Just how can companies develop and implement strategies that are responsive to today's business negotiation environment, where sellers are facing more complex negotiations, more professional buyers, more irrational competitive behavior, and more internal negotiation? All of which are making negotiating even more difficult!
In its most basic form, organization-wide negotiation strategy can be defined as "organizational agreement on negotiation guidelines and outcomes." In this context "organizational agreement" means the development of a consensus among all stakeholders in a company regarding how negotiations are to be conducted and what results of those negotiations will be. These stakeholders include not just the field salesforce but also people in the legal department, product management, sales management, and even senior management.
Note that what the stakeholders must agree to are guidelines, not rules imposed on them by headquarters. Imposing centralized corporate constraints on negotiators in an effort to counter the effects of changes in the business world doesn't really solve the problem. In fact, when salespeople have to go through a pricing committee or some similar corporate group, the sales process becomes slow, bulky, inflexible, and non-customer-friendly. And it often results in losing sales to more creative competitors. At the other extreme, when sales people are essentially allowed to do whatever they want, it invariably results in inconsistent customer and competitor messaging as well as inconsistent profits.
So even though having general agreement on a particular way to negotiate deals is beneficial to the entire organization, individual negotiators must have the flexibility to address their own situation as appropriate within those guidelines. Having a negotiation strategy developed by the appropriate stakeholders provides an organization with what we think of as radically centralized strategy but radically decentralized execution. Once the stakeholders agree on ranges for what can be negotiated, those negotiating have the ability to move within those ranges and must go to management only in exceptional situations. And there are very few such exceptions when all of this is done right because of the creativity and flexibility built into the strategy.
But why establish such a negotiation strategy? There are several very good reasons, not the least of which is that it provides a means of successfuly addressing the changes in the business environment that have made negotiation so much more difficult. When consensus exists in an organization about where you want to go in negotiations, how you're going to get there, and what the results will be, the result is inevitably a reduction in internal conflict and external variance. Reducing variance sends more proactive and consistent messages to both your customers and your competitors. And consistency enables you to avoid creating lack of trust in your customers and irrational behavior in your competitors. Ultimately, of course, the advantage of establishing a negotiation strategy is that these behavioral changes have a positive effect on the bottom line.
The process for designing and implementing an organization-wide negotiation strategy is essentially composed of five steps:
- Identifying all the company's negotiation stakeholders
- Training the stakeholders in the Strategic Negotiation Process
- Writing the negotiation strategy
- Distributing and implementing the strategy
- Measuring the outcomes
Each of these steps takes from a few hours to a few days to accomplish, but once finished, you will have a complete process in place that will provide you with a considerable advantage over your competitors.
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