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Tech & Sourcing @ Morgan Lewis

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

There are books out there that get into great detail and can be very useful in developing negotiating skills (one of our favorites is Never Split the Difference by Chris Voss). In our experience, though, many negotiators that we come across either have an inflated view of their skills and can’t be bothered with reading a book like this, don’t have the time to read a book like this, or read the book and just can’t make the techniques work.

Having given this a lot of thought over the years, we have come to believe that whether or not they are professionally trained or read helpful books, the best negotiators tend to be strategic in their approach (they can see the results of the results of the results), confident in their abilities but not egomaniacal, curious, great listeners, and highly empathetic. Interestingly, but not surprisingly, the best deals we have done have been with people with that mind set. We think it is probably because the best deals tend to be done on the best information. And table-pounders just don’t encourage the right environment for information exchange.

This is particularly problematic for buyers negotiating big, important, transformational deals where the buyer has tons of natural leverage. Unfortunately, over-leveraged buyers can be prone to doing some pretty tone-deaf things and lose a lot of benefit because of it. An awful lot of good ideas just get shot down before they even take off, and if you can put yourself in the other guy’s shoes, you can understand why.

Let’s set the scene… [Fade in]

So there you are… You work for one of the top technology providers in the world and are on a team that has the opportunity to engage with a new and important client. You’re sitting in a meeting with the clients who are kicking off a project that will be unknown territory for them, but is something you have dealt with successfully for a number of years. They are looking for innovation—a creative way to solve their problems—but they are taking all the wrong turns to get there. They’re going down a path that you’ve seen before and that you know can lead to some big problems. Of course, you speak up… but there it is. That magical look on the project lead’s face – the one that reminds you of the look your mom had on her face when you tried to explain why you came home three hours past curfew.

You’re not (quite) as self-conscious as your 17-year-old self, but you’re still in a tough situation, and you know what’s coming. Before you can utter your last syllable, the project manager’s hand goes up to stop you: “You’re a vendor, you don’t know the culture, and just can’t get your head around what it’s like doing something like this at this company. We need our innovative solution—and we want it quickly…and it must fit inside this box… and it must fit within this price… and we want it done this way…because that’s the way it’s done. But you know what? Since you say you’re an expert, go ahead and tell us why we’re wrong.”

The room goes silent and you’re suddenly the center of attention, but painfully alone. So you look around at those faces, those crossed arms, those furled brows. You sit up straight, smile, manage to get out a few lame sentences and the discussion is over. And the team goes down the wrong path. And you were right. But it doesn’t matter because you were drowned out and they won. Or, rather, they could have won….

They could have won because you decided to do the right thing and disagree with them. You didn’t fill in the blank; you rewrote the question. The problem is that they didn’t win. They lost because they actually needed to listen to what you had to say, and they really needed to encourage you to say it, but instead the roadblocks were already in place. They forced you to agree with them even though they pretended to want you to share. “Come on, tell me what you have to say!” is simply not the same as, “You’ve done this and I haven’t. What have you found that works in a situation like this?”

If you turn this around and you are on the side of the company doing the project, you have to ask yourself how much opportunity cost you have suffered over the years because you shut down conversations, demeaned people with experience, and turned a blind eye to incompetence.

The issue is that the problems that these discussions would have addressed don’t go away because a team decides not to pay attention to them. The question is, at what point will they come back to bite you?

Of course, the team could “power” through the procurement process, then “power” through the contract negotiations, which will have the unfortunate result of having these issues surface during execution. This is when you will regret wasting your leverage on a low information power trip, getting that “legal language” right, and making sure all those t’s are crossed and those i’s are dotted,” all while not worrying too much about getting the information required to make the project succeed.

The point of this discussion is to think about how being in and out of a power position impacts someone’s ability to bring value to a discussion. We are often invited to guest-lecture about negotiation techniques. One of the items on our list to discuss is how to get as much leverage as you can, and then understanding how to use it. As Uncle Ben Parker (uncle to your friendly neighborhood Spider-Man) once said, “With great power comes great responsibility.” Not only because the person in the power position should be fair to the people over whom that person has power, but because the consequences of misusing that power can be extremely self-destructive.

So here’s a simple technique that will greatly improve the results of complex negotiations for transformational deals:

  • Think about what you’re doing and how it would make you feel if it were being done to you
  • Then think about feeling that way, and whether or not you would be able to most effectively express yourself

If the answer to the second point is “no,” just stop acting that way and treat the other side the way that you would want to be treated if you had to make your case. Does intense pressure really make you better or does it make you choke? Be honest.

You have the best chance at getting good information by relieving some of that pressure. You will get better value out of the other side and together, will drive a more successful project and will actually win –as opposed to just feeling like you won when you actually lost. Blindly relying on a power positon to “win” a negotiation by cutting off true information gathering is not a sign of a good negotiator. It’s the sign of a negotiator who is unprepared or lacks the skills to deal with information that isn’t prepared in advance or that doesn’t neatly fit into a spreadsheet cell.