1:00 PM
Vendor Negotiations: Winning When You Donāt Have the Strongest Hand
1:03 Mike Preps Kim and Himself
Mike jumps into his car in the parking lot of the restaurant where he just finished the successful lunch with Colleen. He turns the ignition but leaves his car in park. He pulls out his BlackBerry and uses his thumb to turn the power back on. He had turned it off as he saw Colleen enter the restaurant and put it in his suit coat breast pocket during the lunch.
He lowers the volume on the Phil Woods sax solo he was listening to on his way over to meet Colleen and begins to check his messages. Both Kim and Jonathanāthe vendor he is meetingāhad called him back. They both received his calls explaining he would be late. The meeting is still on track. He relaxes some and decides to call back Kim to go over the game plan one more time.
āHi Kim, this is Mike, thanks for letting me know you got the message.ā Mike holds his BlackBerry up to his ear. Itās not very comfortable, even when he isnāt driving. For months heād been admiring Chadās Jawbone earpiece, but he had never gotten around to picking one up or even ordering one online.
āThatās fine, Mike. Did you have a successful lunch with Colleen?ā Kim, like all of the managers in the department, knows whenever Mike is about to add to the team. He keeps them abreast of not only his hires, but also his off-site meetings throughout the day. He wants his staff to know where he is and what heās doing. That way, they can judge whether or not to disturb him with a phone call.
āYes, I did. Sheāll be on board with us the week after next. It was a great lunch,ā Mike says. āListen, I want to go over the game plan for our presentation to Jonathan one more time.ā
āOh, Iām ready, Mike,ā Kim says. He preps his managers for all of their presentations thoroughly to raise their chances of success. Kim continues, āIāll keep the numbers to a minimum and the pictures and stories in which we describe how we are growing to a maximum.ā
Mike has been working with Kim to dump her ājust the facts, maāamā communication approach, which hurt connections with employees and vendors. It has been a struggle. Kim continually defaults to numbers, charts, and graphs. She told Mike it is frustrating to her that if she takes the trouble to lay everything out, those listening should at least be able to āput two and two together.ā
āYouāre right about that,ā Mike would assure her. āBut sticking to being right instead of being good is standing in the way of you becoming a stronger leader. Youāve obviously worked hard at the numbers. Now, work a little more and tell them what the numbers mean. Thatās the difference between being right and being good.ā
Kim would scoff, āI hate all this feel-good stuff,ā but she understood. Mike would lay on a little harder, āKim, please donāt look at it as āfeel-good stuff.ā Itās not. Itās the type of work real leaders accept as the price of building connections and achieving greater performance from those they rely on.ā
For the first five or six times, Kim would often respond with āwhatever,ā but she would still follow through on Mikeās specific instructions. However, in the last month or so, she had accepted the coaching without the sarcasm. Mike is pleased at Kimās progress.
āIām going to let you lay everything out,ā Mike says into his BlackBerry, āthen Iām going to take the lead and ask Jonathan about what his plans are for his company. Feel free to join in along the way during my part.ā
āI will,ā says Kim. āIām not shy, and I like how Jonathan has positioned his business. See you in a few.ā
āGreat, see you in a few,ā says Mike. He clicks off the call and turns the audio on Phil Woodsās saxophone back up just a little while he goes over in his head what probing questions he will ask Jonathan. Even though Mike is a powerful communicator, he once again takes time to prepare mentally for his upcoming meeting.
1:10 Chad and Randy Unveil Their Request
Chad pulls up into the parking space next to Randyās car and rolls down his passenger window, āHey, Randy, how long have you been waiting?ā
āJust a minute or two,ā Randy says. āI was going over the final stuff that Phil sent. He did a good job of getting his stats in. The numbers are now complete,ā Randy reports. Chad is relieved that he made peace with Phil. This meeting now has a better chance of succeeding.
āHow do you handicap our chances of success with Tracy?ā Randy asks as the two head toward the main entrance of their vendorās building.
āItās going to be tough with her, based on what weāre going to present. But, no matter what, weāll emphasize to her that weāre a player in the industry. Eventually, sheās going to have to cut us a break,ā Chad explains. āI think weāve got a fifty-fifty shot at getting something out of her today.ā Chadās insight is good, and his response to Randy is clear. Even if they donāt get what they want today, he is smart to stay in front of her.
Tracyās company is the leading vendor of the suppliers critical to the success of Chadās division. Everything they do is superior: top-notch production, on-time delivery, and a small but innovative R&D department. Tracyās company keeps Chadās division looking good with its customers every quarter.
But thereās a problem. Chadās division is smaller than many of its top competitors, who wind up getting more attention and preferred treatment from Tracyās team. Mike and Randy have set up the meeting with Tracy in hopes of seeing a faster turnaround time on shipments and a slightly lower price.
Last quarter, Chad spent a good deal of time on the phone with Tracy; but he couldnāt get her to budge an inch. āListen, Chad,ā Tracy explained, āI love you guys. Youāre good to work with and you process our invoices promptly. And you are one focused son of a gun, Chad. But look at it from my point of view.ā She made a powerful argument that she had to keep her priorities on her highest volume customers. āIf you ordered more,ā she says, āI could move you up in the production pecking order and even look at our pricing. But youāre not there yet.ā
Both Chad and Randy like the fact Tracy doesnāt play games. Sheās direct and professional. Sheās also fair. Tracy agreed to look everything over again once Chad had his purchasing budget set for next year.
