I’ve just read an article published back in 1999 in the Harvard Business Review that I think is worthwhile for anybody going into an outsourcing negotiation.
Titled, "Turning Negotiation into a Corporate Capability," the article was written by Vantage Partners’ Danny Ertel. Ertel’s theme is that negotiation too often is viewed as a situational activity: You negotiate an outsourcing deal once every year or two, and there’s nothing you can bring from previous negotiating experiences to the latest one.
He writes that this isn’t so — that companies that follow a more coordinated approach actually make better deals and forge stronger relationships.
He refers to a deal struck by Eastman Kodak and IBM, in which Kodak wanted to outsource the operation of its data centers. One thing the two companies did was to develop two lists — one relating to the deal and the other relating to the relationship.
Deal issues encompassed:
- Retirement and replacement of hardware
- Use of third-party software
- Service levels
- Ease of communicaton
- Record storage, maintenance and security
- Pricing
- Terms of employee transfers
- Termination and return of data center operations to Kodak or transfer to another party
Relationship issues encompassed:
- Reliability
- Giving each other the benefit of the doubt
- Absence of coercion
- Understanding each other’s objectives
- Timeliness of consultations
- Mutual respect
My guess? There had to be female negotiators involved in this transaction, because, typically, women are just plain better — and more comfortable — at relationship talk. They see the adhesions that build in relationships through the process of communication. Either that, or Kodak and IBM were both using teams of participants who had studied previous corporate negotiations and absorbed the best practices to understand the value of forging strong relationships before the contracts are signed.
The author recommends the use of BATNA — best alternative to negotiation agreement — first espoused by Roger Fisher and William Ury in their landmark volume, Getting To Yes: Negotiating Agreements Without Giving In.
If alternatives don’t exist, then the negotiation will land you in a place of absolute need, not a good position from which to achieve the best outcome.
At any rate, if you’re interested in the notion of building a "negotiation infrastructure," you can request a free hardcopy of the article on Vantage’s website here.
