All posts by Giuseppe Conti

Shifting the Balance of Power when Negotiating

Sometimes it’s hard to shift the balance of power in long-term relationships. But 10 negotiation experts have some tips on how to do this.

balance of power
Photo by Loic Leray on Unsplash

This article was based on research conducted by Conti Advanced Business Learning (www.cabl.ch), a Swiss training company that specialises in Negotiation & Influencing training.

The relentless assessment and recognition of “who’s got the power in this discussion” plays a vital role in the success of your negotiations. In a roundtable discussion featuring 10 senior Sales and Procurement experts, we explored a number of strategies that aid in tilting the scales in your favour. The six key dimensions we singled out are investigated below:

1. Having the mindset to create leverage

As Laurence Perot, Head of Global Supply Chain Procurement at Logitech, highlights, “we need to create leverage if there is none.” She explains that an effective way to do this is by working at different levels throughout the organisation.

“In my past experience in Logitech, we needed to negotiate a contract with a much larger company however they did not want to have a contract in place. To counter this, we worked internally with our R&D team that had a close collaboration with the supplier. Then we got the approval from the CPO and the Executive Team to our strategy: “No contract, no new designs”.

The supplier was reluctant at first, however, after consulting the R&D and executive teams at Logitech, finally took us seriously and we could agree a contract within two months.”

2. Building Alternatives

It was consensus among the procurement and sales professionals during the roundtable that the balance of power in negotiations shifts when there are alternatives.

Giuseppe Conti, Founder of Conti Advanced Business Learning, added that ‘moving to performance specs or removing a technological barrier may help us to enlarge our portfolio of alternatives.”.

Joerg Steinhaeuser, Vice President Global Sourcing at General Mills, added that “sometimes negotiators use bluffing, but going down the road of bluffing can significantly and negatively damage the trust between the two parties.

Building real alternatives is always much better although you may not need to completely implement your BATNA if you are aligned well internally.” Fundamentally speaking, lasting relationships with liars and bluffers is not possible and long-term business relationships fail when there is no trust.

3. Effective Preparation

Regina Roos, Sales Transformation Manager at Marketing & Innovation Group, emphasises how preparation and bringing a “can do” attitude when negotiating can make all the difference.

Salespeople usually take much more time for preparation than Procurement people and tend to have a better knowledge of the market. Francesco Lucchetta, Procurement Director EMEAI at Pentair, adds that preparation includes choosing the right supplier.

For instance, “do we have some power with this supplier over the total business? Can we choose not to give them future business that is attractive to them?” It is easy to focus on keeping the business momentum moving forward but if you overlook the future implications of your decision, the gains today may be overcome by the loses tomorrow.

4. Exploiting the Power of Emotions

Daniele Giorgi, Director of Procurement at Ferring, recalls a past negotiation with a supplier much bigger than his company while working in Pharma in a single source supply situation. He then talked about the impact this project would have on the patient and on families, colleagues, friends or other members of society like themselves.

“Using the emotional side and talking about “how we can help couples have babies” is a more powerful argument than dry facts.” Our counterparts have the same set of human needs that we do, and connecting with them on a human level will strengthen your ongoing working relationship.

5. Using a Fear of Loss

As Ifti Ahmed, Managing Partner, Titanium-Partners explains, “the fear of loss is significantly more motivational to get someone to move from their position. If the other party feels that they will lose something valuable, they are more likely to move in the direction you want.”

This echoes Kahneman & Tversky research outlined in their 1979 book Prospect Theory: An analysis of decision under risk. They go into detail about how people are more likely to take a risk to avoid a loss than they are to take a risk for an equivalent gain.

Conversely, in a long-term partnership or relations, we should also take into account the impact that this has on the relationship and the trust between the two parties.

6. Penetrating the Other Party’s Organisation

As Marco Martelli, Vice President Procurement at Tetra Pak, underlines “Negotiation is a power game. If you sell, you try to understand how to penetrate the other organisation. You try to understand the structure, the decision makers, and more specifically, you play on the lack of internal alignment. The ideal goal is to sell to Engineering and get the bill to be paid by Procurement.”

Giuseppe Conti adds that the effective Seller is able to differentiate himself via innovation/technology/business model/branding so that the buyer’s organisation wants to buy only from them.

These answers were collected by Giuseppe Conti, Founder and Managing Partner of Conti Advanced Business Learning (www.cabl.ch), a consulting firm that specialises in negotiation & influencing. This article is part of a series aimed at collecting real-life negotiation experiences from Procurement executives. Explore other negotiation topics on the Conti Advanced Business Learning YouTube Channel or visit the website, www.cabl.ch.

