"As it turns out, in tandem with the transformation from phones to text to whatever other exciting forms of interaction future digital breakthroughs will deliver, the negotiation mindset must also evolve," says Dawn Tiura, President & CEO of SIG and Future of Sourcing. Read on to discover more about the evolution of negotiation in the sourcing industry.
I recently read (actually reread) an article on the SIG blog titled "3 Tools to Master the Art of Negotiation" by industry thought leader Darren Smith. One of the many critical points from Darren's article is when he writes: "The difference is that haggling is just about the price, and largely the outcome depends on who starts the highest or lowest. But negotiation is about trading variables and takes more skill, which makes it an art rather than a blunt instrument.”
It is at once a succinct yet broadly made statement that can lead to many different and interesting discussion tracks. I will take one track rarely discussed in today's post – the impact of digital technology on negotiation.
Humans versus With Machines
Do today's emerging digital technologies make us better negotiators? A January 2022 Harvard Law School article states, "The use of technology in negotiation has introduced new ways of communicating and interacting and could have a profound effect on our negotiation behavior.”
What is the “profound effect” to which the article refers?
A Misra study suggests that besides “reducing our attention and consequently our ability to empathize with others in negotiation,” technology may also have a negative effect on our ability to trust. It is a sobering statement because, without trust, negotiation can be difficult, if not outright impossible.
Of course, on the plus side, technology creates “unprecedented new ways of collaborating and connecting with one another.” It also delivers a wealth of actionable knowledge to streamline processes and better decision-making.
From my standpoint, I am a strong advocate of technology use — with a human interface balance.
From Hagglers to Negotiators
A famous Aaron Levie tweet discussed the importance of "building for how the world should work instead of optimizing for how the world does work."
Regarding using technology in the negotiation process, there is no doubt that building for the way the world should work will transform procurement from a functional to a more strategic role. Technology does this by facilitating improved connectivity and communication between buyers and suppliers. Tech also enables a more informed and transparent dialogue to take place between “willing” stakeholders. The key word here is willing, which, by the way, has little to do with the technology someone is using.
As it turns out, in tandem with the transformation from phones to text to whatever other exciting forms of interaction future digital breakthroughs will deliver, the negotiation mindset must also evolve. When I say evolve, I am talking about more than a wishful win-win sentiment. I am talking about leveraging the full informing power of real-world, real-time technology to produce tangible and measurable benefits for all stakeholders.
In this context, many industry thought-leaders assert that procurement is no longer about price alone but delivering strategic value. Shifting the negotiating focus from getting the best price to redefining and realizing value beyond cost alone means we can finally shed the "haggler" mindset to become true and mutually effective negotiators with our partners both within and external to the organization.
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