Negotiation Challenge Some of my experiences

Key learning point

The client knew 'what' they wanted. Their plan was simple. They planned to present their proposal and see how the other party responded! After three months preparation that was the extent of the plan! I coached my client's team about alternative ways to manage the process to increase the chance of success.
We workshopped a variety of options to achieve their goal, and my client eventually chose to adopt a principled approach to the negotiation process. We established ares of shared interest between the parties prior to dropping the 'bombshell' news.

I estimate this saved my client $10m.

Other party

The other party (OP) was a technology company

Context

My client had signed a non-compete agreement with another participant in the same value chain. After signing the non-compete agreement, my client had second thoughts. They commissioned a review of the decision and a business case revealed that it was worth paying the other party several million dollars (up to about $10m) so that my client could walk away from the agreement. Even with the payment the business case would be profitable.

Competitive?

There was no competitive tension

Issues

The non-compete agreement had only recently been signed and the other party's lead negotiator had a reputation for being volatile. One of his behaviours was to leave the table in a rage, and carry on negotiating while holding on to the door handle!

My role was to explain the change of mind, minimise the number of zeroes on the cheque that my client would have to write, and deal with OP's combustible behaviour.

Process

My client explored shared interests for two days, by which time it was clear to other party that there was more to gained by co-operation than by litigation. When my client finally disclosed the desire to walk away, it triggered a response, but the team were prepared for the theatricals.

Outcome

The parties agreed a sum to be written on the cheque, but not only was it in single figures in term of millions of dollars, it was well within the sum that my client's business case had allowed to make the initiative commercially viable.
Critically, the relationship with OP's organisation was enhanced, not damaged

Key learning point

Negotiation can be over-complicated. This example showcases a team I coached who had no commercial savoir-faire. Following my coaching, they learned to 'ask' before they started to 'tell'. A single question -asked before the negotiation began- yielded valuable information. The team used this information to get a better outcome than they might otherwise have done.
My client was in a weak bargaining position, and the negotiation reflected the asymmetry of power when there is no competitive tension.
In this case, a simple tactic yielded tangible benefits!

My role

I coached my client's team who represented a defence force.

Other party

The other party (OP) was a global defence contractor

Context

My client had prequalified one supplier after field trials of specialised electronic equipment. The supplier of the equipment knew that they were in a field of one, and they also knew the budget for the project, as it was in the public domain.

Competitive?

There was no competitive tension

Issues

The negotiation was focused upon enhancing local support, the warranty, liability and indemnity clauses. The supplier's warranty was only valid in peace time! In addition, support was less than the client needed, in terms of first level support and through-life sustainment

Process

OP disclosed that they were flying internationally to attend a contract signing with another country's defence 'Top Brass' immediately after the scheduled completion date of our negotiation.
The team decided to slow down the negotiation and extract valuable concessions on the final day ,as the OP wanted two agreements in their briefcase when they returned to head office.

Outcome

The client's negotiation team focused upon managing risk during the life of the platform, and achieved significant improvements in terms of warranty and liability. Critically, the team upgraded first and second level support, as well as improving service levels for supply of spares.
All achieved in the final session!

Key learning point

Many of my clients want a better deal, but don't want to change source to get better terms. This negotiation did not involve an RFP or any competitive tension. The scale of the cost reduction (66%) indicates that the scope of the services were changed as well as rate reductions. Of course, the service provider was not happy. However, by using me as lead negotiator to work cooperatively with the other party, the client had 'clean hands'.
While the relationship was impacted, it was not terminally damaged.
Additionally, my client still buys from the same service provider. Their budget for IT services is now in seven, not eight figures!

My role

Lead negotiator on behalf of my client

Other party

The other party (OP) was an IT prime service provider

Context

My client had entered into a multi-year IT support contract with the other party. The contract was 'rolled over' every four years with a rate increase each renewal

Competitive?

My client did not want to change the IT provider unless as a very last resort

Issues

My client had had the same IT provider for many years. A price benchmarking exercise revealed that they were being over charged, and had been for 12 years.
My role was to "re-align" the cost to about 33% of the current fee. This would be achieved by a combination of removing some services, reducing service levels and reducing fee levels

Process

I engaged the OP in an exploration of what a 'partnership' would look like. Together, we crafted a variety of criteria designed to measure success. We then reviewed the last contract term, and considered their performance in the light of the external cost benchmark
I put down a 'marker' as the target cost for their services for the next contract term, and we worked together to achieve that (with my client consulted in deciding which service levels might be relaxed)

Outcome

I negotiated the cost down to near the target of 33% of the current fee for service so that the cost went from >$10m to single figures in millions of dollars. 
Critically, my client didn’t need to change source, and the relationship (though impacted) was based upon a clear vision of what the client wanted and expected from their partner.

Key learning point

I researched the other party's financial accounts and found a treasure trove of information about their strategy, margin and cost. I used this information to create a fact-based negotiation strategy for my client. The strategy was successful, in part because the other party could not challenge the veracity of their own Chairman's Report!

"Knowledge is power" isn't always true in negotiation, but it was in this case, and delivered an ROI for my client of 100:1 on my fee.

My role

Lead negotiator on behalf of my client

Other party

The other party (OP) was a global equipment supplier

Context

My client's business case was based on 2nd generation cost benchmarks. When the successful bidder offered third generation technology, my role was to get the 3rd gen technology at the 2nd gen cost.

Competitive?

There was a single acceptable bidder

Issues

The OP knew that they were the preferred bidder, and that their 3rd gen technology was the solution of choice for my client

Process

I researched OP's latest annual report and found that the 3rd gen technology not only improved margins for OP but was a 'bet the farm' play for market share. My client would be a launch customer in their market, we leveraged support for OP in acquiring other customers in our market sector for improved pricing for my client.

Outcome

My client got the 3rd gen solution they wanted. They paid more than the 2nd gen cost in the budget, but several million dollars less than OP's original offer.
The ROI on my fee was 100:1

Key learning point

This was a negotiation with three key challenges; risk, risk and risk!
The challenge was to build collaboration within a competitive context, and keep the Probity Advisor happy.
I designed and led a collaborative approach with my client's team. A key component was designing a performance regime that featured a bonus/malus scheme that was acceptable to both parties.

My role

I was lead negotiator on behalf of my client

Other party

The other party (OP) was a prime vendor for complex services

Context

My client wanted to integrate a variety of separate contracts under a prime vendor

Competitive?

Yes, this was competitive

Issues

The issues were about aligning the supply chain with the client's needs. The focus of the negotiation was on service levels and risk mitigation

Process

I facilitated a joint competitive negotiation process with multiple players and multiple cycles. The prime vendors were challenged to initiate a step change in performance standards.
We jointly 'workshopped' how a performance regime would work and would be mutually beneficial. The resultant agreement was viable for both parties.

Outcome

Partner selected, and a shared focus on progressive improvement in service levels