Negotiation as a Corporate Capability (Part I of II)

Most books written on the subject of negotiation starts off with a reference to negotiation being an activity that all of us participate in whether we are aware of it or not. It is generally accepted that we cannot necessarily determine whether we want to negotiate or not, but rather that we can only decide how well we would like to negotiate. Historically, and rather unfortunately, most of the focus in the development of negotiation skills competency has centred on the interpersonal dimensions of negotiations. Whilst this is certainly a key component of negotiation success, it is unfortunately just that - a key component and hardly a representation of the full negotiation picture.

Interpersonal negotiation skills the ability to use tactics, handle conflict and disagreement, recognise opposing tactics & dirty tricks etc., is an absolutely necessary part of any professional negotiators' armoury. It seems that most of the negotiation training available these days centers on the acquisition of these skills. There is scant attention paid to understanding negotiations at a process level.

Let's look at the realm of sales for a minute. Have you ever heard the expression that a person is a born salesman/saleswoman? If sales people were all born with the gift of the gab, or the natural ability to sell, then why would organisations of all sizes implement best practice sales processes? The reason organisations implement best practices in sales is because research and experience has proved that there are two dimensions to sales, an interpersonal and personal ability dimension, and then an organisational and process dimension.

The interpersonal and personal dimension of sales focuses on the individual's ability to interact with prospective customers and existing customers in a convincing manner to procure business. In turn, the organisational dimension focuses on entrenching within the organisation a culture and a capability to support the application of best practices in the sales domain. Through the use of an organisational sales methodology, it has become possible to

1. Analyse the effectiveness of sales interactions
2. Determine the appropriateness of sales methods used
3. Establish a sales knowledge base
4. Transfer individual knowledge to an organisational level, thereby reducing risks associated with relying on "star" individuals who are susceptible to better offers from competitors

Very little research and focus has been dedicated to the organisational and process dimension of negotiations until very recently. It is the author's view that this dimension will be responsible for revolutionizing the negotiation discipline as a whole. Some of the benefits of adopting an enterprise or organisational approach to achieving negotiation excellence are as set out below:

1. Consistent market perception of the organisation
2. Competitor behaviour can be influenced
3. Consistent customer experience
4. Risks are mitigated
5. Negotiation knowledge and experience becomes resident in organisation
6. Strategy defines tactics in negotiations and not the other way around
7. Margin consistency can be established
8. Service Level Agreements can be standardised
9. Pro-active stakeholder management
10. Base level negotiation skills are established

So, you may ask then: What is a corporate negotiation capability?

I would suggest the following definition: The ability to perform consistently in all negotiations across the enterprise with a view to acquire competitive advantage.

This competitive advantage is based upon sound relationships negotiated effectively with customers, shareholders, employees and other stakeholders (environmental stakeholders etc.) To acquire a sound corporate negotiation capability that will differentiate them from their competitors, organisations have to:

1. analyse their current environment, and
2. look towards industry benchmarks and negotiation best practices for guidance.

It is important to realise that this is a journey and not so much a destination. Some of the components that make up the analysis of the current environment within an enterprise would include:

1. auditing the deals legacy
2. assessing the human capital capability
3. auditing the negotiation knowledge management facilities in place
4. investigating the negotiations enabling environment

In the next edition of The Winner's Circle, we will continue our look into negotiations as a corporate capability by examining some of the immediate steps that can be taken to entrench negotiation best practices within the enterprise.