How to Develop High-Level Strategies for Negotiation with Craig Reed

Hello, my friends, and welcome to another exciting episode of Negotiate Anything. This show is produced by the American Negotiation Institute and with over 5 million downloads and listeners in over 180 countries, listeners just like you have made this the number one negotiation podcast in the world. Hi, my name is Kwame Christian and I am the founder and CEO of the American Negotiation Institute here at A&I. We believe that the best things in life are on the other side of difficult conversations. And we are passionate about providing you with the best content that will help you to make your difficult conversations easier, both at work and at home. Lastly, I want to remind you that we offer consulting and conduct trainings both virtually and in person all around the world. Our focus is in three main areas. First, negotiation and conflict resolution. Second, leadership. And lastly, diversity, equity, and inclusion. Check the link in the description below to learn more about how we could work with you and your team. And now, without further ado, let's jump into the interview. Craig, thanks for joining us today.

Thank you, Kwame. Very nice being here.

Yes, we are excited to have you, my friend. So how about you get us started by telling us a little bit about yourself and what you do?

Sure. So I am a chief procurement officer for Corteva agriscience, which is the largest pure play agriscience company in the world. At Corteva, I have responsibility for all of the procurement function, including facility services and corporate real estate, which encompasses sourcing and supply of goods and services from over 140 countries in support of our businesses. And my entire career I've spent in the procurement and supply chain space with experiences with DuPont, Eaton Corporation, Delta Airlines, Honda of America Manufacturing, and John Deere. So I've spent my entire career in this space and I really enjoyed every minute of it.

That's fantastic. And Craig, I didn't realize too, that you were at Honda of America. I was there too, for a while in their, in their legal department as a. As a lowly summer associate. But I was there.

So you had the white top and white pants as well?

I called them the pajamas and yes, I did. And they were fantastic. It was the best uniform. I've been telling my team we're going to bring the Honda white uniform to the American Negotiation Institute, but they're not interested.

It makes going to work every day really easy.

Exactly, exactly. Well, fantastic. I'm excited for this. Today we're going to talk about procurement negotiation strategy and really getting down into it. And we had a great conversation about this last week or a couple of weeks ago. So One of the things, things that was interesting about the conversation was just realizing that strategy in many cases has almost become a lost art. And when we're thinking about negotiation strategy as it relates to procurement, what would you say is the, the, what are the most important things for us to know, like where should we start?

For me, I think it's always important to start with what's the business requirement? And typically we get caught up sometimes thinking that the negotiation is all about driving an outcome. For some people, that's about price, cost, but in many cases it's about what's the business requirement. And so ensuring that as you're negotiating on anything that is clearly aligned to what you're trying to get as a specified outcome. Some cases it could be, I need a high quality product. Sometimes it could mean, I mean, higher delivery times, sometimes it could mean, I do mean lower cost, lower pricing, better service. But it means making sure that you clearly align that strategy with what the business requirements are.

So intuitively, that makes a lot of sense. We have to figure out what it is that the business needs in this situation, and then we're going to mold our strategy around that. But based on your experience and what you've seen in the industry, what, what is it about that particular foundational element of negotiation strategy that people often miss?

Yeah, you know, it's interesting. I think what is extremely important is once you've aligned the premise of understanding what the business strategy is, what your expected outcome is, now you're clear on deciding what your decision points are in terms of what's important in the strategy. And that allows you to be able to understand, you know, what's in it for you and then also what's in it for the other party. As you're going through preparing for a negotiation, which I would say is probably the second most important thing relative to going into a negotiation, is really negotiation preparation.

Okay, let's talk more about that. So when you say preparation, what does that look like for you in a typical negotiation?

Yeah, for me it means you have to be essentially as smart as the person on the other side of the table in terms of understanding what it is you're going after. So it means you've done your research in terms of being very clear on what's the business drivers. For you, that's important, but also what's important to the person on the other side of the table as well. Because at the end of the day, you want to have a scenario that has healthy tension in it, but it needs to be win, win, you don't want it to be unhealthy because unhealthy isn't long term and it's sustainable. You want it to be long term and sustainable at the end of the day.

That makes sense. And I like the term healthy tension versus unhealthy tension. And it's hard for people to really understand that distinction. So when you talk about just the concept of tension, what does that mean? And then how do you distinguish between healthy versus unhealthy?

