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Negotiation 101

Significant learning for anyone transitioning into a leadership role is the dependency on 'others' for outcomes. Micromanagement is not sustainable, good people will leave, and you will become exhausted. Vendors are a vital contributor. One of my former employers was one of those external organisations. They have amazing people that exceptionally served their clients. I was fortunate to be included in many client interactions as my colleagues built out relationships and solutions. The approach was not a transaction. It was more like a dance, clumsy at first however almost always ending elegantly.

The dance was a negotiation. As a technology leader, this is 'some of your role' for others that serve you its 'all their role'. As a technology leader, you need a structured approach and a sequence of steps; here's how.

1. Who are the key players from the vendor?

  • What level of influence do they have within their organisation?

  • How are the organisation and the individuals serving you performing for their performance year?

  • How important is your business to them?

  • If possible, at the initial meeting, get to know them as people beyond their role at the organisation. Take an active interest in them and be professionally personable, it might lat help.

2. After you know the key players, what are their motivations and goals from your emerging deal/ partnership?

  • Beyond the dollar value, how important will your business be to their profile?

  • Is there anything new/ innovative within the deal, how proven is this, could this be an area of mutual value?

  • What has been automated, simplified or will be? What are the benefits for the vendor and your organisation?

3. The focus is not about winning; it is about growing the value of the deal and creating as much value as possible.

  • This is value for both organisations, and this is not dollar value (neither size nor margin), it is what is in addition to this.

  • Involve others in these conversations, apply lateral thinking. Often within technology deals, a partner is involved, ask what could be of value for them?

4. Take a break. Based on what you now know when would you not proceed?

  • Document what you know, your baseline and be prepared to walk away if the deal is below the baseline.

5. What is the window to reach a possible agreement? The bigger the reasonable window, the better negotiation. If you want to pay ten and they require fifty, it's unlikely however forty to fifty is possible. What is your baseline and if this is unlikely to be met, it's now potentially best to walk away? At this stage consider;

  • What is high value to the other parties but low value to me?

  • Consider making concessions on these.

  • Endeavour to grow the value for the technology provider and their partner.

6. How can value be grown further, explore this with all parties?

7. Reflect on the progress, is the deal good for all involved and avoid win-loss agreements as long-term value is eroded.

  • Only proceed with a win-loss agreement if it is a one-time negotiation; this is the only time you should consider winning.

  • Potentially check separately with the technology partner, sometimes partners come under pressure from technology providers, make sure there is value for them within the deal, and they can fulfil their commitments.

8. Finally, consider the number and timing of the concessions you could make. This is important as not everyone will be as mature in their approach;

  • Three to five concessions are ideal.

  • Don't lead with the best concession or your baseline, as people need to feel like they are going to win or have won. Sometimes they will need to report back that they have won!

  • Put in padding to make sure you know where you could make concessions, however, be sensible and ridiculous.

  • Technology providers and their partners are expecting some negotiation. On some occasion conversations or relationships becomes tense, consider taking the heat out of it by having a pleasant conversation (remember point 1, forth bullet point).

In summary, as a first-time technology leader seek to build genuine long-term relationships to create value within your organisation and across those that serve yours.


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