Five Critical Negotiation Skills for qualified success

Hi readers,

I did write on the subject of negotiation by mentioning 9 rules that may be helpful to executives while negotiating complex deals…and I know for a fact that since the financial debacle of 2008, the deals have only gotten complex !!!

Here is the link to my earlier post of the subject for your reference 9 Rules for Negotiating a Complex Deal

After giving this subject much thought, I decided to share these 5 skills that I personally believe have been crucial to my successes while negotiating with my suppliers, while negotiating with my sales teams, my logistics team, my production staff, my contract labor AND my clients and trade channel partners!!

So here goes….

  • Completely and honestly assess your relative position. Information is everything, and so is making sure you’ve got a completely honest and straightforward assessment of your position and your opponent’s, going in.  In my view it takes guts to look your self objectively in the mirror and say to yourself that given the information that you have you may have to decide a strategy- which may often mean, retraction, or simply “holding your ground”.
  • Study precedent, inside and out. Precedent means terms you and your opponent have agreed to in prior negotiations with other companies. It doesn’t matter if the terms were confidential; assume everybody knows everything. There’s virtually no defense against precedent in a negotiation. But remember, it works both ways.
  •  Plan for all contingencies, up front. Go in with a solid plan: Good cop, bad cop; worst case scenario; bottom line terms; under what circumstances do you walk out; which terms are negotiable and to what extent; when to hold back and when to offer a negotiating chit; the extent of your authority, etc. Anticipate all the same things from your opponent’s side.This definitely requires a 360 degree view and assessment of the negotiation process. Introspect, think , strategise and then act logically, without getting emotionally  involved in the process.
  •  Never negotiate with yourself. Under no circumstances should you offer revised terms until your opponent has countered. Make sure they’ve responded fully on every term before you counter. Of course, feel free to try to use this in reverse, but most are savvy to it and it may hurt your credibility.
  • Always seek to raise your opponent’s risk. This is especially critical in prolonged negotiations with ongoing litigation. Your actions, both at the negotiating table and in the court room, must always be designed to raise your opponent’s risk. Also, your opponent must believe you’re willing and able to go the distance. That means a big war chest and minimal exploitable vulnerability.

Your inputs and ideas are welcome….

 

 

 

10 Rules for Effective Strategic Planning

Hi readers,

I have been sharing my knowledge in the area of sales management and marketing with you all for the past few weeks. I think I did chip in with elements of strategy that I shared with you.

So in order to further this discussion on the subject of strategy , I decided to share this blog with you.

Strategic planning is a time consuming and very challenging process- I would know it because I have had to lead my team in such sessions during my stint as the P&L head for a CPG business in Africa!

I figured that in order to deliver a workable strategy through and iterative process, there were certain fundamentals that one has to be mindful of in the process of strategic planning and delivery.

These 10 rules are

  • The definition. First things first. Strategic planning is any process meant to determine a company’s future direction, including its key goals, strategies for achieving them, and business plans.
  • Executive owner and facilitator. You need a member of the executive staff to own the process from start to finish, plus an objective facilitator from outside the company with expertise in this sort of thing. 
  • The team. The team must be committed to participating in the entire process from start to finish. It’s usually executive management. There can be additions but there’s a size tradeoff: bigger equals more ideas but harder to manage.  
  • Rules of engagement. The facilitator or executive owner sets ground rules or rules of engagement, i.e. attack the problem, not the person; be quiet unless you have something material to add; don’t beat issues to death; no cell phones; that sort of thing.
  • The problem and process objectives. You’re doing this for a reason. Agree on the problem statement and objectives of the process. You can also give it a name if that will help galvanize everyone.
  • Situation or SWOT analysis. Takes time, but it must be brutally honest and objective with no sugarcoating. If you don’t know where you stand versus the competition, the entire process is a waste of incredibly valuable executive time.
  • No sacred cows. Executives get too close to and emotionally wrapped up in their groups, responsibilities, programs, and products. The team has to get beyond all the subjectivity to achieve open and honest perspective. Everything’s on the table.
  • Brainstorm. Be completely open to any ideas. When they’re all listed, have each person pick their top three ideas (weighted first = 3 points, second = 2 points, third = 1 point), then add it up, take the top x ideas, assign each to an exec who develops a business plan.
  • Coalesce. Present the plans, debate, coalesce on company direction, key goals, strategies, etc. Several meetings and iterations are fine, including bouncing off the next level of management and a controlled group of outsiders to get feedback (optional).  
  • Plan and execute. Develop a set of plans for communicating the new direction down through the organization and externally, affecting organizational and behavioral change, product development and launch, marketing and sales, etc. The devil’s in the details. 

