Forest First, Then the Trees

One of the most frustrating traps a negotiator can fall into is negotiating specifics before resolving the broad principles of the deal. For instance, if the supplier hasn’t agreed to the principle of sharing the risks of implementing a new system, discussing specific warranties and remedies for supplier nonperformance could be a significant waste of time. Yet most users, including some of the biggest and best in the business, fall into this trap time after time.

What happens is relatively simple. The supplier, sensing our urgency and that we’re not doing any comparison shopping, is reluctant to engage in serious negotiations, while noting delays in its legal department. In the meantime, the supplier tells a needy end user of ours that we’re delaying the deal with contract mumbo jumbo, which doesn’t help the strength of our negotiation position.

Now we’re worried about whether the supplier will actually address our important issues in time to meet our deadline. After more delays — so the supplier can drive up our blood pressure some more — the supplier agrees to negotiate. Now comes the next ploy: When we sit down, the supplier’s negotiator suggests that things would go faster if we addressed the contract section by section and line by line. Then he asks us to justify each and every change we request, challenging us to “sell” the supplier on why it’s necessary. Any change we propose is likely to be countered by the supplier. A loud ticking sound permeates the atmosphere, reminding us of our deadline.

Any hope we had of controlling the negotiations is sacrificed to the scrutiny of details, and we’re running out of time to go to alternative sources. We’re trapped into negotiating specific changes to a form contract that has been carefully prepared and refined by the supplier over a period of years. The result? We get no substantial concessions, only meaningless fluff.

The tip? Pin down the major issues early in the negotiation when you still have negotiating power and can go to alternatives. That’s vastly more effective than haggling over details first. Negotiating principles first also speeds up the process because an agreement on a given principle is a precursor to agreement on all the embedded details. It helps us buyers control the negotiating agenda and timing and maximize our power and time.

Remember: We’re the customer, and we’ve got what they want — the money.

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One Response to Forest First, Then the Trees

  1. Mary says:

    As always you are right on target,Joe.

    Ever wonder why suppliers don’t take the time to really study their customers needs before proposing a solution?

    If they did their full job as experts, they wouldn’t have an excuse to delay establishing SLA’s,

    Keep on sharing your wisdom. Thanks.

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