Power Corrupts

Negotiations have within them a search for power—the power to walk away with the things you want. Finding ways to change that balance of power is an ancient human activity, encompassing espionage, war, trade delegations and playground fights. With sufficient power, one side can force the counter-party into a position of disadvantage and seek to benefit from that.
However, there is a danger of triggering the law of unintended consequences (first used as a clear phrase in an academic paper in 1936) when this type of power is used, particularly if the negotiation is biased in the direction of a single business requirement, such as price. We’ve all seen hard deals driven in only for supplier performance to fade away in the light of disinterest in marginal profitability.
Equally, there are many stories of suppliers with significant power (usually due to market conditions and an installed user base where cost of change is terrifying) taking selling price and underlying profit to an extreme level, when presented with an opportunity to do so.
So, from either side, we need to be looking at the levers we have to modify the power balance, considering the consequences of any arrangement and ensuring we have a clear sense of the broad spread of areas we need to negotiate in.
The levers available to us are many and varied but often re-examining the deal from a different perspective will suggest how the power balance can be changed. Go broad and think about the relationship from the angle of a series of different departments— how would PR or Sales or other areas make use of this relationship—and see what suggests itself. Once you have a revised view, the question becomes whether that view can be used to change the profile of the negotiation, broadening out the areas being traded to include some firm approaches in other directions. Being creative in this way may allow you to arrive at an entirely new negotiating position, with a quite different power balance.
Understanding the consequences of the position you are taking is a useful exercise. Start with a simple approach of: If they act like this, then how will we respond over time? Can we project a change in behavior or attitude (on either side) that could become detrimental to the relationship? If so, there’s a need to develop the appropriate actions to mitigate or modify the consequences of those changes. This gives us a sense of the impact of over-use of a position, and the consequences of that.
Understanding the broad areas we have to negotiate with is fundamental to ensuring that we have a full picture of areas to balance against each other. Without this, it is easy to become fixated in one place and lose a lot of power, not encompassing the broader issues which sit across the overall relationship.
If we can do these things, we will be better placed to understand and take advantage of our own position and improve it as best we can.  Without them, we will be restricted in our approach and more likely to leave the table with the least good result.
Mark Hubbard thinks about negotiation at Positive Purchasing.


About Mark Hubbard

I set up a specialist purchasing consultancy and a business focussing on seeking innovation. I work all over the world with clients, helping purchasing teams develop new ways of delivering value for their businesses. I love thinking about how purchasing works, and how it can be better, and I'd love to share some of those thoughts with you
This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s