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Tech & Sourcing @ Morgan Lewis

TECHNOLOGY, OUTSOURCING, AND COMMERCIAL TRANSACTIONS
NEWS FOR LAWYERS AND SOURCING PROFESSIONALS

There is an adage that basically says that businesses don’t do business—people do business. That might seem obvious, but it’s useful when one stops and thinks about the interplay between a contract, how that contract is negotiated, and whether the relationship between the people who will be doing business can survive the negotiations.

This plays into the deal work that many of us do because many of those deals are complex—and the parties will ultimately rely on each other to drive success. For example, to implement transformational software, like an ERP system, the systems integrator must bring a unique set of skills to the table. The contract can drive the vendor to bring those skills and they must be proficient, but for the project to be successful, the customer must also bring certain skills: knowledge of its business processes, the ability to assess and implement change, and more. In other words, for the project to work, the parties have to act as partners.

In today’s business environment, it is very important to get through deal negotiations with the relationship between the parties intact. In a good negotiation for a complex deal, the parties should exit the negotiations with a multiparty, high-performing team that already has the channels and skills to work through difficult challenges. This is because the negotiation itself represents a real-life opportunity to solve problems, identify benefits and risks, and learn to come to consensus in a way that will advance the objectives of the project.

There are several benefits to thinking of negotiations as an opportunity to work together on a common goal rather than an exercise in positional warfare, including the following:

  • Using the contracting process as an early pillar of the change management program
  • Forming a high-performing team that already has experience working together to solve problems
  • Producing a contract that is often more rigorous than its positional counterpart, and highly “fit for purpose”
  • Reducing deal fatigue because it is just more pleasant to come to work in the morning when you will be solving problems and identifying ways forward rather than fighting about positional deal points (see our previous posts on deal fatigue: Part 1, Part 2, Part 3)
  • Creating a collaborative environment where negotiators feel free to be creative and thoughtful
  • Taking a business-first approach to negotiations that ensures that the contract reflects the business relationship and the reasons the people in the companies want to do business together

Not every contract or every relationship will benefit equally from a collaborative approach, but we have found that the principles can be applied and are beneficial almost universally.

Many people seem to shy away from a collaborative approach because it takes quite a bit of negotiating skill to use effectively. But we would submit that these are skills that are worth developing. There are several places to learn to build these skills, but the best way is to watch it in action. In a truly collaborative negotiation, it’s not unusual to experience a lightness that belies the seriousness of the work that is being accomplished. The terms fall into place, the work gets done, but you only very rarely feel that stifling combativeness that oftentimes permeates more traditional approaches. Perhaps most importantly, real innovation is possible because the people at the table can actually think instead of spending so much energy defending themselves.

So if people, not businesses, do business, maybe using a collaborative approach to negotiations is a good way to honor the humanness of those people.