In the information economy, commodities are no longer the province of every country. To survive global competition, sellers have customized to varying degrees. Distinctive products and services build greater loyalty among end users—begetting tighter requirements on the buyer’s side, and a narrower supply base. Deals are more complex and executed over longer periods. They’re more likely to include issues that can’t be fully factored into the initial terms. The most successful businesses are constantly looking—not only behind them, at established competitors, but also ahead, to where the trailblazers are charging. Creative negotiators carve out uncontested market space with a blue ocean strategy. They leapfrog the competition with transformative deals.
Only skilled and savvy dealmakers can survive in the current environment. And only the bold and inventive ones will grow. In a time of profound uncertainty, where organizations must adapt just to stay in the game, creative negotiating can make all the difference. How else has negotiating changed? Let us count the ways.
Price is no longer king
At a recent seminar with a top metrology company (or the people who measure auto parts with super-fine engineering tolerances), a salesperson told us, “We’re the highest-priced firm out there. If we go out and just sell our product, we’re dead—we won’t make any sales. We’ve got to be selling solutions.” Then there was the client we’d assumed was a coal company, until they corrected us: “We’re an energy solutions provider.” The best price is no longer a deal’s sine qua non. It makes little sense to get a rock-bottom number for software if you end up paying through the nose for training and customizing, plus next year’s indispensable upgrade.
Nearly everything’s on the table
There’s vastly more headroom for both sides more flexible pricing, and far more opportunities to expand a deal. In the digital age, the cost curve of specialized products has plummeted. Which capabilities does the customer want optimized? How much technical support will be included? When every contract is a la carte, there’s far more potential for creative problem-solving.
Collaborative dealmaking is in vogue
Newtonian physics seemed to work just fine until Rutherford and Einstein discovered subatomic particles: enter quantum mechanics. In contemporary business dealings, as negotiators delve more deeply into the finer details, the limitations of haggling have grown more apparent. It might seem paradoxical, but macrocompetitive forces are forcing negotiators to work harder at working with the other side.
Back in 2007, Walmart changed its slogan from “Always low prices” to “Save money. Live better.“ In 2017, it moved to retire its fabled price match program. Against rising competition from Amazon and eBay, Walmart realized it was no longer enough to refuse to be undersold—for a brick-and-mortar behemoth, it probably wasn’t even possible. The company turned on a dime to enlist manufacturers for help in stocking higher-value products, the better to meet customer needs. To nourish those alliances, a somewhat kinder, gentler Walmart was forced to change the way they negotiated. Understandably, when you’re beating the stuffing out of your suppliers, they’re generally less inclined to collaborate.
Disruption is the rule, not the exception
Companies worry less these days about a known rival underpricing them and more about the next existential threat from out of nowhere. An international firm may emerge with a similar product at half the price. A new technology may render your keystone product obsolete. Kodak never saw the smartphone coming, and neither did Blackberry. Uber and Airbnb have upended whole sectors; ditto for the Toyota Prius and the Tesla. So, companies either adapt or you leave the field.
As W. Edwards Deming once said, “It is not necessary to change; survival is not mandatory.” And Richard Branson couldn’t agree more: “A company that stands still will soon be forgotten.” A company does not need to change, but to prove longevity, transformative decisions separate the successful from the pack.
Adapted with permission from CREATIVE CONFLICT: A Practical Guide for Business Negotiators, releasing June 15, 2021, HBR Press, by Bill Sanders and Frank Mobus. Sanders is CEO of Mobus Creative Negotiating, a firm founded by the late Mobus. Mobus’s nationally recognized experts provide public seminars and private, in-house corporate training, coaching, and consulting to Fortune 500 companies.
