Having worked on project negotiation and the delivery of high value outsourcing contracts for many years I have discerned two general approaches, usually the same for each phase and mainly, but not completely, dictated by the customer. These are confrontation (or competitive) and cooperation.
Here is an essaythat looks at the cooperative and the competitive approaches and saysnegotiation involves a fundamental tension between whether parties feel they need to cooperate or compete in order to achieve their goals.
The confrontation style assumes that not only is the party concerned always right in everything, but the other party must make the least benefit possible from the transaction. To the proponents of this approach, by way of example, a “partnership” means that the other side takes on more onerous obligations than if it was a less privileged supplier or customer.
And as I say whilst it is usually the customer that sets this sort of tone, there are suppliers who behave in the same way whether because of their size or the nature of their service (like some commodity cloud suppliers) and for whom it can be “my way or the highway”.
Whilst confrontation may work in a supply of commodity products, though even here I am not sure, it definitely presents serious challenges to the successful conclusion and implementation of a more complex contract for say IT services.
Cooperation means that that whilst each side may still drive a hard bargain, at the end of the discussions each side believes that they will gain from the deal over the long term.
This study from Stanford Business School Negotiating the Big Deal: Cooperation Can Beat Confrontation suggests that seeing business interactions as cooperative rather than confrontational can often produce better outcomes.
I personally believe that the cooperative approach has to some degree to be utilised if the project is to be a success. A customer which feels it has been pushed into a corner by a greedy supplier which happens to have the only available solution at that time will always be looking for a way out as early as possible. It will not be seeking a long-term supply relationship. A supplier that is making no money or which has accepted impossible timescales will either cut corners or be unable to deliver leading eventually to complete relationship breakdown.
I have helped resolve project implementations that were failing not because they were intrinsically going wrong but because one side or the other had been forced into a fixed position by the harsh nature of the deal they had concluded. In the most extreme example of this I was in private practice acting for a large customer on a renegotiation not the original deal. The supplier simply explained that we had a choice of resetting the contract or facing total failure of the project and a long and expensive reprocurement – because otherwise they would go bankrupt.
I am not suggesting being weak and giving way, far from it. You can behave in a co-operative manner and still gain your objectives – see, for example, this Harvard Business Review articleon How to Negotiate Nicely Without Being a Pushover.
I like this quote from the author Virginia Burden Cooperation is the thorough conviction that nobody can get there unless everybody gets there.
Here is an essaythat looks at the cooperative and the competitive approaches and saysnegotiation involves a fundamental tension between whether parties feel they need to cooperate or compete in order to achieve their goals.
The confrontation style assumes that not only is the party concerned always right in everything, but the other party must make the least benefit possible from the transaction. To the proponents of this approach, by way of example, a “partnership” means that the other side takes on more onerous obligations than if it was a less privileged supplier or customer.
And as I say whilst it is usually the customer that sets this sort of tone, there are suppliers who behave in the same way whether because of their size or the nature of their service (like some commodity cloud suppliers) and for whom it can be “my way or the highway”.
Whilst confrontation may work in a supply of commodity products, though even here I am not sure, it definitely presents serious challenges to the successful conclusion and implementation of a more complex contract for say IT services.
Cooperation means that that whilst each side may still drive a hard bargain, at the end of the discussions each side believes that they will gain from the deal over the long term.
This study from Stanford Business School Negotiating the Big Deal: Cooperation Can Beat Confrontation suggests that seeing business interactions as cooperative rather than confrontational can often produce better outcomes.
I personally believe that the cooperative approach has to some degree to be utilised if the project is to be a success. A customer which feels it has been pushed into a corner by a greedy supplier which happens to have the only available solution at that time will always be looking for a way out as early as possible. It will not be seeking a long-term supply relationship. A supplier that is making no money or which has accepted impossible timescales will either cut corners or be unable to deliver leading eventually to complete relationship breakdown.
I have helped resolve project implementations that were failing not because they were intrinsically going wrong but because one side or the other had been forced into a fixed position by the harsh nature of the deal they had concluded. In the most extreme example of this I was in private practice acting for a large customer on a renegotiation not the original deal. The supplier simply explained that we had a choice of resetting the contract or facing total failure of the project and a long and expensive reprocurement – because otherwise they would go bankrupt.
I am not suggesting being weak and giving way, far from it. You can behave in a co-operative manner and still gain your objectives – see, for example, this Harvard Business Review articleon How to Negotiate Nicely Without Being a Pushover.
I like this quote from the author Virginia Burden Cooperation is the thorough conviction that nobody can get there unless everybody gets there.
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