Strategy is about making choices, trade-offs;
it's about deliberately choosing to be different.
Too many strategic plans become yearly reviews not dynamic plans for how to compete. As Michael Porter teaches, the objective of strategy is to win in the marketplace, delivering superior sustainable performance. His convincing argument requires making clear choices about where to compete and where not to compete.
When I identify a negotiation is a strategic one for the business I ask to see the current strategy, to see how this negotiation fits into that strategic framework. Often I receive blank looks and the invalid response “this is our top client and is of strategic importance”. “This customer knows we are a big chunk of their business”, is also not valid.
To bring greater value to any strategic negotiation with a key customer, the organisation must view these strategic deals differently.
I find a great way to start on any live deal is to focus on what they do well instead of focusing on why they lost the last few deals. Often in the early stages of preparing for a strategic negotiation I get the negotiating team together and ask these questions:
- When it comes to strategic negotiations with customers what does your company do especially well?
- What are the top one or two priorities for improvement for this negotiation?
- How can you personally contribute to the improvement for this negotiation?
Once the team is fully focused, I help them develop a strong value proposition for the strategic negotiation and then determine the best way to frame that value proposition during their negotiation.
Finally, because no strategy can be considered in isolation, it depends on how customers react and competitors act. So, I ask:
- What moves will provoke the most damaging retaliation by competitors?
- What moves will provoke the greatest cooperation from the customer?
The answers to these questions help make choices about where to compete and where not to compete.
In summary, for strategic negotiations first learn from the past and then anticipate the future by thinking about possible customer actions and competitor actions.
Porter is right: strategy is about choices and where to compete. If you call a negotiation strategic can you show how this current negotiation fits with your strategic plan?