Purchasing Training ~ How Big is Your Negotiation Advantage?

by Omid Ghamami

Stay with me on this read.  I promise it will circle back to purchasing and negotiations, with some good learning.   Essential-Negotiating-Strategies

I try to play racquetball many times a week when I’m not travelling.  When I’m travelling…. Well, forget it.  All bets are off, because I’m just too busy with work and meetings.

Anyways, my racquetball partner is pretty good.   In fact, I almost never beat him.  However, I’m not so bad myself.  So why do I rarely beat him?

And what always struck me as strange is that our end score never reflected the relative ranking of our skills.  For instance, if he won 15 – 5, does that mean he’s playing 300% better than me?

How in the world could that be the case?  I’m not THAT out of his league.  We are competitive, but he’s just a little better.  Just enough to win. He is just *a little bit better*, and that was my “aha” moment.  That’s all he needed to be to beat me, point by point.

And the same things happen in negotiations.  Someone who is just “a little bit better” can win on the various negotiation issues, point by point.  That’s all it takes.

A horse who wins by a nose wins it all in a race.  That horse and its diminutive jockey get all the accolades and all the money and fame that comes with it.  But that horse doesn’t need to be 50%, 35%, or even 15% better than the completion.  That horse just needs to be 1% better to win.

And while I try to hit the ball as hard as I can, my partner uses finesse.   He surgically places the ball in areas where I can’t get to.  If I’m in the left rear quadrant of the court, he hits to the right front quadrant.  I can do it too, just not quite as good as him, and not quite as consistently.

Meaning, his 1% or so advantage becomes multiplied when he understands my “negotiating position” at that exact moment in time.  And he exploits it, every time.

Bill Walsh, the famous and super bowl winning former San Francisco 49ers football coach, was obsessive about dissecting his opponent’s liabilities.  He was ruthless about it, actually.  His entire game plan was focused around exploiting those liabilities.  He used counter intelligence, which is your most powerful tool in negotiations.

He could beat better teams just by knowing where their relative weaknesses were.  And he would script the first 15 plays, just to see how they would react to certain situations, as a means to validate his strategy and approach.  He knew that once those 15 plays were over, the best predictor of future behavior was past behavior. And this is true in sports, life, relationships, and negotiations!

This is what Asian suppliers do.  They tend to spend LOTS of time knowing you and fact finding before they ever want to negotiate.  Actually, they started negotiating really early in the process, and you just didn’t know it.

So in a nutshell, what I learned is, while it’s nice to be dominant, you don’t need to be;  you just need to be 1% better, and you need to know how to use that 1% in strategic ways that leverages the other party’s needs, wants, and pain points.

Of course if you know enough about me, I don’t preach psychological extortion practices that “get the upper hand” and secure “an unfair advantage”, so that you can win and they can lose.  I don’t how you build a supply chain with this kind of approach.

So we won’t use this information and knowledge in a negative way with suppliers, but you have to know how to assess and manage bargaining power if you want to be a world class purchasing professional.

Educate, motivate, and be prepared.  Know yourself and know who you are negotiating with.  1% never bought you so much before.

Be your best!

Omid G

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