Investigative Negotiations – Creating and Claiming Value in Purchasing Negotiations

Too many in our profession focus on their negotiation strategy and how they wish to achieve it.  This is a misguided approach, because it presupposes that all that matters in negotiations are your own objectives.

If both sides take this approach, then there is no possibility for negotiation success, because both parties will be exclusively focused on their own interests.  Ever see kids argue with each other? This is why those arguments never lead to productive outcomes. 

Further, there will be many points missed in negotiations that weren’t on the table for discussion – but should have been.  Investigative negotiations means engaging in deep exploration of the other party’s interests PRIOR to engaging in negotiations.

This will allow you to create value and invent options that weren’t on the table going into negotiations.  Failure to do this will invariably mean that you and your supplier will be fighting over the same pie, which is most notably centered around price.

I was doing work for a healthcare company recently.  They were getting ready to enter into negotiations with a supplier that had created a product that could test something through superficial skin contact instead of through traditional invasive blood testing.  I won’t get more specific because of confidentiality.

The other benefit of this product was that it allowed for constant monitoring and trend data creation, instead of getting data only from points in time, which is all doctors could get when blood was drawn.

The major negotiation point that was on the table was price, of course.  However, the healthcare company – one of the biggest in the world – decided to do some investigative negotiations.  What they found changed everything.

They found this supplier’s greatest interest was not price, nor was it profit. What the supplier wanted was an industry proof point.  They wanted to get a stronghold with a big player in the healthcare industry, at any price, and to use that proof point to leverage and establish other healthcare clients – at which point they would then engage in price and profit optimization strategies.

Now the purchasing professional involved, having engaged in investigative negotiations, knew exactly where the real value was for the supplier – and it had nothing to do with price.  This revelation was going to buy the purchasing negotiator everything, and it was going to cost the purchasing negotiator nothing.

So negotiations proceed.  The purchasing professional leverages this knowledge and presents the supplier available avenues to help drive awareness of this product’s capabilities to the healthcare industry, in return for discounts in price that were previously only achievable in his wildest pipe dreams.

And even with the huge price concessions that were ultimately agreed to, the supplier was thrilled.  It’s all because purchasing did not assume they knew why the supplier wanted their business – and instead engaged in investigative negotiations to find out the true underlying reasons.

• Omid G, Competitors View