Eating Healthy for Life

One can sense a great deal of insecurity in the world financial markets wherever you go - for the first time - irrespective of where you find yourself in the world.

Warren Buffet stated that it is only when the tide goes out that you can see who is wearing no swimsuit. In other words, it is easy to be prosperous when the economy is doing well; it is only in tough times that we can easily discern quality & commitment.

How can you use your negotiation skills, negotiation training or purchasing training to avoid losses in the present economic climate?

Use 'Loss Framing'

People are more motivated 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 more likely to be risk averse when seeking benefits. In the way that we negotiate, we can make our counterparties aware of the unique items that they stand to lose if they don't move in our direction and otherwise acquire if they do.

Create Alternatives

In times of uncertainty 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 concluding a transaction is the primary driver of our negotiation power.

Usually we wait until we realise that we are not going to make a deal before we begin to think about alternatives. We risk entering into unfavourable transaction and if we have not investigated all the options. Similarly, thinking about the alternatives available to your counterparty in the negotiation will give you a clear understanding of their relative position of strength in the negotiation. If they have good alternatives available then they will be more aggressive and if they don't, they will tend to be more agreeable.

Use Reciprocation

Reciprocation is one of the key principles of powerful influencing skills, because we are prone to return to others the sort of behaviour that they demonstrate towards us. In times of difficulty it is key that we act in the interests of our counterparties if we would like them to perform in ours. You can use this principle to your advantage by acting first and using the rule of reciprocation. One note of caution and ensure that you register the obligation with your counterparty.

Move from price to value

Remove the focus off price and concentrate 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 engage on the price, the best that we will do is to barter and it is only when we explore the total lifecycle of the service, product or solution that we trade, that we begin to discover opportunities for negotiation. Before you mention price in negotiation, analyse your counterparty's long term strategic fit, expertise, switching costs should they wish to change a business partner, financial steadiness and potential risks or negative consequences that may happen when the other side doesn't reach an agreement with you.

Remember 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 enough time to planning your negotiations.