It’s the direction that counts

Here is a good article posted on ProPurchaser.com. The author shares a personal example when as a professional buyer she asked for a cost reduction from the steel can supplier. Research had shown steel prices had fallen. The supplier had a ready reply. Have you ever had that experience? The author respectfully responded. A great example of understanding the negotiation from two views.

The short article also demonstrates ‘what goes around comes around.”

The Golden Rules of Bidding

Why would the most high potential supplier turn down the opportunity to participate in the bid?  I had a multi-million dollar global contract and the company we identified as the most promising supplier declined to participate.  Why?  Because they understood the bidding process and the total cost to participate.

Bidding’s Golden Rules by Emma Jaques offers the reader valuable insight to the bid process.   She demonstrates that developing a worthwhile bid is time-consuming and expensive.  She advises suppliers to avoid stepping into a competitive bid process designed just to squeeze cost reduction from the existing supplier.

Here are Emma’s Bidding Golden Rules:

  1. Look for opportunity – This requires energy and an open mind.
  2. Don’t bid for everything – Be selective about your choices.
  3. See things from the buyers’ perspective – focus on their priorities, not yours.
  4. Prepare your bid theme and executive summary first – This sharpens your thinking about the overall project.
  5. Look for showstoppers – Failure to address them goes ill.
  6. Answer all the questions – Be obsessive about detail in your proposal.
  7. Answer the questions the buyer is actually asking – Be a detective.
  8. Engage, influence and persuade – Develop and exploit buyer personnel contracts.
  9. Ascertain your price and know its value – Be upfront with realistic price.
  10. Follow the buyer’s rules – Go along or you won’t get along.
  11. Use case studies – If you have experience, show it.
  12. Be organized – Stay on top of bid-writing personnel and tasks.
  13. Learn and improve – Analyze your experience with wins and losses.

 

A successful bid opens doors to a long-term relationship.  Pay attention to all the steps that come before and after submitting a bid.  For more detailed discussion consider Emma’s book which includes tables, charts, tips and rules.

You might be wondering “what was the result of my multi-million dollar global contract?”  We learned a valuable lesson as buyers about the value of fair and competitive bidding.  We took extra time to ensure participants this was not a game designed to squeeze the existing supplier.  In the end, that reluctant high potential candidate was the best fit and won the contract.  A big win for both of us.

Don’t Fall in Love… with your assumptions

It’s important to have a plan.  It’s important to have assumptions.  Just remember your assumptions are wrong.  Wait…not all of them are wrong.  The problem is you don’t know which ones are wrong.  So don’t fall in love with all of them.  Successful negotiators understand it is a process.   Michael Wheeler describes it as learn, adapt, influence.  You can learn more about his strategy from his book “The Art of Negotiation” or watch this short video.

As you prepare for your next negotiation take time for research, to understand your alternatives, and make a wish list.  Next make careful assumptions about your counterpart on each of these same categories. Just remember the more effort you put in, the more seductive they become and the harder it is to emotionally disconnect.  Make your assumptions just don’t fall in love with them.

Don’t panic at a deadline!

Are some deadlines padded? You know it!  Wouldn’t it be a shame to negotiate a poor agreement because of a false or negotiable deadline? The best defense with dynamite and deadlines is to proceed with caution.

Test deadlines imposed by the other party. They are probably negotiable. Don’t let deadlines hypnotize you into making premature decisions. Yes, some deadlines are real. That’s when your research, and sound business judgment comes in.

Read more about deadlines and how the buyer and seller use them in the September blog by Karrass.

Negotiating with Emotion

Here is a great article by Kimberlyn Leary, Julianna Pillemer, and Michael Wheeler. The Harvard Business Review magazine posted this article earlier this year. “Negotiating with emotion” is worth reading for anyone that has experienced tense emotions in a negotiation. http://hbr.org/2013/01/negotiating-with-emotion

I especially liked this comment section where Ruben Terminasian wrote:  “In order to stay cool during tough negotiation professional negotiators often recommend to look at the emotional level of the counterpart. This is indeed a good advice as it keeps your ego busy watching the other persons’ ego. The effort always pays back. After all, people most likely will forget what you said or even did, but they never forget how you made them feel.”

When to make the first offer?

When is it best to make the first offer?  The answer is – it depends.

Journalists Jill Barshay and Seth Stevenson created a series of short podcasts designed to teach a few simple rules for any negotiation. In Episode 1, they address the crucial question: Who should throw out the first number, you or your opponent? Click here for the podcast link: Anchoring the bid

This short 12 minute podcast does a nice job demonstrating how giving the opening bid can anchor the price to that number.  Near the end they give a short demonstration of the winners curse.

Remember:  If you have not done your research you might NOT be at an advantage giving the opening bid.

We all want value, right?

