Negotiations are a part of any business relationship and are essential, especially between B2B sellers and B2B buyers. Planning and executing them is a key skill that both sides on the negotiation table should master well. This article discusses the issue of becoming too predictable as a negotiator leading to suboptimal outcomes. It argues that true negotiation power comes from staying unpredictable whilst maintaining a trusting and mutually beneficial business relationship with their respective counterpart.
“I know what you did last summer…” is probably the last words one wants to hear from the opposing party in a commercial negotiation. It means the other side has anticipated one’s moves, timelines, and has looked through the overall process. One has lost their negotiation power and become predictable, a situation that can significantly weaken commercial leverage, most likely resulting in inferior outcomes and lost opportunities. It is a beginner’s mistake to show one’s cards before the game has even begun. But still, more often than not, on both sides of the negotiation table, be it seller or buyer, negotiators follow their regular patterns and habits. This makes them all too predictable.
For instance, commercial negotiations are often scheduled around individual holiday plans, which mainly fall - surprise, surprise - in the summer months. They are planned around budgeting cycles, and industry fairs, are setup shortly after the previous contract expires, or regularly take place at the beginning of the company’s fiscal year, etc. Why is that? Should a negotiation not rather be triggered when market conditions are right, or a window of opportunity arises on the sales or buying side (e.g. over/under supply, high/low demand, tight/lose market conditions, etc.)?
When asked, why negotiations always seem to be occurring at the exact same time, people most often respond:
• “…it just has always been like that!”,
• “…the industry works like that!”,
• “…the supplier/customer is closed over the summer!”,
• “…the supplier/customer is a strategic partner!”.
The real reason why most negotiations always take place in the same way is because it feels very comfortable. It is just so much easier to be predictable. This behavior comes at a cost though. First, it can significantly weaken one’s negotiation power. Skilled negotiators are trained and tasked to read and understand patterns, habits and routines of their counterpart to gain leverage and to improve their own agenda. Second, being predictable can lay the foundation for complacency in the business relationship. Unpredictability, in moderation, strengthens ones negotiation power as it helps to challenge the interaction between buyer and seller. It forces both sides to continuously reevaluate the relationship and to assess their own strengths and weaknesses and common opportunities and threats. Third, predictability leaves money on the table. To always follow the same patterns hinders the possibility to take advantage of market opportunities and to avoid arising business risks.
What should a skilled negotiator do then?
Embrace unpredictability! Regular adaptations and revisions of one’s negotiation approach and process are key to a path to unpredictability. However, it is also important to plan and strategize thoroughly. The following areas could be considered a good starting point to generate more unpredictability.
• Using the power of surprise: Advancing or delaying a negotiation process can make a significant difference and will have an impact on the other party.
• Leveraging favorable market conditions: Starting a negotiation when certain factors are in one’s favor can dramatically increase the leverage and power in the negotiation process.
• Alternating the negotiation setup and style: Changing between a bidding process and a private negotiation can lead to very different responses from the counterparty. Switching between individuals that lead the negotiation brings in a further element of surprise.
• Displaying competition: Transparent displays of available alternative options as a seller or buyer will lead to action and reaction from the counterparty.
Just to avoid any misunderstandings, neither side of the negotiation table should become consistently unpredictable, and hence unreliable in the business relationship. This can have severe implications and negative consequences for both sides mid- to long-term. When planning and executing their negotiation, a skilled negotiator will always take the business relationship into account and balances tactics with returns, values and risks.
“I STILL know what you did last summer…” is not where any sales or procurement person wants to be. Being unpredictable will make one feel uncomfortable. It will require preparation. It takes guts and a clear assessment of where one stands in the power matrix with the other party. But it is indeed sometimes needed to keep the commercial relationship on track. Let’s dig into the negotiator’s toolbox and become unpredictable again!
Jens Hentschel is the founder of The Fivis Partnership