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May 13, 2016
Fact-Based Negotiations
By: Jack Barry

The art of negotiation has been replaced by the science of negotiation. The image of the lone extroverted negotiator skilled in the tricks and tactics of negotiation has been replaced by the teams of negotiators that are empowered by their knowledge, discipline, and preparation. It is no longer a game; it is a process—a process that is learnable and repeatable. Its roots are the scholarly research book by Roger Fisher and William Ury entitled Getting to Yes, which should be mandatory reading for all supply and procurement professionals. It is based on long-term relationships between the buyer and the seller—not a short-term advantage of one over the other, but in true partnership seeking to reduce cost and improve value and performance.

Fact-based negotiation starts with a process. The first step in that process is the identification, the definition, and quantification of the stakeholders’ objectives and requirements. If this effort is not rigorously accomplished, all future efforts will be compromised. This effort includes an understanding and quantification of the expectations and limitations to the authority of the negotiating team. It is only with this knowledge that the team can determine what must be achieved in order to have a successful negotiation, what should be achieved to complete satisfaction, and what concessions the team can make during the actual negotiations.

It is with this knowledge a negotiation team can develop The three key approaches: The first is The Maximum Supportable Solution (MSS), The second is The Least Acceptable Solution (LAS), and The third is the Best Alternative to Negotiable Agreement (BATNA). The MSS is the optimum that the team can achieve in a negotiation; it is the most defensible and realistic aspiration of the team. The LAS is the minimum the team can accept and still consider the negotiations a success. Failure to achieve the LSS means the team has failed. The BATNA is what you can salvage from the failed negotiations and, possibly, restart the negotiations. It is what we will do if we cannot get a mutually acceptable agreement—that is, alternatives in the event of a deadlock or unsuccessful agreement.

Without this basic knowledge, the negotiating team cannot develop a definitive strategy and start the preparation to ensure success. With this knowledge, the negotiating team can start the process of understanding the environment in which they are negotiating, the culture of the teams, the dynamics of the industry and marketplace, and the products or service specifications and alternatives.

The truism is that success goes to that team with the most knowledge. That knowledge is based on consensus. Consensus means you and your stakeholders (plus suppliers, plus team) are in agreement in each of the various levels of internal and external negotiations:

  1. Initial with Internal Users (Stakeholders)

  2. Initial with Internal Negotiating Team

  3. Screening and Level Setting with Suppliers

  4. Actual Negotiations with Suppliers

  5. Interim Feedback with Internal Users

  6. Communicating the Outcome with Internal Users

  7. Finally, Transfer Ownership to Day-to-Day Users

The most important of these negotiations are the initial negotiations with the internal stakeholder; the objectives are to determine both the individual and coordinated Critical Success Factors (CSFs), real and imagined, that must be addressed in developing the MSS, the LAS, and the BATNA.

As your career progresses, each of you will be a key member of a negotiating team. It is in our best interest to understand the dynamics of fact-based negotiations and be prepared to add value.

Below is my listing of the best books on negotiations:

  1. Axtell, Roger E. Do’s and Taboos Around the World. The Parker Pen Company, comp. 3rd ed. New York: John Wiley & Sons, 1993.

  2. Ferrarao, Gary P. The Cultural Dimensions of International Business. 4th ed. Upper Saddle River, New Jersey: Prentice Hall, 2002.

  3. Fisher, Roger and William Ury. Getting to Yes: Negotiating Agreement Without Giving In. 2nd ed. New York: Penguin Group, 1991.

  4. Morrison, Teri. Kiss, Bow, or Shake Hands: How to Do Business in Sixty Countries. Avon, Massachusetts: Adams Media, 1994.

  5. Thomas, David C. and Kerr Inkson. Cultural Intelligence: People Skills for Global Business. San Francisco: Berrett-Koehler, 2004.

  6. Ury, William. Getting Past No. Revised ed. New York: Bantam Books, 1993.

  7. Walker, Danielle, Thomas Walker, and Joerg Schmitz. Doing Business Internationally. 2nd ed. New York: McGraw-Hill, 2003.

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