And that's a really good point. Simply, you know, it becomes extremely unhealthy when it becomes personal. Right. If, if you've taken the time to really align your negotiation strategy to the business requirements and you've done your research to understand what's important to you and what's important to the person on the other side of the table at the end of the day now you're trying to meet and you're trying to meet somewhere in your green zone. And sometime to get in that green zone, you're going to need to be able to stand on some things that are founded in your negotiation strategy. And that's what will drive that tension. But when it becomes outside of the strategy, it becomes more so personal, which negotiation can become very personal very quickly. Then it becomes more unhealthy than healthy. Because when it's healthy, you're standing behind data, facts, information, strategy, a specific business outcome that's very clear. When it becomes unhealthy, then it becomes this is what I want and the reason why I want it. And you know, doesn't matter what you want at the end of the day.

Absolutely. That makes so much sense. And I think sometimes it's hard for people to distinguish between the two in themselves because they're so close to it, they don't have the proper perspective. And that to me demonstrates one of the many benefits of negotiating on a team. Right. Because sometimes somebody can get really wrapped up in it. They get very emotional, those type of things, and then they think they're making a right decision and they think it's logical, but really it's their emotions driving the train.

Absolutely. And that's why I say negotiation preparation is so key. So getting your team in a room to run through those scenarios and making sure that you're all aligned on what's important, because the last thing you want to do is to come back with the solution or requirement or recommendation and then it not meet in expectations because you hadn't taken the time to make sure that you've taken that 360 degree view on what's important and ensure that you balance the roles and responsibilities in, in the room when you're talking about going into full blown negotiation.

Absolutely. And listeners, I know you've heard me say this a million times, but here's one more. If you go to our website, americannegotiationinstitute.comguide, you can get access to all of our free negotiation preparation guides that'll walk you through strategically preparing for your negotiations. It's over 15 free guides and the price point is pretty solid, so make sure you check that out. There's a link in the description below. And Craig, when you think about the way that you prepare, when you're thinking strategically with your team, going through and thinking through what it is that you're going to do and sometimes more importantly, what it is you're not going to do at the negotiation table, what would you say are the core elements of effective preparation?

Yeah, like I said, the very first thing is you really have to get smart. And I always start with this getting smart. And getting smart means you really have to do your research and you have to look at all sides of the equation. Second piece of this is really, if you're negotiating on a product good or service, really making sure that you've gone through and you've pulled together a really robust, what I would call category strategy that really outlines your short, mid and long term expectations. And this is what you're looking for. And what are those external influences and impacts and what are the internal influences and impacts on what you're looking for? And then third and final, now taking a look at the potential solution providers or your supplier strategies against that to then help you formulate. Now here's my go to market strategy. Based on all this information and data. These are the things that I'm now going to drive that are going to help me win and achieve the overall outcome and output that's going to allow me to achieve my immediate mid and short term business goals.

That makes sense. And this reminds me of a one of the classic quotes from the military. I forget who said it first, but they say no plan, no strategy survives first contact with the other side. Right. And so when we think about strategy, yes, we want to take the time to create our strategy, but then we also have to recognize that strategy will change through the process of negotiation. And so when where you're in that situation, how do you know when it's time to tweak your strategy in the flow like as the conversation is going along?

That's why it's very important to listen because in a negotiation you will pick up so much information that will be informative to your baseline assumptions that you built into your overall strategy. And in listening and picking up that information, it will inform you of a couple of different things. It will either confirm your assumptions and expectations of the direction in which you're heading, or it may tell you you haven't considered everything. And before you go too far and potentially become outside of the lane of reality, it reduces your credibility on what you're driving. You need to take a pause and it's okay to take a pause and come back and it can be a short term pause. Excuse me, give me a second. I need to take some time to go in and get some more information or I need to take some time to go and get something or this has been a great discussion. This is what I would recommend. Let's table it right now and let's come back in a week based on what you've talked about. Here's some other things I want us to consider and I want you to have some more time to think about that. You have to find great ways and opportunities to put the perfect bow in a position that allows you to maintain the position in which you're holding in the conversation, but also allows you to be able to pick up and drive forward faster. Sometimes in listening, it'll tell you now's the time to close because if you continue too far, you can put yourself at a disadvantage because the other side can now start to take it personal, which means what you thought you could get, you won't get now because they won't be as receptive. And so listening is a very important process in the negotiation because you learn and pick up so much that allows you to be able to tweak and adjust your strategy as you go forward.

