I interviewed Kent Handelsman who discussed Win-Win Negotiations.
1. Please provide a brief background of yourself
Thanks, Dustin and thank you for the invitation to talk today. I have been involved in relationship management – procurement, supply chain management, contract management, and related areas – for over twenty-five years now. For much of my career, I have been connected with companies in leading-edge technologies including aerospace, mainframe computers, high-end consumer electronics as well as the Internet including from routing and switching to technologies and services the Internet enables. The complexity of these product spaces means that partnering with others for the right outcome is usually required, so my background includes complex systems sourcing and supply chain management, including a focus on the sourcing, negotiation and life-cycle management of these complex systems and the relationships needed to make it all happen in a productive manner.
2. What are win-win negotiations and are they real?
There are many views on what “win-win” means in negotiations. A nice simple definition I found on-line is “When each party is better off after a negotiation has been completed.” (1) In a broader sense though, it means all participants actually wanting the outcome to be good for and – to the extent feasible – optimized for all participants. So, yes, win-win negotiations are real. Win-win is a function of intention before-the-fact as well as execution throughout the process.
3. Why are they important?
Humans are a very competitive species. We – as a rule – love to win. We’ve all heard the saying: “winning isn’t everything, it’s the ONLY thing!” We are taught from the earliest games we learn to play that winning means the other players losing. There is nothing wrong with competition and nothing wrong with adversarial negotiations. It is a matter of what the desired outcome is and whether it is an event or an ongoing performance-based relationship. Competing-to-win/lose with fellow stakeholders has routinely been demonstrated to be bad for the relationships, bad for the desired outcome, and likely negatively impacts the overall performance of the organization. If you think about team sports: competing against the other team is the goal versus competing against the other players on your team. I am not saying, by the way, that competition has to be removed from relationships in order to have win-win negotiations. Just as there can be try-outs for roles on teams followed by collaboration among the competitors, competition to arrive at the negotiation is a healthy thing. It helps to keep all players at their best. In a value chain, it is critical that all the links in the chain are strong and resilient. All organizations rely on other parts of the organization for both input and for consumption of their output. So knowing that the interactions are mutually intended to be symbiotic is foundational to win-win.
The buying and selling of simple goods and services has, in many cases, evolved into complex interdependent systems that must collaborate over time and across multiple events for a customer-focused outcome. The value chain stretches from the initial ideation with a customer and perhaps a sampling of stakeholders and continues across the providers of products and services and across the total lifecycle of the customer experience. Doing this well requires robust relationships that have a common good in mind -- an underlying understanding of the steps and roles and stages of serving the customer, and a foundation of trust that allows the interactions to perform as a synergistic chain.
We now rely on our value chain for everything from early access to advanced technology and product ideas to product fulfillment, customer service and an end-of-life strategy that our customers can live with. We have all heard of – and perhaps experienced – cutthroat negotiations. We have seen companies claim productivity gains by simply transferring risk or value from themselves to somewhere else in their value chain. These are not sustainable acts generally and they are not win-win in my sense of it. As an example: the American automobile industry nearly destroyed its value chain (and itself) in its downward spiral race to the bottom. People and organizations cannot be vested in your success if they have to defend themselves from your assaults at their very survival.
4. How are they done?
If you are familiar with Steven Covey’s “7 Habits of Highly Successful People,” a lot of this will sound familiar. The second segment of “habits” (habits 4-6) is all about optimizing for better, mutual outcomes. There are other frameworks as well, such as the “Mutual Gains Approach” by Lawrence Susskind,(2) which outlines four steps. Regardless of framework, it really comes down to the following:
1. First is internal requirements definition and clarity in order to truly understand your needs. This includes a deep dive into your wants versus needs and, where possible, the ranking of priorities. You need to also understand the process you will go through to select and down-select options and choices in the process of reaching a deal.
2. Second is understanding the other team. This means to truly anticipate and understand your partner’s needs. But unlike in normal win-lose game theory, here you are trying to understand for the sake of knowing your partner and how they will prioritize. Here your goal is actually to study how to create value for your partner – from their vantage point. With benefit of the deep dive you did in the prior step, you can look for enabling elements are well as blocking elements and assess for workarounds. Did I mention before that often the toughest negotiations are internal ones? In this stage you are particularly prone to that. You will hear things like “I am not going to negotiate with myself” and other things reflecting people both vested in the win-lose paradigm as well as worried whether the partner has the proper mindset. This dialog is still internal and should be encouraged to be bring all issues into the open. You do have to be honest with your collective selves in assessing the anticipated strategy of your partner and whether or not they are believed to have your best interests at heart. By the way, even if the consensus on your team is that the other team does not play well with others, it doesn’t mean you can’t craft a win-win strategy, it simply means you have to convince the partner to adopt your priorities as their own so that when they propose them back, you can accept them as theirs. This does work, but requires a lot of advanced work and dynamic team engagement with the partner’s players as well as letting go of the ego of claiming the winning ideas as your own.