Now, three months later after Chadās last plea for a better delivery schedule and lower pricing, the two of them are sitting in Tracyās office, ready to go over the numbers and plead their case. Chad has a lot more confidence in their presentation with Philās West Coast numbers in his reports.
āGuys, I hear youāre weathering the storm out there pretty well. Congrats.ā Tracy isnāt one for small talk, but she is always polite. Chad notices she started out with a sincere compliment that demonstrates she is following the market. She puts them at ease, even though sheās in the driverās seat at this meeting.
āYes, we are, Tracy.ā Chad jumps in. āWeāre not growing as quickly as a type A personality like me would like, but we are holding our own.ā
āAll you Ivy League guys are type A, arenāt you Chad?ā Tracy turns to Randy, āBut mere foot soldiers like us,ā Tracy nods at Randy, āwho donāt carry the weight of the world on our shoulders, will live longer, wonāt we Randy?ā She smiles at both of them.
Yikes! This is a pretty good jab at Chad. While Randy mutters, āSure, I guess so,ā Chad resists the urge to correct herāhis alma maters, Williams and Northwesternās Kellogg School of Business, are not Ivy League institutionsāand instead smiles weakly, wondering why Tracy is giving it to him. What did he do to offend her so quickly?
Randy doesnāt nod or wink to Tracy. That would be breaking ranks. But he knows why sheās poking at Chad, who never seems to catch on that his not-so-subtle self-promotion is irritating. Chad is always giving himself labels that sound like he just came from a self-affirmation seminar. Today Chad called himself ātype A personalityā; but it just as easily could have been āleader of the āgo-toā team,ā or the guy who believes that āfailure is not an option.ā
Randy feels that Tracy is indeed a pretty smart cookie. She knows that Chad and he are sitting there, mutual hats in hand. She doesnāt want to start the meeting letting Chad get away with his promotional crap. Randy also finds himself wondering what it would be to like to work for someone as insightful as Tracy.
1:21 Mike Lets Kim Take the Lead
āThanks for your flexibility, Jonathan. I got behind and I couldnāt catch up,ā Mike says to Jonathan as he and Kim got settled in their supplierās small office.
āThatās okay, Mike, I understand. It gave me a chance to do a few extra things,ā Jonathan says.
Kim marvels once again at Mikeās leadership and skill. It would have been easy for him to throw that new hire under the bus. After all, itās Colleenās fault that Mike was running late. Instead, he just simply apologized and didnāt trouble Jonathan with the reasons. Elegant, Kim thinks. Itās an elegant way to get back on track quickly.
āJonathan, your products are critical to our success with our clients. We want more of them, faster, and we want to pay less for it. Weāre here to ask you for a couple of things,ā Mike says. āFirst, we want a shipment schedule of 14 days instead of the 21-day schedule weāve been on with you for a year or so. Second, we are looking for a price cut of 5 percent. Weāve done our homework and we hope to get you over to our way of thinking. Both requests will be good for your company, as well as ours.ā
Jonathan smiles. āBoy, Mike, you donāt mess around, do you? Okay, I knew you were going to ask for something; but I didnāt know it would be so specific. Well, Iām not agreeing to anything yet, and I wonāt promise that I will, either. But Iām willing to listen. And thanks for admitting you need us. Most of our customers would never say something like that when theyāre asking for a price break,ā Jonathan says.
Kim is again amazed at how quickly Mike gets Jonathanās attention and starts a negotiation with such positive vibesāeven after he was late for the meeting. She makes a strong mental note: Mike is a great boss because he rarely, if ever, blames others for his problems, even when others affect his performance.
āThen Iām happy weāre off to a good start,ā Mike says. āAnd now itās going to get even better. Iām going to have Kim take over and present our plan for the next couple of years.ā
āThanks, Mike,ā Kim says. āJonathan, we plan everything we do around what our customers need to make their customers happy. We say that our mission, vision, and values are determined by whether weāre succeeding in helping our customers to be in great shape with their customers. As long as we do that, we figure weāre going to stay in the picture and grow for a long time.ā
Kim goes on to explain to Jonathan how all their growth opportunities focus on a detailed examination of their customersā growth opportunities. She uses five different examples in five different market sectors to demonstrate how this plan led to steady increases in sales and gross margin in the last two years. Then she talks about what they were doing this quarterāand had planned for the next quarterāto come up with several new market segments to go after once they understood their future customersā customers.
While Kim did include several critical sales figures and buying projections along the way, they were all there to punctuate the happy ending to another customer story. She would have been much more comfortable beefing up this report with at least three times as much data justifying her conclusions, but she knew Mike would have told her to take it all out. She had the data memorized, though, just in case Jonathan questioned anything.
Itās an unusual presentation for Jonathan to sit through. Usually, customers and suppliers came in for meetings with lots of spreadsheets and charts regarding market expansion or contraction, costs per unit of production, and quality control figures. Kim only talks about her customers, using a simple PowerPoint presentation that featured a single clear text headline or main idea on each projected slide and minimal graphics. Itās easy to follow, especially as Kim becomes more and more excited about the success her customers are having.
Mike sits quietly but attentively. He never takes his eyes off Kim and her presentation slides. He knows that if he concentrates on what Kim was saying, it will set the tone and also a visual tableau for Jonathan to stay tuned in as well. Mike coaches all of his managers to focus attention on the speaker in all customer meetings, despite the intense urge to peruse their notes or even glance at an incoming e-mail on a BlackBerry.
Heās taking mental notes along the way. He realizes that Kim has come a long way in the last year. Sheās really connecting with Jonathan. As a result, Jonathan is gaining a clear and compelling insight into what Mikeās division is up to and why itās ...