My sincere thanks to my teacher, Dr. Daniel Deneffe, Global marketing strategy director, Arthur D’Little, who inspired me to research on the subject and to present this to you all.

Thanks also to all my teachers who taught me at my alma maters, the HULT School, Boston, and IMI, Delhi.

3 Strategies for Successful Pricing during a Downtown

Hi readers,

Since 2008, its been a struggle across the globe for leading brands- those providing cutting edge services and great products are on their edge trying to figure out strategies that will not only help them tide over this global recession and depressed demand, but also enable them to make decent profits.

Not an easy as it sounds.

The US markets have been sputtering at below par GDP for over 4 years, the Nigerian market, largely unaffected by global money markets has managed to delightfully buck the trend and has grown at over 5%, and growth in India currently stands at 5.5%, well much higher than that in the US, much lower than that seen in China, BUT well below its real potential.

Those who wish ( or wished ) to invest in India are cagey at best, or have already given up on the India story “fairy tale”perpetrated by the Indian Government and their spin doctors!

Business leader after another has painted an abysmal picture of the Indian economy and would rather take their investment plans overseas than sit on piles of cash here, with no returns.

So what are the facts-

The current economic climate might be the worst some managers have yet seen. With customers so jittery, the stakes for getting pricing right are high, and managers may be unprepared to avoid common pitfalls of pricing in tough times.

Based on my assessment of strategies used by successful businesses in past economic downturns, I have put together 3 generic strategic directions that the enterprise may want to consider before formulating and deploying a strategy that works in this downturn

  • Understand how price-sensitive customers will behave – and act on that knowledge more quickly than competitors.

A recession, is an opportunity to learn faster about changing customer behavior and gain advantage through this insight. You look not only at the taillights of the car in front but the car in front of him (and in front of him). By paying attention to your customers’ customers (and their customers), you can identify problems before your business crashes into some unforeseen pricing reality.

Essentially it entails that you need to develop client/consumer insights beyond your nose. This requires first class grip on analytics ( big data need of the hour!!), practicing DILO (Day in the life of) and spending more time with trade channel partners, with THEIR clients and comprehending their needs.

  • Consider the longer-term strategy before changing prices.

“The great danger is you take sensible short-term decisions that screw up your long term brand value,” says Cram.

What this means is this- dont get pressured into taking decisions on impulse- if the board or the CEO (under pressure from the board) starts breathing down your neck, action AND NOT reaction may be the best strategy. You need to understand that in times of crisis and pressure, anger and reactions are normal- problem is, that if it starts to impact the board and the CEOs behavior, some where down the line, the reaction needs to stop; better it starts with YOU and you put your head down to really think hard and think through and then put your well thought case to your CEO or the board. You will be better served when you are seen as a sane voice in a room full of senior executives gone insane with pressure!!

AND dont forget- your logic and a long term perspective has to be the underlying theme for your pricing strategy.

  • Be sympathetic to cash-strapped customers – and take care not to start a destructive price war by accident.

Make sure your price cuts don’t appear to be panicked reactions to falling sales. Your rivals will be watching you closely, and you don’t want to start a price war. If that’s a possibility, it’s better to promise to match competitors’ prices. And if it’s your competition that’s slashing process, think carefully before following suit. Your rival’s decision,  might be ”the idiot decision of one manager who is going to get fired.”

I could not agree more on this. Panic an knee jerk reaction to a competitors pricing policy is NOT the answer for ensuring long term sustainability of the business, the top line and the bottom line.

 

Let Jyoti be the light that creates a new India

One of the TV channels just announced through a politician that the name of the rape victim who has galvanized the soul of an entire generation is , Jyoti.

Jyoti, ( for my American and English speaking friends) means light and the irony of the tragedy is not lost one me when I realize that it took her life to wake up the sleeping masses, who have meekly endured the tyranny of our rulers (please note- they are NOT our leaders) for over 65 years!!

If it takes a Jyoti to light the fire of revolution , then so be it!

If it takes a Jyoti,  to wake up a sleeping giant, a slumbering leviathan, then so be it!

If it takes a Jyoti, to awaken the collective consciousness of a nation in stasis for over 65 years, then so be it!!