3. The last stage is the complete negotiation. The dance. This stage is best considered around the concept of achieving something neither party could do alone and with the goal of not simply living through the experience but actually working it for mutual benefit as discussed earlier. There are many different approaches to effective negotiations and all can be considered. I would say that the keys, in addition to what we have already discussed, are listening and agility.
a. Listening to understand is not easy. Particularly with Type A, competitive personalities, we think of conversation more like a fencing match: I am hearing your words only to determine my counter-move, versus to actually “get” what you are telling me. It is important to have multiple people listening and to collectively reflect on what is being heard. We all know from family and politics, etc. that the same words are interpreted differently by different people, so the collective listening, asking for clarity where needed and coming to an understanding of what the partner is saying is critical.
b. Agility. Dictionary.com has two great definitions for agility that get to the point here (3):.
i. The first is: “the power of moving quickly and easily; nimbleness”
ii. The second definition given is: “the ability to think and draw conclusions quickly; intellectual acuity.”
In these definitions you can gather that the point is that negotiations are fluid things, and the parties need to anticipate that fact, even consider variable “what-if’s,” but ultimately to be able to hear, consider, decide and respond with an intended outcome in mind – all in real time.
It is also worth noting that we often have no choice on either side of the table as to whom the players are going to be. In a perfect scenario, we would hand-pick all the players for skills in listening, problem solving and articulating for effectiveness. We might also try to factor in chemistry as in working well together. Absent the ideal, we need to each try to approach each other with an open mind and an assumption of benevolence. What I mean by that is: when we hear other’s communicate, how will we filter what they say? We know we all have “buttons” that can be “pushed” that make us lose objectivity. What I am suggesting here is that: absence evidence to the contrary, we all need to listen with an assumption that the speaker intended the most benevolent or value-oriented interpretation possible. Keep listening for clarity and understanding.
One other point: I stated earlier we want “complete negotiations.” I bring this up because there are a LOT of organizations that get to only 80 or 90 percent of the deal and “table the rest” to be settled later. It should be no surprise that it is usually the case that this last 10-20 percent is around some tough issues. Intellectual property. Limitations of liability. Share cost of changes. Service level agreement, etc. It is always wise to take the time needed to reach good outcomes. But that is not “indefinitely.” We need to behave as grown-ups and finish the negotiations all the way through AND to do so BEFORE we award business or start work on the efforts. Not doing so is a recipe for losing outcomes. Members on both sides will fight you tooth and nail on this. “Time to market means we have to start last week.” “ This issue will take care of itself, so just leave it alone.” Here, the seller knows that the balance of power rests with whether or not this stands. I have seen many situations where final contract terms are not reached for years because the business was awarded and the urgency was lost forever. This is simply wrong-headed behavior, in my opinion, and goes to whether or not the parties really do want a mutually good outcome and are committed to seeing it through. If you can keep people focused on the goals and the requirement to finish first, you can make it work
So, win-win is real. It is manageable and, I would argue, it is the only sustainable deal practice in commerce where leadership in product and service and value are the desired outcomes.
Thank you again, Dustin, for this opportunity today.
2. Susskind, L. & Cruikshank, J. (1987). Breaking the Impasse: consensual approaches to resolve public disputes. Basic Books Inc.: New York, NY
American Psychological Association (APA):
agility. (n.d.). Dictionary.com Unabridged. Retrieved April 09, 2013, from Dictionary.com website: http://dictionary.reference.com/browse/agility
Chicago Manual Style (CMS):
agility. Dictionary.com. Dictionary.com Unabridged. Random House, Inc. http://dictionary.reference.com/browse/agility (accessed: April 09, 2013).
Modern Language Association (MLA):
"agility." Dictionary.com Unabridged. Random House, Inc. 09 Apr. 2013. <Dictionary.com http://dictionary.reference.com/browse/agility>.
About Kent Handelsman
Trusted Leader & Change Agent in
Supply Chain, Procurement and Contract
Management bringing Customer & Corporate Value