7 Ways To Influence Your Internal Stakeholders?

For most, influencing externally comes easily. But when you have to influence internally, there is a mountain of factors and intricacies to navigate…

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This article was based on research conducted by Conti Advanced Business Learning (www.cabl.ch), a Swiss training company that specializes in Negotiation & Influencing training.

Seven procurement experts share their advice on how they creatively influence their internal stakeholders to come to agreements and a consensus for any different challenges they or the company faces.

1. Matching their requirements

Carefully! The ability to influence internal stakeholders is about knowing what is important to them and finding a solution that matches their requirements. If you do not know their goals,objectives or challenges, how can you know whether your idea will help or hinder them? Spend time with the key internal stakeholders, determine what their priorities are, look at your needs and understand how you can help your stakeholder.

Susannah Gooch, Vice President, Direct & Operations Purchasing & Supplier Management, AbbVie

2. Be proactive: point out the things most important to them

We influence stakeholders by tailoring the message to them and pointing out the things that are most important for that individual stakeholder. While preparing for a large negotiation we had to have senior executive’s approval of our strategy. The decks we prepared for these meetings were all different, but all came to the same conclusion (i.e. our strategy). This approach worked beautifully as we were able to show each senior executive that our strategy would match exactly with his goals.

Lukas Wyder, Director, Rogers Communication

3. Pinpoint you ‘must-wins’

By knowing what’s their purpose and what is a must win. R&D departments are not truly impressed or motivated by good economic deals! However, a company’s reputation and innovation are definitely buzz words for them. To keep them on your side of the table and prevent them shaking hands with suppliers before procurement does, it’s important to anchor them on their principles and gain their trust to act freely and move ahead with suppliers.

Alessandra Silvano, Category Director CAPEX and MRO, Carlsberg Group

4. Create opportunities to emphasise your decision-making powers

This is different to “asking what they want” or “receiving instructions” from the business. The greatest success I had was the formation of a “Procurement Steering Committee” where I, as CPO, was the secretary and ran the agenda. It was chaired by the CEO, with the COO and CFO in attendance. These were contracted signatories to deals so it was my opportunity to put forward the deals and proposals I would place with the market, to test their risk appetite and proposed BATNAs in exchange for commercial (and price) advantages. The meeting encouraged healthy debates and discussions and it got the senior leadership team involved in the contracts themselves, aligning with their expectations. It also had the advantage of delegating myself certain decision-making powers in order to secure deals on what was agreed. The process was sped up and it circumvented multitudes of stakeholders with differing views. It helped focus on the “important”, and not the “nice haves”. 

Alan Hustwick, Senior Executive Global Supply Chain, SCCR Pty Ltd

5. Find common interests

It is always tempting to try to convince internal stakeholders about the strategic importance of procurement, as we are so convinced about it. We like to convey our passion and vision. Also, and more often than don’t, the naïve belief that the internal stakeholder will share the same passion. Seldom do they!

The best way to convince internal stakeholders is to identify common interests. Certainly, this means that we need to know what their challenges and issues are, and how we can help them best. If they are convinced that there is something for them in the story, then and only then, will they start to listen to your ideas, and getting their support becomes much easier.

Bérénice Bessière, Director, Procurement and Travel Division Private and Public Organizations, WIPO

6. Confirm your reasoning with 3rd party information

Typically with objective facts. More often than not, 3rd party confirmation of your analysis is needed, for example, these may come in the form of outside analysts or consultancy organizations. Strangely, internal stakeholders often give more weight to outside opinions than colleagues, especially from other functions. They assume there are inter-departmental politics instead of seeing the cross-functional benefits and expertise of the whole company. I frequently refer to or copy and paste graphics or statistics from outside analysts when influencing others. 

Michael Hauck, Director Global Procurement, Tetra Pak

7. Speak their language and incorporate their needs into your communication

A good starting point is to look at the deal from their perspective and understand how I could get them to choose in their own interest what I want. Talking their own language also helps and this applies to all Procurement communications. I remember a mistake I made over ten years ago. We had just completed a Temporary Labour project and proudly presented the results, mentioning that we had delivered 2.4 million of cost savings, streamlined the process and improved the service levels. It would have been much better to put the focus on the process and service levels improvements and then mention that we also saved 2.4 million. 

