“These are days when many are discouraged. In the 93 years of my lifetime, depressions have come and gone. Prosperity has always returned and it will again.” John D. Rockefeller
The one reliable feature of the current economic climate is that it keeps demanding change. Some businesses prosper in a downturn just as others prosper in recovery. The ones that come through tend to be those who spot opportunity in adversity, or who adapt quickly enough to take advantage when conditions shift. There may be room for creativity in an uncertain market. There is no room for impulsiveness. As pro-activity and planning become more critical, the real priority is making time to think about new opportunities and to work as a team around the possibilities.
After a long stretch of relative stability, recent disruption has made it more important to look creatively at how agreements are negotiated, to re-examine relationships and to renegotiate where it makes sense. Creativity can unlock value for both parties and produce agreements better designed to weather difficult conditions. When compliance and performance come under strain, usually through shorter agreements built to limit risk, the case for disciplined planning across a broader agenda becomes hard to argue with. This is precisely where investment in negotiation training and structured preparation earns its return.
Make the time to scope and prepare
Planning and constant reappraisal are a continuous necessity for anyone trying to navigate uncertainty. Risk, investment, scale, performance, compliance and results all interact and each shapes how negotiators read their own power and the power of the other party. With a finger on the pulse, a negotiator can read the climate and plan discussions before they begin. Each issue should be understood and treated as a checklist. If you cannot articulate an answer to every item, you are most likely operating with a blind spot.
Effective negotiators are pro-active. People are generally reactive to change because there is always something more pressing to do. That single attitude sub-optimises more commercial opportunities than any other, through complacency or denial. Investing time to reappraise agreements, new or current, is like checking the fitness of your team before the next match. You cannot wait until half-time to decide who you want on the bench. Most agreements carry provision for performance or compliance, with reviews scheduled as a matter of course across industries as varied as construction, retail and property. When the market shifts, third party pressures often supply the impetus for new conversations.
Take the case: Simply Tiles and Sebeline
A Spanish terracotta wholesaler, Sebeline, supplied a UK retailer with floor tiles in various sizes and finishes. The relationship was strong, with a good history on both growth in demand and supply quality. The UK retailer, call them Simply Tiles, had grown to represent 30% of Sebeline’s business.
During 2008/9 Sebeline’s performance in France and Spain weakened, leaving the firm increasingly dependent on a struggling UK economy. Cost cutting only made supply to the UK less reliable. Simply Tiles recognised that, although they faced tough conditions themselves, the chance to offer greater security to a vulnerable supplier could prove an opportune discussion. The board took a full two weeks out to scope a strategy. The UK bank was reluctant to lend, so any agreement had to stay paper based in the short term. Within three months of talks opening in June 2009, the retailer had secured a 49% stake in the wholesaler at a 70% discount. Time and circumstance played their part. The time invested in scoping the opportunity produced timely action and a well considered strategy.
Curiosity is a commercial asset
Questioning and listening are the obvious skills of an effective negotiator. What drives them is curiosity. That instinct helps us understand the personalities involved, their pressures and their priorities at any given moment and to identify what can be influenced during discussions. The motives of people and businesses move with personality, timing and circumstance. Most negotiators handle a counterpart who needs to be seen to win very differently from one whose natural style is to seek a fair outcome. Research and exploration should stay focused on three moving elements: the market, business performance and personalities.
In the Simply Tiles case, managing director James Sadler travelled to Spain to spend time with his counterpart at Sebeline. He found a passionate management team whose central constraint was finance for new technology rather than any lack of ambition. That single piece of intelligence reframed every decision that followed back in the UK. As children our thirst for information is boundless and over time daily life tempers it. Strong negotiators work to reignite that habit of inquiry, which is one reason so much value sits in good negotiation consulting and in well designed negotiation courses. For a wider view of how preparation plays out under pressure, this piece on negotiating in an uncertain market is worth reading, as is this analysis of why risk and uncertainty belong at the negotiation table.
Discipline and motivation across the team
Time is one of the most powerful levers in any negotiation when it is attached to terms. On a strategic level it sets the balance of power and the chance to discuss issues on a level basis rather than reactively. Within most agreements there are two points worth recognising. The first marks the moment when market or performance change begins to show in contract performance. The second marks the point at which those changes become established as the way things are now, precedents form and renegotiation grows difficult. Operating between or beyond those points compromises both power and opportunity. That alone should supply the logic for early planning.
This matters most in renegotiation. Too often we walk back in assuming the relationship is what it always was and that the other party’s pressures are unchanged. Uncertain economies expose that assumption quickly. The objective of preparation is to develop a current understanding of both positions and that usually requires some level of trust or collaboration. Strong negotiators treat preparation as part of the negotiation itself. They set objectives for the preparation, not only the outcome, starting with a simple question: what do I need to qualify before the first meeting? Plan multi-level rather than single-level scenarios. Map who else needs conditioning before talks begin and how the negotiation will be escalated if it has to be. This is the discipline that structured negotiation skills training is built to embed across a team.
Take the case: Boeing and the Chinook order
On 10 November 2009, under political pressure to reinforce operations in Afghanistan, Gordon Brown announced plans to fast-track a large order of Chinook transport helicopters, effectively setting aside the government’s longer term procurement strategy. The potential £1bn agreement with Boeing marked a significant departure from the usual tendering process. Circumstance produced urgency, short-term dependency shifted, the balance of power tilted and normal protocol was set aside. The question for any negotiator on Boeing’s side is how the lead-time implications would now be priced and whether such a scenario had been factored into earlier planning.
“It is not the most intelligent species that survive, it is the most responsive to change.” Charles Darwin
The Sat-Nav already exists
Stating that planning matters is about as illuminating as suggesting you plan a route before driving the length of the country. The useful question is whether a system exists that anticipates the hazards, the toll roads, the closures and the recent accidents. The Gap Partnership developed one called ESP, the Electronic Strategic Planner. It provides a common way of planning, identifying the appropriate route based on power, process and people, then pre-empting the challenges a chosen strategy will present. With more potential hazards in uncertain times, it has become more valuable, not less. ESP defines a route then builds contingencies for the moment we hit traffic, giving every internal stakeholder a clear picture of how the process should unfold, down to each conditional proposal and anticipated objection.
As we continue to find our way through a shifting climate, the ability to prepare and plan will keep shaping the results of our commercial transactions. Commit the time to prepare in a structured way and set high expectations for how you negotiate and what you aim to achieve. That is the perspective consistently brought by The Gap Partnership, the global negotiation consultancy and training specialists. The market will keep moving. The businesses that prepare for change rather than react to it will, as Rockefeller and Darwin understood in their different ways, still be standing when the cycle turns.
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