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Using Negotiation Skills To Ensure Complex IT Transactions Do Not Fail To Deliver Maximum Value
A recent study into business negotiations discovered that the biggest challenges faced by businesses and individuals are (a) the price/value trade off and (b) creating alternatives/generating options, respectively. A recent Fortune Magazine review in affiliation with Miller Heiman (the complex selling methodology gurus) found that sales resources cited price as the number one reason they did not close transactions.
There has been much talk in the IT sector on both the buy- & sell side about 'partnering' to produce solutions. The supporting data shows, it is doubtful whether this talk has converted into action.
Whilst most organisations would like to believe that they are engaging both clients & suppliers in a 'solution based' format, the role of price still dominates the landscape. This is due in large part to the failure of individuals to see the 'big picture' or to get involved in creative thinking. Our research & experience shows that one of the main features of successful business negotiators is the ability to be creative & flexible.
Whilst many IT businesses have built their standing on the back of their market leading and creative technologies, it would seem that creativity is often restricted to the design & engineering departments. One of the strongest drivers of human behaviour is the tendency to avoid potential deficits. When assessing information about the future, managers are more interested in avoiding potential deficits than achieving the same gains. This means that during negotiations that support difficult and high value IT agreements, the focus is more often on managing risk to avoid potential losses, rather than on creating innovative and creative ways to create additional value for all stakeholders.
The more complex the transaction, the more vital it becomes to manage risk. Rather than just trying to avoid losses, we should concentrate on methods to create alternatives for mutual benefit during negotiations.
To avoid falling into the price trap, ask yourself the following questions ahead of each negotiation and make this part of your negotiation strategy:
1. Vision
a. What are the main interests of all the stakeholders to the transaction that will be satisfied by achieving an agreement?
b. How critical will it be for each party to the deal to act in a partnership mode?
2. Value
a. What are the key purposes of all the parties to the deal?
b. What are the limits associated with each of the objectives for all stakeholders?
3. Process
a. What suppositions have you made that you could confirm through questioning during disucssions?
b. How can you frame the negotiation so as to support a collaborative, partnership based approach rather than a price centred negotiation?
4. Relationships
a. Do all parties have a similar requirement for a lasting relationship?
b. How can you impact the 'climate' of the negotiation so as to assist in the achievement of a collaborative approach? ('Climate' pertains to non-verbal, physical and cultural aspects.)
Once you have covered these basic elements of preparation you will have time left to be initiative. Being innovative is not something that comes naturally to all of us but it is an essential negotiation skill. Use one of the recognised creativity methodologies such as De Bono's Six Thinking Hats, or the Disney Creativity Model to help you generate options.
If you want to really embrace a partnership method that delivers optimal value, you should waste no time in getting the creative juices flowing.
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