Giuseppe Conti, Founder and Managing Partner, Conti Advanced Business Learning

Do you have ways to influence your internal stakeholders? If so, share in the comments below!

These answers were collected by Giuseppe Conti, Founder and Managing Partner of Conti Advanced Business Learning (www.cabl.ch), a consulting firm that specialises in negotiation & influencing. This article is part of a series aimed at collecting real-life negotiation experiences from Procurement executives.

7 Tips On Mentoring Your Reports In The Art Of Negotiation

We spoke to seven procurement experts to hear their advice on mentoring junior professionals on the art of negotiation…

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For any junior buyer, going head to head with an experienced negotiator can be especially intimidating. In many cases they are thrown into the deep end without enough preparation and guidance by their colleagues and superiors. For this piece, Giuseppe Conti, Founder and Managing Partner of Conti Advanced Business Learning interviewed seven procurement experts and leaders in their respective industries to find out their advice on teaching direct reports the art of negotiation.

1. Access to training and development programs

Over the 35-years that I have been in the procurement and supply function, I have found the following three approaches in coaching for the preparation of negotiations to be critical in order to become a respected and effective functional leader and a consistently successful negotiator:

The first is to coach “win-win” outcomes in business negotiations, aiming for partnerships with suppliers instead of taking the “arm’s length” approach to relationships that are so common. Secondly, to provide access to training and development programs that genuinely help individuals to strengthen their potential for success in negotiations; not just from a functional or technical perspective, but equally in soft skills. Lastly, to mentor and encourage the development of emotional intelligence (EQ) in how we are perceived in our professional engagements and how this can be leveraged or disable our ability to deliver successful negotiation outcomes. 

Les Ball, Chief Procurement Officer, ABB Motors and Generators

2. Exposure to more complex negotiations lead by experienced sourcing professionals

I use a three-faceted approach when mentoring direct reports to negotiate. Firstly, I make sure that all ‘on-the-job’ elements of negotiation preparation are available, this includes understanding market forces, supplier/buyer strengths and weaknesses, leverage tool kit, leading post negotiation assessments to name a few. Secondly, I want to ensure my more junior direct reports are exposed to more complex negotiations led by experienced sourcing professionals and over time, provide more opportunities in real negotiations to improve their skills in the field. Finally, it is a must to provide high-quality external training to keep learning new negotiation techniques and strategies.

Elodie Cramer, Associate Director of Biogen

3. Negotiating together

I believe in learning by doing. The best way to help and improve the negotiation skills of direct reports is to undertake a negotiation together. Use these opportunities to provide feedback and reflect on what went well and what didn’t. I also believe that after any important negotiation you should have a post-mortem review. Younger negotiators need to have an internal, or external, coach to guide them in preparing and delivering a negotiation. This includes a rehearsal before a big negotiation, which is not often done by buyers.

Guillaume Leopold, Procurement Advisory Partner, Ernst & Young

4. Scenario planning

Scenario planning and role playing can really help accelerate a person’s ability to negotiate. Do they know who is coming and what their expectations are? How are they going to open the negotiation and present their needs? Have they considered what the responses may be to their arguments and how to counter them? Additionally, coaching in other facets such as learning to actively listen and what topics or words not to say are just as important as rehearsing the key arguments. 

Jon Hatfield, Director Global Supply Management, PPG

5. Joint preparation

Spending time with them during the preparation phase gives direct reports more assurance. This is especially evident for complex negotiations, for instance when suppliers may also be customers. Consequently, collaboration becomes an absolute necessity.  As a group, we organise simulations and role plays in order to practice, exchange, discuss, review the negotiations and our performance in them. This team element ensures that they can learn from me and I can learn from them.

Christophe Schmitt, Head of Strategic Supplies, Omya

6. Sharing of current negotiations as a team

I like to set up regular physical meetings with all my direct reports to share and think collectively in a secure environment. By creating a friendly and open-minded atmosphere, we can share our current negotiations, the techniques we used and the challenges we faced. We would discuss the approaches, the outcomes and brainstorm on any alternative ways.

Olivier Cachat Chief Procurement Officer, IWG

7. Role playing acting as the supplier

Role playing is my favourite method. Specifically, I would ask my buyer to brief me on their strategy then, when we role play, I take the role of the buyer and get my colleague to experience how the supplier may feel and react to their argument and proposals.

