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Negotiations: Theory And Practice (MGSM 884)
Term 4 Block Class, 2018
Individual Essay
Filip Hron

Introduction

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In this essay, we are diagnosing a real-life case that transpired between two executives of different departments where they had to come to a consensus to meet the requirements of a client. To protect and preserve the confidentiality of the parties involved the name used in this case are not real.

The key learnings we came across the course helped me to evaluate and dissect the case which was more on the lines of a win-lose strategy which eventually ended up in some form of compromise on both parties end.

The following case will be analyzed through the framework ‘The Seven Elements’ by starting with a diagnosis of what happened and how it could be improved on by creating value for both parties thus satisfying the organization’s goals through maximization.

Case

The organization in question is one of the largest nonalcoholic beverage corporations in India. It was responsible for bottling operations which included Sales, Marketing, Finance, Logistics, and Equipment Department as these are the core pillars for its daily operations. As a Key Account Executive, I recently acquired a prominent National Key Account with the help of my seniors. We had to place coolers and fountains in its stores spread across various locations in Mumbai over a short period of time. The essay is going to explore the conversation between the equipment executive Akash and key account executive myself. We were to coordinate and ensure the timely execution of the requirements laid out by the customer ABC in a smooth and effective way.

The challenge was to align finance and equipment department for the timely delivery of coolers within the next seven days. All the approvals were in place from the finance side but the equipment department was facing issues in terms of shortage of coolers and also had concerns regarding productivity as the demand for coolers was on a higher side. I, on the other hand, wanted to implement the transition of the account from our rivals on an urgent basis to meet my KPI’s so that it doesn’t affect my quarterly incentive and future promotion.

Problem 1
Asking for Commitment at the start of the conversation.

My aim was to get an early commitment from Akash to make sure my interests are covered due to the pressure of a deadline and the significance of the deal.

Moving straight to commitment was not an ideal start as we did have a contentious relationship in the past. The trust was lacking as we both used power in most parts of our relationship history. Therefore the baggage of our previous relationship weighed in the current negotiations. The strategy, as a result, was that of a high-risk one with the fear and expectations of unmet interests.

The dialogue that took place:-

Me: Akash make sure the placement of the coolers for client ABC is done on priority within the next 7 days time without fail as it is a National Key Account (NKA) which is of high importance.

Akash: I cannot make any commitments as it is a too short period of time to get the logistics and paperwork processed. Also, we have a shortage of coolers.

When analyzing the dialogue mentioned above one can notice that I skipped the process and moved straight to commitment due to time constraint and believed that my deal took precedence as it was an NKA. At hindsight looking from Akash’s perspective, he could not make any commitments so early on as there was a laid process in place for placement of coolers which involved other stakeholders as well. He further legitimized it by mentioning the shortage of coolers and productivity concerns.

The conversation gave me an insight into how I should have involved Akash in the process while negotiating and agreeing with client ABC. This would have helped to build rapport with the intent of being on the same wavelength. Therefore, one should be sincere and honest about each other’s interest in wanting to build a trusted relationship. Instead of jumping straight to commitment, I should have approached the conversation with a positive intent by sharing mutual interests and privileged information (Hron, 2013). This would have probably put him at ease to appreciate the importance and requirement of the deal. Once the above has taken place we could come to an agreement by exploring options to finally make a commitment.

Problem 2
Focused on Position and not Interests.

In most instances, negotiators start by taking positions which are influenced or caused by their underlying interests. Therefore it is the interests that define the problem and not positions. “The basic problem in a negotiation lies not in conflicting positions, but in the conflict between each side needs, desire, concerns, and fears” (Fisher, R., Ury, W., ; Patton, W, 1991). As a result, it leads to a win-lose approach when they try to protect their positions.

The dialogue below will illustrate the strong positions been taken before fully understanding each other’s interests.

Me: Akashhhh …. (Elevated Voice Tone) It has to be done at any cost.

Akash: Sorry, I can’t promise anything as there are other stakeholders involved.

Me: That’s none of my concern.

Akash: Nor it is mine. I will wait for the due process to take place.

In retrospect, I failed to acknowledge that negotiations between Me and Akash are not just a two-sided affair. Both of us had to take into account the process and approvals of our seniors and other stakeholders (Clients, Colleagues etc). Also navigating through different position taken by them behind the scenes.

The insight I gather from this conversation is to align each other’s interests with clear communications without focusing on past grievances. In order to achieve that I should have moved from being more general to specific details which makes my problem more credible.