You might be interested in this complimentary webinar from IACCM on the conversation of business value.  One of my favorite blogs “Think! Inc.” talked about this webinar in the August 30 blog.  Take a peak at the description from the IACCM website below.  If you attend send your comments back.  Share one or two insights you discovered from the webinar.

http://web.e-thinkinc.com/blog-B2B-Street-Fighting/bid/186305/IACCM-webinar-Committing-to-Buying-Value-Selling-Value

Wednesday 4th September 2013

4:00 PM London, 5:00 PM Paris, 11:00 AM New York, 11 PM Singapore

What happens when procurement and sales talk ‘value’? More often than not, procurement will argue that sales will talk ‘value’ without quantifying it. Sales will argue procurement doesn’t want to pay for value and is ultimately seeking lowest price…

In most organizations, the term value is overused and not delivered upon, largely not because the buyer or seller only offer lip service, but because of existing company culture, metric and reward structures.

But we all want value, right?

We have invited two great IACCM Americas conference speakers, representing value selling and value buying, to debate how you can spend less time negotiating and more time on buying, selling, delivering and receiving value.

Join the debate! With:

  • Lisa McLeod Author; Business Coach; President, McLeod&More (Sales Perspective)
  • Todd Snelgrove, Global Value Manager, SKF Group (Procurement Perspective)

Discussion Host: Roselle Harde, Director of Development, IACCM

Lisa McLeod: Organizations like Apple, Kimberly-Clark and Pfizer hire Lisa McLeod to create passionate, purpose driven sales organizations. Lisa is recognised as a sales leadership consultant whose clients range from financial services to pharmaceuticals, a sought-after leadership and sales keynote speaker who has rocked the house everywhere from Apple to The United Way and a problem-solving expert whose conflict resolution book was hand delivered to every member of the 2011 Freshman class of Congress.

Todd Snelgrove: Global Manager; Value with SKF, the world’s market leader for bearing and related industrial products. With over 10 years experience in being the team leader on understanding, presenting, calculating, pricing, and purchasing on Total Cost of Ownership (TCO).

Todd has developed and implemented his leading insight into strategies for developing distribution channels, sales and marketing programs, strategic account management, customer value partnership agreements, TCO procurement strategies, and numerous programs that help customers increase profitability by measuring and reducing acquisition, operation, and disposal costs.

Todd has demonstrated successful customer partnership agreements with Fortune 1000 companies, in numerous industries and segments, in all geographies of the world.

Since this ATE is in debate format, feel free to email your related questions before the session to Roselle atrharde@iaccm.com – or simply post them during the live session

Todd and Lisa will be speaking at the IACCM Americas conference in Phoenix Oct 8-10, for more information and to find out how to register please visit www.iaccm.com/americas

You need not be a member of IACCM to attend the webinar. Click here to register.

 

The International Association for Contract & Commercial Management enables both public and private sector organizations and professionals to achieve world-class standards in their contracting and relationship management process and skills. It provides executives and practitioners with advisory, research and benchmarking services, and worldwide training and certification for contracts, commercial and relationship management professionals. IACCM is a non-profit membership organization that supports innovation and collaboration in meeting the demands of today’s global trading relationships and practices.

19 Questions to enhance the negotiation conversation

You are working for a “win win”  negotiation and the conversation stalls. What can you do to get back on the track? Back in 1998  Vandar Huber posted this link – The original list contained 22 questions.  I have posted my favorites.

Questions to Help Separate
 Positions from Interests

  1. Correct me, if I am wrong…
  2. We appreciate what you’ve done/ are trying to do.
  3. Could I ask you a few questions to determine if my facts are correct?
  4. What’s the principle behind your action/proposal?
  5. Let me see if I understand what you’re saying…
  6. Let me get back to you on that by _______
  7. Let me explain why I have trouble following some of your reasoning…
  8. Is a trial basis/period possible?
  9. If we disagree, the implications are…
  10. What are you trying achieve by…
  11. Could you reword your proposal?
  12. Could you explain what we both can gain by your proposal?
  13. Let me see if I understand your concern…
  14. Would you consider…?
  15. Could you explain what problems you see with my proposal?
  16. How can we decide what is reasonable? what is fair?
  17. Can we break the issue into more manageable parts?
  18. I understand that’s your position, but could you explain what it is you are  concerned about?
  19. Why do you think that proposal/price is reasonable?

http://faculty.washington.edu/vandra/html/neg22quests.html

Vandra L. Huber


Over coming commitment to Failure

Have you ever escalated your commitment to a losing course of action?  Ever hired the wrong employee?  Have you ever paid more than you should have for an item because you had invested so much time in the negotiation?

Whenever we throw good money after bad we fall into a trap that organizational behavior expert Barry Staw calls escalation of commitment to a losing course of action.  We find it hard to step away  after investing time, energy or resources to a choice that goes bad.

One simple solution is taking time to plan.   Set your goal. Most important is setting the point when you will walk away. Know your alternative to no deal .  Keep your strategy in front of you.  Review it often.

The success or failure of any negotiation depends on how much effort you put into planning and understanding your alternatives.