Disruptive Negotiations – What You Need to Know

by Omid Ghamami

Ordinary negotiators abound.  Ordinary negotiators take the circumstances of a deal and negotiate the best outcome, usually focusing on price.  They mostly focus on at-the-table negotiation strategies and measure their results on misaligned comprehensive criteria.

Ordinary negotiators get walked all over by suppliers and never know it.  Reference a 7-part blog series I wrote entitled “The 7 Habits of Highly Ordinary Negotiators”.

Master Negotiators, in contrast, upset negotiation dynamics.  Master Negotiators live and breathe Disruptive Sourcing.  It’s the secret sauce that makes suppliers wonder why their standard and proven negotiation strategies didn’t work this time.

Disruptive Sourcing means taking the current deal parameters and throwing them out the window – BEFORE ever sitting at the negotiation table. 

Ordinary negotiators try to get their results while sitting at the negotiation table. 

One of my clients, a very large IT company, had an outsourced call center with thousands of employees handling the endless flow of customer communications.  These employees spend all their hours sitting and talking and typing. 

My client decided they wanted to get the best office chairs in the world for these employees, with the idea that the ergonomic and comfort benefits would result in greater worker satisfaction and a lower injury rate. 

They went after the most famous high end office chair company in the world, I’ll call them HM Chairs.   Except they found the chairs to be far too expensive, and they weren’t able to get anywhere productive in negotiations.  Bargaining power was clearly in HM Chairs’ favor. 

Taken at face value, this was a deal that no procurement professional could win, because the balance of bargaining power was too far in the supplier’s favor.

My client decided to do some homework.   They found out that HM Chairs is not a chair manufacturer at all!  They are a chair designer.

So they researched and found a company in China that was doing the manufacturing.  They spoke to them but the OEM wasn’t interested, because they sold to resellers, not directly to businesses. 

Now what?  The procurement manager thought about the OEM’s motivations, and he remembered that there was an annual event at his call center, at which senior representatives from many other call centers were in attendance.

He then went back to the OEM and said “what if you sell me chairs directly, and I let you showcase them at this annual event?”.  The OEM couldn’t wait to sign up.  They agreed to a 50% discount over what HM Chairs was offering.             

What happened next?  The OEM achieved tremendous success from this event.  In fact, they were also now able to have a direct pipeline to end user feedback on their chairs that they didn’t have before. 

My client now started to drive customization of chair designs based on this feedback, while still securing a 50% discount. 

HM Chairs was left twisting in the wind while all this was going on – away from the negotiation table.  Such brilliant moves. 

Another one of my clients is famous European beer manufacturer.  I’ll call them C-Beer.  They manufactured their own bottles, made 70% of sand and 30% of soda ash. 

Their raw material suppliers ran a powerful oligopoly, very possibly engaging in colluding price models.  The C-Beer CPO was sick and tired of paying high prices to suppliers with excessive bargaining power.  None of his at the table strategies worked. 

The CPO stepped back and looked at the supply chain.  He realized that his customers were dealing with the same exact problem, as they were also manufacturing bottles.  He decided to contact them.

Two supply chain partners were now discussing this problem.  They realized they were being divided and conquered. 

Away from the negotiation table, they consolidated their demand for sand and soda ash and sent out an RFQ to the oligopoly players.  It was an all or nothing deal.  Now the oligopoly players were pitted against each other. 

The net result?  A new business model with dramatically improved prices, supply line, contract terms, and the shattering of an oligopoly.

Our entire profession, still today, is trained on how to drive at-the-table negotiation strategies.  Negotiating at the table is for ordinary negotiators. 

Tactics.  Counter-tactics.  Ploys.  Good guy, bad guy.  Puppy in the window.  Feigning disinterest.  Pretending to walk.  Claiming final authority.  Claiming not to have final authority. 

All of these and MUCH more are your grandfather’s negotiation strategies.  They were great then. They are ordinary now.

Ordinary negotiators take the deal as presented and drive at-the-table strategies for next level results.  And sometimes they achieve them, but always within the constraints of the deal as currently designed.

Master Negotiators throw the current deal design out the window.  They understand and dissect and CHANGE the bargaining power levers to be in their advantage. 

It’s not illegal and it’s not unethical.  It’s just very, very savvy.  And you should be too.

Now go off and do something wonderful. 

Omid G.

“The Godfather of Negotiations” ~ Intel Corp

P.S.  I’m rebuilding the CPSCM™ program structure from the ground up, and you are going to see a huge announcement coming up.  New website, new infrastructure, new capabilities, and enticing new investment models for individuals and companies.  50+ companies in the Fortune 500 that have invested in CPSCM™ can’t all be wrong.  You can be an ordinary negotiator with an ordinary career, or you can put your capability and your career on the fast track.  Better yet, join the legions of CPOs that have certified their entire department.  Get on board or get left behind.  www.CenterforPSCMExcellence.org

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