One can sense an air of uncertainty in the world financial markets wherever you go - for the first time - irrespective of where you find yourself in the world.
Warren Buffet said that it is only when the tide goes out that one can see who is naked. In other words, it is easy to be prosperous when the markets are booming; it is only when tough financial times arrive that we can clearly distinguish quality & commitment.
How can you use your negotiation skills, negotiation training or purchasing training to avoid losses in the current economic climate?
Use 'Loss Framing'
People are more interested by avoiding loss than by achieving the very same gain. Kahneman & Tversky's Prospect Theory work describes how people will become risk seeking in an attempt to avoid a loss whilst they are likely to be risk averse when seeking rewards. In the way that we negotiate, we can make our counterparties aware of the items that they stand to lose if they don't agree to our requests and otherwise acquire if they do.
Create Alternatives
In times of difficulty it is vital to look at other options so as to strengthen our negotiation position. Creating options are vital in the context of negotiation and the power of options to securing a deal is the key driver of our negotiation power.
We normally wait until we recognise that we are not going to make a deal before we start thinking about alternatives. We risk entering into a less than ideal deal and if we have not studied all the alternatives. Similarly, thinking about the options available to the other side in the negotiation will give you a clear view of their relative position of strength in the negotiation. If they have strong alternatives available then they will be more aggressive and if they don't, they will tend to be more agreeable.
Use Reciprocation
Reciprocation is a key principle of powerful influencing skills, because we are prone to return to others the sort of behaviour that they exhibit towards us. In times of difficulty it is important that we act in the interests of the other side if we would like them to perform in our best interests. You can use this principle to your benefit by acting first and using the rule of reciprocation. Be careful and make sure that you register the obligation with your counterparty.
Move from price to value
Divert the focus off price and home in on the Total Cost of Ownership. For all services, products and solutions that we buy or sell, there is always a trade off between value & price. If we only focus on the price, the best that we will do is to haggle and it is only when we explore the entire lifecycle of the service, product or solution that we trade, that we start to discover options for negotiation. Before you even mention price in negotiation, evaluate your counterparty's long term strategic fit, capabilities, switching costs should they wish to change a business partner, financial stability and potential risks or negative consequences that may happen when the other side doesn't manage to reach agreement with you.
Don't forget that the magic in negotiation is found in the quality of your planning. In times of economic uncertainty it is more important than ever to dedicate sufficient time to planning your negotiations.
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