Giuseppe Conti, Founder and Managing Partner, Conti Advanced Business Learning

The following answers were collected by Giuseppe Conti, Founder and Managing Partner of Conti Advanced Business Learning (www.cabl.ch), a consulting firm that specialises in negotiation & influencing. This article is part of a series aimed at collecting real-life negotiation experiences from Procurement executives.

Check out the other articles in this series:

Part One – Seven Negotiation Fails We’ve All Experienced

Part Two – Seven Negotiation Tricks Procurement Procurement Professionals Must Know

7 Negotiation Tricks Procurement Professionals Must Know

Every procurement professional has a special bag of tricks when negotiating– let’s see if you recognise these seven tips from experts in the field…

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The benefits of countless hours of negotiation experiences is that you know what you should be doing more of and what to stop doing. We discover the key traits and tools that make us perform better and are better armed for our next negotiation.

Giuseppe Conti, Founder and Managing Partner of Conti Advanced Business Learning interviewed seven procurement leaders to find out their favourite negotiation trick that played a key part in their business success.

1. Making the first proposal right away

I like to come to the negotiation table well prepared and well-aware of the market alternatives. Making the first proposal allows me to anchor conditions to a level close to the bottom of the market offer, immediately reducing the amplitude of the BATNA of my counterpart. Then I try to improve the conditions that are more valuable for me by making and requesting mutual concessions.

Francesco Lucchetta, Director Strategic Supply – Pentair

2. Preparation, Target, Value

I make sure I follow these three steps at the starting point in any negotiation where I am leading. The first is undoubtedly being well prepared. Secondly, to have a clear understanding of the desired outcome with a predefined “target range”, and thirdly, to fully understand the “value” of the business in the context of the potential suppliers being considered.

Les Ball, Chief Procurement Officer, ABB Motors and Generators

3. Profile your counterpart

Understand whom you face before negotiating! I use initial negotiation meetings to pique the interest the person I’m negotiating with – letting them discover all the potential benefits of working with my company. Then I encourage the speaker to talk as much as possible whilst showing genuine interest in their activities. I try to understand the way they work, their objectives and challenges. Having key objectives clearly in mind, I can better understand where our common interests are and how to shape the deal accordingly. From this moment onwards, I consider it the precise point where the negotiation starts.

Olivier Cachat Chief Procurement Officer, IWG

4. Asking yourself the right questions

It depends on the scenario but for mepersonally, negotiation always starts from knowing your position versus the market. You need to ask yourself ‘what you need to achieve’ and ‘what is the nature of the parties and the cultures you are engaging with’. Nothing beats preparation and being able to explain ‘what you need, why you need it and what is in it for the other party’. My go-to-guide for knowing the best methods in discussions are those from ‘Getting to Yes’ and its methods of principle negotiation. Be firm on your expectations, be open how to get there.

Jon Hatfield, Director Global Supply Management, PPG

5. Do your homework!

Preparation is the essence of a successful negotiation. Knowing your targets, your limits, and your BATNA is extremely important however it is useless if you fail to understand the other party. Put yourself in their shoes to know what they are looking for and how they would conduct research about your company. Do they really need your business? Are they looking for volume, for margin, for market share or for a combination of these? With these insights you will be able to drive and steer the negotiation to your preferences.

Christophe Schmitt, Head of Strategic Supplies, Omya

6. Make them love your vision and strategy

My preferred technique is to make the strategy attractive to the supplier and develop a common vision. Once the supplier is onboard, you can design an agreement in a very favourable direction.

Fabrice Hurel, Director Global Indirect Sourcing, Emerson

7. Questions, Questions, Questions

Asking questions, particularly the ones carefully prepared for in advance. I recall a negotiation with a professional services provider where the negotiation lasted for 3.5 hours. They started the negotiation feeling very confident about winning the business. After two hours of thought-provoking questions, they decided to substantially reduce their prices and ambitions. At the end, we reached a satisfactory agreement for both parties (good for them, great for us!)

Giuseppe Conti, Founder and Managing Partner, Conti Advanced Business Learning

The following answers were collected by Giuseppe Conti, Founder and Managing Partner of Conti Advanced Business Learning (www.cabl.ch), a consulting firm that specialises in negotiation & influencing. This article is part of a series aimed at collecting real-life negotiation experiences from Procurement executives.

Check out Part One of this series: Seven Negotiation Fails We’ve All Experienced

7 Supplier Negotiation Fails We’ve All Experienced

Every procurement professional knows that supplier negotiations aren’t always plain sailing – and we’re sure you’ll relate to these seven scenarios.

