One can sense a great deal of insecurity in the world financial markets wherever you go - for the first time - regardless of geographical location.
Warren Buffet stated that it is only when the tide goes out that one can see who is naked. In other words, it is easy to be thriving when the markets are booming; it is only in tough times that we can easily discern quality & commitment.
How can you use your negotiation skills, negotiation training or purchasing training to sidestep losses in the present economic climate?
Use 'Loss Framing'
People are more motivated by avoiding loss than by achieving the very same gain. Kahneman & Tversky's Prospect Theory work describes how individuals will become risk seeking when trying to avoid a loss whilst they are more likely to be risk averse when pursuing advantages. In the way that we negotiate, we can make our counterparties aware of the items that they stand to lose if they don't move in our direction and otherwise acquire if they do.
Create Alternatives
In times of difficulty it is very important to create alternatives so as to support our negotiation position. The ability to create options is key in the context of negotiation and the power of options to concluding a deal is the key driver of our negotiation power.
Usually we wait until we realise that we are not going to be able to do a transaction before we begin to think about other options. We risk entering into a less than ideal deal and if we have not explored all the alternatives. Similarly, thinking about the options available to your counterparty in the negotiation will give you a clear understanding of their relative position of strength in the negotiation. If they have good options available then they will be more competitive and if they don't, they will tend to be more agreeable.
Use Reciprocation
Reciprocation is a key principle of powerful persuasion skills, because we are prone to return to others the sort of behaviour that they demonstrate towards us. In times of economic uncertainty it is key that we perform in the interests of our counterparties if we would like them to perform in our best interests. Use this principle to your benefit by acting first and using the principle of reciprocation. One note of caution and ensure that you record the indebtedness with your counterparty.
Move from price to value
Divert the focus off price and concentrate on the Total Cost of Ownership. For all services, products and solutions that we buy or sell, there is always a trade off between value & price. If we only engage on the price, the best that we will do is to barter and it is only once we start to study the total lifecycle of the service, product or solution that we trade, that we start to uncover options for negotiation. Before you even state price in negotiation, analyse your counterparty's long term strategic fit, expertise, switching costs should they wish to change a business partner, financial steadiness and possible risks or negative consequences that may happen when the other side doesn't reach an agreement with you.
Don't forget that the magic in negotiation is found in the quality of your planning. In times of economic uncertainty it is key to commit enough time to preparing for your negotiations.
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