Organisations often have clear but unwritten conventions about how they do business, which are well understood by their staff and by frequent business partners. Sometimes when we start a relationship with a new business partner, we find that we just click, and everything is simple. Perhaps our habits and expectations are aligned because we work in the same industry and business culture, or we just got lucky? In other cases, things might be rough, but we just can’t put our finger on why seemingly aligned organisations with clear mutual benefits available from a deal just can’t make progress?
Some years ago, I was leading a team to negotiate with a new supplier located overseas, who had an exciting product and a plan to grow their sales aggressively. We were an early adopter of the product and were keen to negotiate an enhanced supply arrangement. All previous negotiations had been in Australia, with our organisation setting the tone and leading the proceedings. As the relationship grew, we established a liaison team at the supplier’s premises and we were keen to include that team in the negotiation, so we proceeded on the dreaded long-haul flight to go and undertake the negotiations.
Things opened well and the cordial negotiations soon surfaced all the important variables for the parties. We started exploring the issues to try and establish their relative importance and think about what sort of proposal structures were going to be useful and how to open that phase. Progress abruptly begun to stall. Our counterparts seemed unwilling to entertain proposals. We tried make our usual style of integrative offer to address all the issues and simply drew a blank. They were very polite and thanked us for the proposals but would not be drawn far at all on the merits of the overall proposal, although they would discuss elements in great detail. Linking the elements to an overall pricing structure was proving especially hard going, and we weren’t getting anywhere. Our efforts were also beginning to cause frustration in our counterparts, clearly we were doing something wrong, but what?
Business or national culture can play a big part in framing negotiations, and often the issues at stake are obvious to the point of being invisible for participants used to them. Industries often have conventions around the expected terms of trade and what type of agreements might be reasonable. Interestingly, the preferred engagement model for negotiations often works a bit the same way...
After much head scratching, I finally called a colleague in a different firm who I’d done business with before in that country for an off the record chat about the challenges we were seeing. As a native of the country, he proved invaluable in offering an understanding of the situation. His advice was that we simply weren’t approaching them in a manner they were used to and understood. In particular, we were supposed to negotiate in clear phases, framing the deal with the working level team by exploring and defining the issues, but they were not expected or empowered to make the final deal. The expectation was that at the right time, we would move on to engage one of the most senior figures in the organisation directly, and the deal would then very quickly be done at that level based on the information already shared. With some trepidation, we left behind the team style formal negotiation we had been using and asked for a chance to meet with El Patrón (the boss).
The ensuing two on two conversation in their office was short and highly effective. A brief and very informal exchange of views on the key issues was followed quickly by some highly constructive problem solving and three quick rounds of proposals leading to agreement with time to spare for lunch! Knowing this model, we were able to forge a great and very productive relationship, but it was a matter of fine professional judgment about when to ‘go to lunch’, as you needed to have shared a great grasp of the issues and be really ready to culminate the deal.