By Oleksii Sidorov/ Shutterstock

It’s happened to even the best negotiators.  Leaving a negotiation with less than desired results might even be called a rite of passage for procurement professionals. It’s frustrating and time consuming but there are learnings to gain from every disappointing negotiation.

Giuseppe Conti, Founder and Managing Partner of Conti Advanced Business Learning, interviewed seven procurement leaders to find out their most notable negotiation fails.

1. Pushing too hard

Using competition to push your advantage and lock it into a contract can be counterproductive. I recall a negotiation performed for a global IT project, during which we closed what looked like a great deal secured by a complete and detailed contract. Once the project began, the vendor quickly started to lose money. Having no leverage and way out from the contract, he eventually decided to stop the project. Ultimately, to continue our working relationship, we had to sit down together, find solutions and find fair compromises to make the project a success. Olivier Cachat, Chief Procurement Officer, IWG

2. Internal alignment

Involving executive leadership into a critical negotiation can be a very powerful ‘tool’, when done in a very concerted way. Our main objective was to secure supply for this material and ideally get a price concession when allocating more volume to this supplier. We briefed the President of our BU and explained the situation. We also explained in much detail that anything beyond a three per cent price reduction is very unlikely and that this supplier would rather threaten us to stop supply. While the first part of the actual negotiation was going well, our president decided to our complete surprise to become very aggressive with our supplier by threatening him to move to a different supplier if they would not reduce pricing by at least -15 per cent. Not only was that very insulting to our supplier, but it was also a complete bluff and our supplier knew that we were not able to move away within any reasonable/manageable timeframe. As a consequence, our supplier stood up and left the meeting, stating that we have one week to think about his offer to raise pricing by +5 per cent as they would otherwise stop supplying us. It took me two months to ‘repair’ the relationship and to convince them to continue supplying us at a flat price. Furthermore, I had to make additional concessions which we would not have made if our colleague would have stayed with our plan. Matthias Manegold, Head of Global Indirect Procurement, Liberty Global

3. Clarity on agreed terms

Make sure the final terms of a negotiation are clear for both parties. I had the surprise, for a new supply agreement (over 35M Euro), to discover that we were not aligned regarding the product specifications. Our yearly demand had been multiplied by 10 and obviously, during the negotiation, the supplier did not dare confess not having the capacity to deliver our needs. We needed to rediscuss and revaluate this challenge and find a way forward to solve the issue. It demonstrates the importance of always re-confirming the terms you reached.  Christophe Schmitt, Head of Strategic Supplies, Omya

4. Safety in small numbers

At times I have walked into a room and seen more than ten people around the table. In such a situation, it is very unlikely that any significant flexibility will be shown during the following hours. By nature, most people will not want to lose ground in public. As a general guide, I find the best agreements are made in smaller meetings with participants who have been briefed in advance. Unless related to celebrations, nobody likes surprises!Jon Hatfield, Director Global Supply Management, PPG

5. Stubborn suppliers

Sometimes even if you have evidence that you could get a better price for same quality the supplier will not move. This can happen especially in the Pharma world where changing supplier is time, money, and resource consuming. I also think this behaviour by the incumbent supplier is wrong. Ultimately pressure on prices will prevail and the new cheaper supplier will be a better fit. Romain Roulette, EMEA Procurement Director, Bausch Health

6. Changing protocol

Overcoming counter-productive pre-existing relationships of suppliers can derail negotiations. My corporation acquired a company that had strong links with the local supply base. The local suppliers were working with this company for decades and had developed ineffective habits that were hard to change. When we requested the existing supply base to apply standard requirements, we were confronted with resistance and opposition from these suppliers. A few negotiations went well, however we had to change all of the other suppliers. Francesco Lucchetta, Director Strategic Supply, Pentair

7. Lack of alternatives

It was a single source supply situation. Over ten years ago, I was renegotiating an IT outsourcing agreement that was expiring. Benchmarking data indicated that our prices were well above market. On the other side, the supplier knew that we had no other alternatives and they enjoyed a strong relationship with the CIO. In spite of our efforts, we only received a very minor price decrease. The next step was to start developing an alternative supplier to be in a stronger position at the next contract renewal. Giuseppe Conti, Founder and Managing Partner, Conti Advanced Business Learning

These responses were collected by Giuseppe Conti, Founder and Managing Partner of Conti Advanced Business Learning (www.cabl.ch), a consulting firm that specialises in negotiation & influencing. This article is part of a series