One can also notice that I was committed to my position which led to me being hard on Akash and soft on my interests. This particular instance might have made Akash more defensive and indifferent to my proposal and concerns. Therefore it is always wise to separate people from the problem (Fisher, R., Ury, W., ; Patton, W, 1991).

The ideal solution is to explore the value cycle by putting oneself in other’s shoes and see the rational and logic being taken by them so that you have a better understanding of their perspective. This will help to push each other hard for a mutually beneficial solution that will ultimately produce high value and low-cost solution for both parties involved.

Problem 3
Using Power to Claim Value.

The relationship between Me and Akash can be categorized as that of an interdependent one. As I approached the conversation with the mindset of claiming value I was inherently playing a division game.

In the dialogue mentioned below once can observe that I tried to win a competitive division game by using the threat as a tactic.

Me: I think you are not understanding the gravity of this situation. I will be forwarding the mail to both our bosses.

Akash: Please go ahead, I am not answerable to you.

In reference to my hardstyle approach as seen earlier I prioritized on claiming maximum content by ignoring the relationship with the intent of shifting to alternatives by involving senior management. Since Akash too stood his ground the power play was in place.

From my perspective, I believed that we had an interdependent relationship but as the conversation moved ahead we tried to break that interdependence. In my opinion, I overestimated my power in the current scenario as the deadline was imminent. As a result, my effort to pressurize and stress the importance of placing the coolers might have shifted the balance of power on Akash’s side and thus creating a dependency factor into the equation.

The takeaway for future negotiations is that we should focus on exploring mutual interests, options, and legitimacy for both parties involved. Another important insight is that we distinctly noted that egocentrism and emotions played a major part in deviating us from the said agenda. Therefore we should be more mindful of our verbal expressions which form bias that is self-serving to our views.

Problem 4
Assumptions and Cultural Pitfalls.

“We simply assume that the way we see things is the way they really are or the way they should be. And our attitudes and behaviors grow of these assumptions” (Convey, 1990).

The above quote aptly explains my behavior throughout this conversation. Due to my previous interactions with Akash and the feedback I received from my fellow colleagues I made strong assumptions about his overall personality. I characterized him as a cynical and domineering person with a bad work ethic. These assumptions, as a result, crippled my thought process and conversation which ultimately created pollution.

As negotiators, we need to make sure that our assumptions don’t become facts as it can be proved wrong. While negotiating we should carefully review both ours and the other party assumptions by asking questions with a childlike curiosity before jumping to any conclusion or judgment. Therefore one can say that negotiation is broadly an intelligence-gathering operation.

Let us dissect the below dialogue to further our understanding of how assumptions and cultural pitfalls affect our negotiations.

Me: This is not an appropriate way to speak. Your difficult demeanor off late is well known in the company.

Akash: I don’t know where you get this information but I have a good understanding with others unlike you who always try to get your way in the end with misformation.

An important factor that influences our assumptions is the way we think, communicate and behave which ultimately leads to forming cultural stereotype’s in our head.

From my perspective, I viewed the conversation as a straightforward goal-oriented one. Whereas Akash was looking at it from a relationship point of view. As I was relatively new in the organization in comparison to Akash who had been there for more than a decade, he didn’t appreciate my informal style. As most people called him Akashji (Ji at the end of the name is used to convey respect) due to his age, knowledge and vast experience in his field.

From Akash’s perspective even though we were at the same level, he demanded respect and didn’t acknowledge the sensitivity of time as he would have considered it as my attempt to hide something in the process. This resulted in high emotional quotient which led to inappropriate behavior from both ends.

The important take away here is that always leave the relationship or conversation on a good note even if the other party is confrontational. Because you may have to deal with the concerned party in the future. Looking back one can say that all relationships move up and down over time with conversations being taken out of context. It is imperative for one to protect and cater to the ongoing relationship with consideration and humility.

Problem 5
Division Game and Win-Lose Strategy.

The aim of the conversation till now was to “slipt the pie” i.e to claim maximum value or the largest slice for oneself at the expense of the other party. As a result division game mostly turns out to be a win-lose strategy

To get a better perspective of win-lose strategy, let us evaluate it with the help of 3 pillars of negotiations i.e Communications, Substance and Relationship.

The dialogue between Me and Akash definitely had an element of information asymmetry as I was looking at the whole process from a first position, which polluted my judgment and opinions with a range of cognitive bias. I should have on the contrary tried to understand how he feels and what he wants in to order to build rapport and create value (Hron, 2013).

In another instance, I traded the relationship by using power to extract more substance from the negotiations point of view.

Therefore when looking at negotiations from a third position one can objectively look at the problem and develop options which work for both the parties. In the third position, he or she can take a neutral stand without polluting the situation with judgments and assumptions (Hron 2013).