Does your company invest in professional development training? If you believe that your team would benefit from a negotiation workshop, all you need to do is go to our website, fill out the workshop request form, and then we'll set up a time to chat. These workshops are completely customizable and we've done them all around the country. Negotiation and conflict resolution skills are beneficial across all professions, but they're especially useful in procurement, purchasing, sales, sourcing, and contract management. Our calendar is filling up quickly and we even have some workshops scheduled for next year if you think you might want one. I'd suggest reaching out soon so you don't miss out. Check out the link in the description to learn more and we will be right back after this. Now, let's talk about the pause for a little bit, because that's such a critical part of the process. But I think a lot of people miss it and the reason why they don't feel comfortable injecting that pause, saying, hold on, let me think about this, let me call this person, or let's, let's table this and let's talk about it later. One of the things that I hear a lot is that they're afraid of losing face in front of the other side. They feel as though it makes them look weak. They feel as though it makes them look unprepared. And so for you, when you want to inject that little bit of time so you can make a better decision and think things through, how do you do it in a way that still makes sure that the other side doesn't look down upon you for doing so?

Yeah. For me, you have to curve it towards where you are in the conversation and you have to find those points that allow for it to be natural. The situations have changed. You know my position. I've heard your position. I'll tell you what, let's take a little bit more time. You go, you, you go back internally, have discussions. I'm going to do the same. And then let's come back to the table in X days and finalize our discussions. It's a perfect way to not give up anything. They're not giving up anything, but it allows you to put some time in the process to go back and adjust your strategy accordingly. Because in many cases, as you mentioned earlier, things change quickly. And as you want to get as smart as possible. No one's as smart as the news that happens in the moment. And so you have to be able to pivot on that as well. So negotiation is art and science and, and that's the art side of it. Science side is the data and the information. The art side is understanding when you should hold them, know when to fold them, know when to walk away, know when to run.

That's right. I love it. I love it. Now, with your time working with different procurement teams, let's focus in on the. Those internal negotiations, because there's so much focus on external negotiations with suppliers, with vendors, those type of things. Oftentimes the hardest negotiations people have are within their own company. So they have the negotiations within their team, on the procurement team, and then they also have negotiations with their internal business clients. So tell us about how the negotiation strategy applies for those internally directed conversations.

Yeah, it's interesting because in many cases, internally Sometimes it depends on are you both aligned on what's important for the company function or the division. And so that alignment is really what you're trying to drive. And when you get aligned on here is what the strategy is and what we're driving for. Now it becomes how do you satisfy that? And that's the, the tricky part of you having the discussion and dialogue because there are a lot of ways to get to the end result. What you're trying to do is get aligned on the direction and the pathway that we're going to go on together to make that happen. And what I found that really allows that to work the best is you have to have those discussions before you're talking about a negotiation or a sourcing event. You know, these strategic discussions should be happening as a part of the strategic planning process. So here are the things that we're driving for as an entity. Entity, it's company or division or function, and here's the reason and rationale why, and here are the ways we can get there. And so let's have discussions around the decision criteria, what's important for you, what are the things you want to achieve. And then let's align on the set of data that we're going to utilize and let's walk this path together. Walking the path together allows both to have skin in the game in the process and have input on how you're walking the path together to get to the end result. And many times I've seen the discussion start with, hey, I want to go out and do X, Y and Z. Because I think this is important and we haven't really aligned on the fact that you think it's important. But is it important to your internal stakeholder or partner in terms of what it is you want to go execute? And so that alignment is really key.

Absolutely. And one of the things to pay attention to is the concept of timing. And you mentioned this, you want to have these conversations before the, the actual negotiation event is occurring. Because let's, let's think about the, the impact of time and pressure, how that, the impact that has on the different dynamics of the conversation. So you could go about the conversation in a very thoughtful, respectful way and you could utilize a perfect strategy, but implemented at the wrong time. So you have that important conversation, but you have it either during or right before the negotiation event. And then the other, the people internally, your internal business client, they respond poorly to this because they didn't have enough heads up. Right. And so it's not enough to just have the conversation like you said, you have to make sure you have it in a timely manner. This is a critical part of the negotiation process. And what I've seen with the clients that we've worked with is that one of their biggest strategic mistakes is that they wait too long to get that internal alignment. And so that conversation becomes a lot more difficult than it needs to be.

