Negotiation Mistakes: Misguided Integrity

negotiation integrityNegotiating with integrity is central to the Win Wisely™ approach; after all, if we are in search of positive leverage to artfully move the other side closer to our way of thinking, we must have integrity. Integrity gives us the foundation to make value arguments that are believable. When we are perceived as people who constantly play games with the truth and are slippery during discussion of the challenges, our leverage predictably erodes.

However, there are situations in which being too forthright needlessly damages your position and erodes your leverage as surely as being untruthful would. Imagine that you are negotiating with a manufacturer whose specialty component is critical to your upcoming product. The week before, you dismissed an alternative provider after lengthy negotiations, leaving this manufacturer in the “sole provider” position.

There is rarely anything to be gained by revealing that your entire strategy now hinges on this one provider, thereby offering your potential supplier a free boost up the leverage slope. Remember, you must protect your weaknesses when possible.

Let’s look at three options you might consider once you realize the position you are in:

  1. Urgently re-engage with the supplier that you dismissed – with your hat in your hand.
  2. Bluff and posture to over-compensate for your sudden weakness: “We can go with you or your competitors. It’s up to you.”
  3. Artfully omit your weaknesses: “Of all our alternatives, you are our first choice. I am hoping to create a relationship that makes further consideration of other alternatives unnecessary. This would require your best terms and prices.”

About the first option: it is good insofar as you are reestablishing contact with a potential supplier you may need in the future. But this doesn’t completely solve your leverage problem in the short term. Your urgency to reengage may also be a clue to the shrewd supplier that you have come back because of your reduced options, making renegotiation even tougher than the first time.

The second alternative leaves you without options if your bluff is called. So, so let us consider the third and best option, which is an example of effectively managing information. This allows you to offer the inducement of a “sole source” relationship with the vendor, extracting better terms from what is, in fact, a disadvantage. An additional argument for taking option three is that you simplify your supply chain by having a single vendor. The downside is that you have no alternatives in the event that your chosen vendor has problems. (This is a serious consideration.)

Sole sourcing is not something that K&R endorses if you are a buyer. If you go down this path, know that it requires very careful contract construction that protects you and your organization.

To keep integrity and leverage, you should never lie, but you do not have to tell the other side everything, especially about confidential negotiations with their competitors. There is an artful balance to managing negative information while maintaining credibility.