The insight here is that we should separate the 3 pillars of negotiations with their own individual options. This will ultimately make the process fair and efficient. It will also help in creating value with the relationship being the building block for the process in its entirety.

Problem 6
WATNA – BATNA.

(The dialogue for this problem is mentioned in the Appendix)

My conversations which reflected power and confrontation was leading to a situation of me landing with WATNA and thus an embracement of not being able to execute key account commitment leading to losing incentive and promotion too. I paused and reopened the dialogue in an apologetic and positive tone to find a win-win solution between me and Akash ensuring organizational objective. My learning out of this conversation was that I should have involved Akash in the process while negotiating with the customer by regularly updating him and taking his inputs. This would have ensured he being fully committed as well as aligned.

I was looking for alternatives in the negotiation process to come to a resolution, thus by starting afresh, I was able to realign my key account along with Akash on cooler requirement and placement time schedule. This made Akash feel more participative in the process, ensuring timely execution on the placement of coolers in the various outlets of the customer ABC. Through this process, I was able to find the best alternative to negotiated agreement (BATNA). This was definitely reliving and satisfying end to a stressful negotiation, which could have been avoided

Conclusion

Looking at the case through the lens of ‘The Seven Element’ framework it gave me invaluable insights that negotiations are a part of our everyday life and how should we approach it by being broad-minded.

Negotiation is a process where both parties have certain unique, shared or conflicting interests or needs. The success lies in leaving the conversation on a positive note with the hope of creating maximum value for one another. The importance of process is something that should be stressed upon with communication and relationship being at the forefront. While communicating one should review the intent and impact of their verbal and non-verbal actions like ego, an emotional state which can affect the substance and relationship in the long term.

A negotiator must do his due diligence before making assumptions and try to understand the cultural background the other person is coming from to get a better grip of the negotiations.

Lastly by keeping a win-win attitude with the use of power being the last resort one can lead to a favorable outcome.

Bibliography

Falcao, H. (2010), Value Negotiation: How to Finally Get the Win-Win Right, Pearson, ISBN: 9789810681432
Hron, F., York, S., Blažek, L. (2013), Negotiation Evolved, Negotiation Evolved Trust, Sydney, ISBN:9780992341206
Fisher, R., Ury, W., ; Patton, W. (1991) “Focus on Interests, Not Positions” in Getting to Yes Negotiating Agreement without Giving In, 2nd ed., Penguin, New York, Chapter 3

Stone, D., Patton, B., ; Heen, S. (1999). Sort Out the Three Conversations in Difficult Conversations, Penguin Books, London, Chapter 1.

Salacuse, J. W. (2004). “Negotiating: The top ten ways that culture can affect your negotiation”, Ivey Business Journal, September/October, 69(1), pp. 1-6.

Covey, S. (1990). The 7 Habits of Highly Effective People: Powerful Lessons in Personal Change. New York: Simon ; Schuster, ISBN: 0613191455, 9780613191456

Appendix

Me: Akash make sure the placement of the coolers for client ABC is done on priority within the next 7 days time without fail as it is a National Key Account (NKA) which is of high importance.

Akash: I cannot make any commitments as it is a too short period of time to get the logistics and paperwork processed. Also, we have a shortage of coolers.

Me: Akashhhh …. (Elevated Voice Tone) It has to be done at any cost.

Akash: Sorry, I can’t promise anything as there are other stakeholders involved.

Me: That’s none of my concern.

Akash: Nor it is mine. I will wait for the due process to take place.

Me: I think you are not understanding the gravity of this situation. I will be forwarding the mail to both our bosses.

Akash: Please go ahead, I am not answerable to you.

Me: This is not an appropriate way to speak. Your difficult demeanor off late is well known in the company.

Akash: I don’t know where you get this information but I have a good understanding with others unlike you who always try to get your way in the end with misformation.

Me: Let me start afresh by stating the importance of this deal and prestige attached to see our company coolers placed in these outlets. We must come out as winners as a team, reflecting positively within the organization as well as ensuring achieving organization’s pride by executing to customers satisfaction.

Akash: I agree but we have two hurdles. Firstly, I need to consider other executive requirements and secondly, there is a concern with cooler productivity as the requirement is inflated.

Me: I do understand the challenge but we must find a solution as we also need to convince key (Customer ABC) to align them. I am sure together we can make it happen. I can also release four coolers form two outlets which are closing in the next couple of days.

Akash: Ok, let me workout and revert. I am open to discussing with key account along with you to ensure we satisfy our key account customer.

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