Negotiation strategies - a cue from our past
Trying to draw a parallel to the four negotiation techniques, I was wondering whether it is mere coincidence or if this bundle of knowledge was indeed systematically transferred over generations to enable us evolve the strategies that we follow today.
As per the ancient Indian scriptures, there are four tenets of "Dandniti" (dealing with an opponent/negotiation with any entity). Lord Krishna, arguably, the world's best psychologist/psychiatrist to date, has also spelt these out in the Bhagavad Geeta (the voice of God). Trying to draw a parallel to the four negotiation techniques, I was wondering whether it is mere coincidence or if this bundle of knowledge was indeed systematically transferred over generations to enable us evolve the strategies that we follow today. Whatever the reason, the negotiation strategies we adopt to deal with a supplier or with a set of suppliers, can "be found to have their roots" in these ancient scriptures.
While looking at the strategies adopted by organizations to deal with their supply base, even as we keep discussing the key aspects of the tail spend savings that we have been able to execute or plan to execute at Verizon, I find that these four strategies popularly called "Saama, Dhaama, Danda and Bheda", find extensive application everywhere, everytime, on case to case basis. Let me take this opportunity to share my opinion on each one, as succinctly as possible.
Saama in Sanskrit means Logic. If I go a step further to try to look at the synonyms, I easily stumble upon words that signify knowledge, rational behavior and convincing through a logical discussion. Transparent supplier negotiations involve Saama, where both parties discuss each element of cost and factor in the market rates and "rationally agree upon" the framework as per which prices are going to change. I think this might be most applicable in situations where the supplier has a lesser bargaining power and is willing to share information.
Next, Dhaama translates into an offer (maybe something that is easily accepted to, rather than through a "painful discussion"!!) - a situation like this might arise when the supplier is on the "power side" of the discussion. The buyer would have to give up something in order to get into a contract with the supplier is this case. A Volkswagen or a Nissan might have to give up their 5% cost reduction target to achieve a "generation next" world class diesel injection system from Bosch, without taking a chance on their global launch next season!
Danda means punishment. You negotiate, not to negotiate - the world of exit strategies, threats and penalties. Something to do even with the terms and conditions on the contract.
Last but not least, Bheda means differentiation - an incentive to do something different so that the supplier will be able to get aligned to the expectations. It might even be introducing new competition through an RFx process.
I like to stop writing here, as my mind "freewheels" further into other strategies . . . . . (should I quickly convert this into a 2 x 2 matrix before BCG comes up with something more appealing and acceptable !!!).
Please leave your comments when you have a moment.