Friday, November 2, 2018

On Business Negotiation

B2B Deals

When I was a young engineer working in a sales position, my boss gave me some good advice about negotiation in a business-to-business (B2B) environment. Both sides have to come out of it feeling as if they gained something; both sides have to think that they won. This has long been considered the gold standard in business negotiation. This is the win-win situation that everyone talks about. If this is not the case, then the negotiation is not a success, but a failure, even if one side considers it or claims it “a success.”

In my view, this is still good advice. I remember when back in 1990, when I was 32, I was sent by my company to negotiate a large multi-year contract with its largest customer, Texas Instruments in Dallas. I was nervous to have such a large responsibility on my shoulders, but my boss had confidence in me and my abilities. I prepared well in advance, which is never a bad thing and always a good thing to do. Moreover, I was joined in the negotiations by a senior American company representative, so I felt much better, that we would share the responsibilities.

The negotiations lasted three days; they were tough and at times exhausting. At the end of the day, however, we both negotiated in good faith and a large multi-million dollar deal was signed—one in which both companies found to their benefit. Such is always a good thing. This was a lesson that I have carried with me for the rest of my professional life. Afterwards, I negotiated many such deals, some large; some small, but the same principal of mutual respect informed all such negotiations. Then, and only then, is the handshake a sincere and good one, based on good long-term relations.

There is a problem with a winner-take-all approach, which although acceptable and expected in a sports competition, is a poor way of conducting business affairs. It leaves one side of the negotiations feeling unhappy or slighted; this is not a good thing. You can be assured that the relationship afterward will be rocky. It is always better to get what you truly need, and also ensure that the other side also get what it truly needs. (To be sure, this is not the same thing as getting what you want or think that you can get.)

When both sides win, it is the sign of a successful negotiation; this is the sign of a successful and enduring deal and one of an enduring relationship. And in business, this is what it is all about.


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