Absolutely. And really being aligned on what's the decision criteria, that ensures that what we're negotiating is going to deliver the success we need. Right. And so in one of my earlier companies we used to use a criteria of cost, quality, delivery, development. That was kind of the basic elements of the things that we looked at. But we didn't wait it the same with every negotiation we went into. It was what was important with that relationship with the business requirements, with the functions, needs that really drove the overall weighting in those discussions. And then it allowed you to really be able to drive a different discussion and get everyone aligned on the process, the value, the strategy and the role related to how we're going to execute and negotiate a potential opportunity. You know, one of the best, I think strategies in negotiation is being able to leverage your stakeholders in a very powerful way. Because if you can set the distinction between who owns operations and who owns who owns commercial, then it becomes very clear that you can create this wall in your organization that when you're actually having these discussions that you can get the best of both worlds. I mean, to have the best I can in service level, quality in performance, oh, by the way, I need to have the very best in cost in service level and a whole host of other stuff. And those two dynamics working together can yield great results because within the party on the other side of the table, they work the same way. Sales guy is looking at how do I drive top line. He has a whole business that's focused on quality delivery service and a whole host of other stuff. And you want to make sure that you're looking at value in its totality when you're having these overall discussions.

Yeah, it makes a lot of sense. And this creating that the decision making matrix. Right. Negotiating with them beforehand to see what are the points that we're going to focus on in order to know whether or not we're making a good decision has many benefits, but one of them is the fact that it makes it less likely that emotionality plays an inappropriate role in the decision making process. Because once we take that time to not talk about the particulars of a specific vendor, but just say, hey, internally with you, with your Department. What is important to you? What are the things that you're focusing on? You're getting that you're getting their decision making matrix beforehand before they fall in love with a vendor and want you to capitulate inappropriately.

Correct. And getting back to one of those earlier points I made, if we can keep everything focused on the strategy and that initial due diligence, diligence work really sets the playing field for an unbiased approach in process to how you would potentially negotiate to drive the greatest value. And to your point, that alignment internally becomes so important because sometimes that can tip the scale. You know, we always talk about in our world, what you hate is the end around or the back door. You know, you're having a discussion here, but there's been discussions that have taken place in other places around your company that now can potentially derail the actions and activities you're taking. For you to have those discussions early on, there can't really be an end around because they're trying to end around with someone that's a part of the process already. And that's what's really important in terms of how you continue to move the ball forward.

Right. And I know we're coming up on time and I want to kind of change it up with this last question here. I'm feeling inspired with this. This is, this is something we didn't discuss, but let's see where this goes. Based on all of your years of experience in procurement and seeing high level negotiations and seeing high level negotiators, what would you say is the main thing that separates a good negotiator from a.

Great negotiator from a good negotiator from a great negotiator. Great negotiators listen and they know when to pull the rip cord. You know, there's a saying that says pigs get fed, hogs get slaughtered. Have you ever heard that before? And so many times you get individuals that get so caught up on trying to overdrive something till at the end of the day they basically can't get to where they want to get. And so you really have to understand, going back to that phrase of healthy tension when the let up off the gas and even in discussions when you've created healthy tension, you have to find ways to take the pressure even off the person on the other side of the table because you can understand that they can break too. And if they break, you're not going to be able to get the end result that you're looking for.

For.

And so this pigs get Fed hogs get slaughtered is a great way of looking at it. And then I often look at this metaphor of fly fishing, and I don't know if you have ever done fly fishing before, Right. If you go fly fishing, take the reel, you throw it out, you hook the. The fishes on it, you're pulling, you're pulling, you're pulling back, then you let go and you just let them swim. They get. They swim, and then you reel them in some more, and then you let them swim, and eventually they get tired, and when they get tired enough, then you can reel them on in, and then you essentially get the fish. If you continue to just go against the grain, when they're as strong as they can, they break the rod, they break the line, game over. So it's really that balanced approach. And it goes back to this, having a perfect balance of art and science in negotiation. And sometimes we can be too science focused where we say, the data tells me this, but the data can't tell you a personal, individual, company's circumstance or their own internal goals or challenges or circumstances that they're dealing with at the time. And so you have to be artsy enough, nuanced enough, have enough of that emotional quotient to realize and see those things so that you can make sure that you're taking that into account as you're driving your negotiations and your strategies forward.

That is a phenomenal way to end this interview. Craig. I really appreciate it. Thanks for taking time and sharing your wisdom with us.

My pleasure. Really appreciate it.

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