The Changing Nature of Negotiation



Tim Cummins
03/05/2013

Interview by Tim Cummins, IACCM

In this short interview with IACCM, Graham Drew of Monitise about the changing nature of negotiation and what this means to process and skills.

Graham, you're leading off our negotiations track at the conference at the end of April. I just wondered to what extent is negotiation, as a skill, a little bit overstated today. We're seeing more and more growth of things like master agreements. The majority of negotiations now are really conducted by virtual means. So do we tend to also overemphasise this negotiation skill for the contracts commercial community?

G Drew: No, we certainly don't overemphasise the importance of negotiation. I think conceptually the importance of negotiation is very well recognised. But even in this IACCM community – hand on heart – do we really invest the time and effort we need to optimise the negotiation outcomes? If I think of this as a buyer, which is what I spend most of my time doing now, there are a couple of things to consider here. The first point is what is it my external customers really need from my supplier negotiations and is this agreement really going to support their requirements, now and in the future? The other thing is do my internal stakeholders see the value? Have we taken every opportunity to consider how this agreement's really going to work in life? It's no longer good enough just to have an acceptable deal at a point in time. Whatever we put in place has got to have some longevity. Your point around master agreements is very well made. Framework agreements, in my experience, are excellent for setting out broad principles and key obligations. That's especially important for matters related to regulatory compliance or risk management. But even feedback from IACCM members, and my own experience, is that managing the intense pace of change is key. The critical point here is that, even with a framework agreement, we should expect to negotiation within that over time. That relates to specific outcomes we need or an approach, or types of resource being used, or time scales. I just summarise this point by saying there are some key reasons why it's very appropriate that we negotiate within a framework agreement. The first is that it enables us to much more precisely map onto our client requirements at any point in time. The second one is both from a buyer and a supplier perspective; it enables us all to take benefit and advantage of developments within the supplier-owned business, whether that's in terms of capability or operational methods.

If I'm to summarise that, what we've got to start doing is rethinking negotiation from being a point in time activity, where we sit across the table from each other, to being much more of a continuum; to be much more lateral, both in terms of the continuum of time and the need to embrace and reconcile the views of wide variety of stakeholders, internal and external. Another aspect is that you've had the opportunity to sit at both sides of the table. Do you think that's something that all professionals in our field should aim to do? Does it result in better outcomes?

G Drew: It definitely does. It's a huge benefit to have been on both sides of the table. I'd add another dynamic to this. I think there's actually a third side. It's the people that aren't represented in that meeting, or in that series of negotiations. The negotiation table's got the buyer and the seller in the room, but I think it's equally important to consider the people that are actually going to deliver this contract – whatever this thing is – in life. I've had the pleasure and benefit of being part of all three of those areas. And it's very important to remember the in-life delivery of whatever this agreement is. I'd add another point, which is as buyer, now it's an absolute pleasure to negotiate with great sales people. And by great, I mean these are people who prepare thoroughly for a negotiation. They know the deal they want to do. They know how they're going to contract; how they're going to deliver; and how they're going to manage the agreement. I should also say, on the contrary, I still have too many examples of negotiation planning from other parties taking place, perhaps in real time, in the room, live. As a buyer, we have to resist the temptation to take advantage of this because the outcome, in those situations, isn't sustainable for either party. That's a very frustrating and wasteful situation where potential agreements, perhaps, lose traction due to the seller, in this case, being caught up in their internal governance. The key point here is, not that governance is a bad thing. Quite the contrary. Governance is incredibly important to support negotiation. But the key point is around planning. Both parties should know what a good deal looks like for them and get those points out on the table very quickly. Then we can spend our time on the more creative and important points around gaining common ground, on mutual flexibility and creativity.

That absence of negotiation planning is something that many of us observed on many occasions and probably both of us have, at some point, been guilty of. But the point about not really making your plan in the room is a very important one. Your session at the conference – which as I mentioned is in Berlin, April 23-25 – is seeking answers to whether the nature of negotiations today is changing. We touched on that at the beginning. It obviously is an important point. But it raises a different question, and that is around whether today's negotiations training is equipping people with the right techniques and methods. What are your thoughts on that one?

G Drew: I think the nature of negotiations is undoubtedly changing, but the key principles remain unchanged. A point I should pull out at this stage is, when I read the IACCM report on the top ten terms under negotiation, I was just astonished that 74% of respondents said that, to some degree, negotiations don't enable us to achieve the required business outcome. I think we need to look very hard at ourselves as experts in this area at something that really is under our control to remedy. Specifically, in terms of training, my observation is that the approach has definitely matured. I think it's unusual now, to see training focusing on win/lose negotiations, because I think everyone recognises those aren't really sensible or even acceptable in those cases. To be clear, whilst it's very appropriate to take a firm stance in negotiation, in some areas, the resulting agreement has got to be viable for everyone. The key tests that I would always apply in these situations are, firstly, can the other party actually deliver to the negotiated terms, and do they actually want to do that? Secondly, does the outcome really help my external customer? Because that's the only reason we're having this negotiation. In terms of training itself, I've seen that become much more relevant. My experience is that best-in-class training is providing a thorough grounding in both the theory and the practice of negotiation. That absolutely should include very life like, high pressure simulations of face-toface
negotiations. Again, back to my previous point, it really is a joy to negotiate with someone who clearly values the art and the science of negotiation sufficiently to have invested in training. My experience is that, when this happens, we almost always achieve great results for our respective organisations, and we maximise the opportunity for the agreement to deliver all the expected benefits.
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Graham will be speaking at the upcoming 10th Annual IACCM Europe Forum, taking place 23 – 25 April 2013, Hotel Palace Berlin, Berlin, Germany. For more information, visit www.iaccmforumeurope.com, email enquire@iqpc.co.uk
or call +44 (0)20 7036 1300 for more details.