This is a blog post I wrote in May 2020, as the COVID-19 pandemic was hitting the World like a tsunami. I am reposting it 5.5 years later, as I believe it is as true now as it was at that moment!
Winning negotiations in times of crisis is particularly challenging. The COVID-19 pandemic hit us totally unexpectedly and put the World on a halt. Going beyond the initial shock, with its inherent "action paralysis", we realize that the business must go on if we are to survive from an economic point of view. But the key question is: "How do we thrive in the new business normality?"
None of us was really prepared for this "new way of doing business," and business negotiation makes no exception.
So, what challenges are we facing nowadays, and what are our best negotiation strategies and tactics that will help us overcome them, so we maximize our odds of winning ALL our negotiations? I'm sharing in this post some personal observations and advice, as I see them at this point. Hope they will be useful to as many readers as possible.
1. The ethics challenge
I chose to speak first about this challenge because I witnessed firsthand how this crisis brought significant (negative) changes in people's ethical standards. I have seen peers (otherwise ethical people) misleading others and bending their spines to avoid a potential job loss. I have seen suppliers trying to renegotiate their prices (upwards!) after confirming an order, just because the demand was so high for their products and they could sell more expensively to someone else. A friend told me that this pandemic brought the worst out of many people. He compared this time with the Wild West, Cowboy time, when you first shoot, then you ask who's there. Sadly, it is true, and we must be prepared to handle such situations. How?
First of all, NEVER lower your own ethical standards! Winning negotiations is much more than "making a pact with the Devil" for a short-term gain. You only lose your soul once… so if you fall for the temptation of the cowboy approach, you will never be able to claim your integrity and ethical standards back again. And demand the same approach from your people, no exceptions allowed!
Secondly, while trusting people, "do it with your eyes wide open" (quote from John E. Pepper Jr). So, give them the benefit of the doubt, yet be alert and prepared for the unexpected. Read more about business ethics here.
2. The remote negotiation challenges
The negotiations during the pandemic pose a huge challenge, related to the remoteness of the participants. We have been used to negotiating in most cases face-to-face. Truth be told, in the past few years, remote negotiations via special video conferencing tools have become more popular. Yet, these were mostly reserved for the cases of significant physical distance between the parties, because, let's admit it, nothing replaces a face-to-face meeting, with all its advantages. However, due to the Coronavirus lockdown, even the negotiations among parties residing in the same city had to be done either via phone, via email, or via the videoconferencing tools like Skype, Zoom, Teams, etc. So, how do we approach this mandatory way of negotiating in ways that will maximize our chances of winning the deal?
Let me be blunt: negotiating via email is the WORST option you can have! The written communication will NEVER convey the exact meaning you want because it is only one-dimensional: written. It does not take into account the feelings you had and that you could transmit verbally, your non-verbal cues, etc. I remember when I negotiated with Yale University the translation rights for a business book, and they only agreed to discuss via email. I had to make sure I'm extra clear in what I write, so there is no room for misunderstandings. Therefore, I overexplained the points where I felt we might disagree and, as a result, I wrote 1-2 page-long emails that cost me hours, but served the purpose at the end. Should they have accepted a visual way to discuss (Skype or similar), we would have saved many hours and would have closed the deal faster. So, please, avoid emails at all costs, as they may be roadblocks in your way of winning negotiations. Use them to summarize what you have agreed, but don't replace the verbal communication with the email!
The next (better) option you have when negotiating remotely is to do it AUDIO (phone calls, WhatsApp, etc). Here you have the big advantage of using the voice to convey much better what your feelings are, you can clarify "live" any misunderstandings. It's not ideal, yet it's a huge step forward vs the email. The challenges when using the phone line relate to costs and time zone differences (if the call is international). When using WhatsApp, the costs are not an issue, yet the time difference is.
The best option is to use the modern videoconferencing systems (Skype, Teams, Zoom, etc). They add the VIDEO parameter to the communication. Seeing each other brings the additional benefit of the nonverbal signals that you can see and interpret. And, let's not forget, it is virtually free of charge, so you can have longer calls if needed.
But what none of the remote communication methods can do is replace the effectiveness of a team working together around the same table. Don't get me wrong: there are a lot of productivity-enhancing tools around, and people can work very well remotely using them. But it will always be faster and even better to do this when you are physically together.
3. The challenge of building relationships
"Life is all about relationships!" is one of the deep beliefs of John E. Pepper, the former CEO and Chairman of P&G. I cannot agree more: winning negotiations means building very strong, mutually trustworthy relationships! Yet, under lockdown, it is extremely difficult to build this type of quality relationship, as physical encounters do not take place anymore. Unless you've known each other pre-COVID crisis, any new business relationship that you start during the crisis will have this challenge. I'm not saying it will be impossible to build relationships! I'm only saying that it will take longer and will need more effort. But I strongly advise you to do this extra effort, be more understanding than you would normally be, and give people the benefit of the doubt. You may end up being very positively surprised!
4. The challenge of doing extra due diligence
The COVID-19 crisis affected all business areas to a greater or lesser extent. Some areas collapsed almost entirely, like the travel industry, some were hit less, like the food retail, and others even grew, like some pharma areas.
In all cases, before starting any negotiation, please do a very thorough Due Diligence for both the company you will be negotiating with, as well as for the people that will be representing it. Ask for proofs of financial stability from the other side and, if feasible, ask for guarantees of payment and/or delivery. And, if you are buying, avoid as much as possible the advance payments, especially with small suppliers. Work out with your Finance and Legal departments the best ways to protect if things go south. Read more about Business Due Diligence here.
5. The challenge of demand variation
As mentioned in the previous point, there are products for which the demand increased hugely (for example, disinfectants, cleaning products, protection equipment, computers/laptops, TVs, etc), while for others decreased significantly (like the case of discretionary purchases like expensive items, clothing, investment items, etc.). The demand for international haulage slowed down significantly, and the availability of trucks is a challenge, too.
The suppliers of all those goods or services mentioned above were hit by the crisis as well, and they might struggle to meet the exploded demand, or sell their stocks if the demand collapsed. You may see the "first-come, first-served" attitude for those suppliers of high-demand items, even to the extent of unethical behavior mentioned at the first point above. You may need to make decisions much faster if you want to take on offers in high demand. If you are a supplier of such demanded products, my strong advice is to think about the long term and not just about making some quick money and then running!
These are my personal observations on winning negotiations, after 2 months of unprecedented global crisis. They are not at all exhaustive, yet they struck me as being the most important ones to be attentive to to maximize your negotiation gain. Please feel free to email me any thoughts you might have in this area!