One can see an air of insecurity in the world financial markets wherever you go - for the first time - irrespective of geographical location.
Warren Buffet stated that it is only when the tide goes out that you can see who is wearing no swimsuit. In other words, it is easy to be prosperous when the economy is thriving; it is only when tough financial times arrive that we can easily distinguish quality & commitment.
How can you use your negotiation skills, negotiation training or purchasing training to sidestep losses in the present economic situation?
Use 'Loss Framing'
We are more interested by evading loss than by attaining the very same gain. Kahneman & Tversky's Prospect Theory work describes how people will become risk seeking when trying to avoid a loss whilst they are likely to be risk averse when pursuing gains. In the way that we negotiate, we can make the other side aware of the unique items that they stand to lose if they don't agree to our requests and otherwise gain if they do.
Create Alternatives
In times of uncertainty it is vital to create alternatives so as to strengthen our negotiation position. The ability to create options is key in the context of negotiation and the strength of alternatives to securing a transaction is the primary driver of our negotiation power.
We normally wait until we realise that we are not going to make a deal before we begin to think about other options. We risk entering into unfavourable transaction and if we have not studied all the options. Similarly, thinking about the alternatives available to the other side in the negotiation will give you a clear understanding of their relative position of strength in the negotiation. If they have strong options available then they will be more competitive and if they don't, they will tend to be more accommodating.
Use Reciprocation
Reciprocation is one of the key principles of powerful influencing skills, because we are most likely to return to others the form of behaviour that they exhibit towards us. In times of economic uncertainty it is vital that we perform in the interests of our counterparties if we would like them to act in ours. You can use this principle to your advantage by acting first and invoking the rule of reciprocation. One note of caution and make sure that you record the indebtedness with the other side.
Move from price to value
It is key to take the focus off price and home in on the Total Cost of Ownership. For any service, product or solution that we buy or sell, there is always an exchange between value & price. If we only focus on the price, the best that we will do is to barter and it is only when we study the total lifecycle of the service, product or solution that we buy or sell, that we begin to discover opportunities for negotiation. Before you mention price in negotiation, analyse your counterparty's long term strategic fit, capabilities, switching costs should they wish to change a business partner, financial steadiness and possible risks or negative consequences that may occur when your counterparty doesn't manage to reach agreement with you.
Remember that the magic in negotiation is found in the quality of your preparation. In times of economic uncertainty it is more important than ever to commit adequate time to preparing for your negotiations.
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