But as a practicing strategist, I have but a few points to make for those on the streets and fighting for a just cause against the neo- colonialists , our venerated politicians and their cronies ( bureaucrats and police officials)-

  • Please understand that those of us , agitating in urban centers across the country, against an entire political class , constitute only 20% of the votes.
  • Majority of the voting ( 80%) happens in the semi-urban and rural centers- these areas constitute the MAJOR VOTE BANKS for the politicians.
  • If this revolution (pink revolution as per our intelligent, venerated President’s son, Abhijeet Mukherjee!) is to make serious inroads, gain traction , and shake up the rotten foundations of our pathetic excuse for a democracy, then the masses in the semi-urban an rural centers of India have to be roused from their deep sleep.
  • It is not as difficult as you imagine- thankfully, due to the poor development of urban centers, all it takes is a drive of 2 hours away from urban centers, and voila , you are in rural India!
  • Target those who have armed forces background, explain you cause in their local language, provide the context for them to comprehend issues beyond, caste , creed, and certainly beyond sex, and convert them to your cause.
  • These converts, from armed forces background, are most likely to spread the REAL ISSUES of this mass initiative, and shake the foundations of our pathetic political class and their cronies!!

Give me a shout out if you need free consultation on how to drive this strategy!!

Critical key factors for going global in the next decade

The rush to go to “low cost producing economies” ( Read- BRIC+ Mexico) and to create a long term competitive advantage has proven to be short term and not really a sustainable competitive advantage for many branded product and service providers, especially in the developed , competitive economies.

The reality of availability of vast pool of “quality” engineers in India ,waiting to be leveraged has proven to be a myth- majority of graduate engineers from the Indian sub-continent , or those from China, dont come close to western benchmarks and thus cannot be deployed to extract the cost versus value advantage!

The answers perhaps lie in the successes coming out of the “low cost producing economies”- Embraer aircraft from Brazil has slowly but surely made a global mark as a successful maker of medium range, cost effective commercial jet aircraft, competing successfully against giants like Airbus and Boeing. So what can we learn from this example and many others like it?

Closer analysis reveals that the following factors may be crucial inputs for developing and deploying long term strategies for successfully transforming into a truly global enterprise

  • Focus on people- Corporate are beginning to grapple with the harsh reality of skill gaps in their ranks today- and given the systemic   faults in recruitment and engagement, skill gaps will only widen tomorrow. It may be prudent to invest in your existing work-force , as well as the work force of the future- a PPP (Public private partnership) model may be the long term strategic answer.
  • Dont focus only on the low hanging fruit in developing markets- global players, enter , large, under exploited, under developed consumer markets, and immediately go for “quick wins”, by addressing the high end of these markets- and quickly get into a comfort zone, often “managing” (read- mis-representing the real potential of the market at the BoP) the expectations of the board and the shareholders. The real potential lies in the low income consumer groups in these markets; these markets are no doubt challenging to access and develop, but they offer tremendous, and real, long term business value to the serious global enterprise.
  • Managing cost gaps- developing economies offer low cost upfront- but managing “hidden costs” in these economies is key to success- you need a mix of creative thinkers and number crunchers to successfully crack these markets.
  • Prioritize and pin point- Old school of thought reeked of a herd mentality- “if my competitor is moving production to China, so should I”….gone are the days when that idea worked across the board. Critical evaluation of your markets and associated real costs ( including opportunity cost, sunk costs, economic costs etc) will often reveal that having your production in a “high cost” center, often provided strategic advantages, that far outweigh the obvious cost advantage of a low cost center.
  • Innovation and innovating fast is the ONLY long term comparative and competitive advantage – the ability to copy successful western designs, and to make them cheaper and faster, was the innovation model of the Chinese economy- but over the last 5 years, the growth of real innovation in the Chinese economy has picked pace. Western enterprises, serious about going global will have to pick up their pace in the innovation space and go all out if they want to succeed.
  • Embracing diversity in enterprises, markets, consumers and geographies- acceptance of the reality of the vast diversity of a global village will be key to your going global. This will commence from your enterprise, and then slowly move to regional operations and down the line. This will naturally foster a collaboration driven model where diversity in thoughts and ideas will create long term competitive advantage for the enterprise, which can then be leveraged by key decision makers to develop and deploy successful business strategy to take the enterprise, global.
  • Think big , think fast and ACT fast- speed will be of the essence; if you as an enterprise, with global ambitions want to establish you markets in geographies across the globe, you will need to develop teams that are quickly able to roll out tried and tested GTM strategies from one geography to the next.