Beyond the Done Deal

The root of the problem, Ertel says, lies in the way deal-makers define their role: that their job is to get the other side to agree. It's a view unfortunately encouraged not only by books and training programs, but also by the way deal teams are structured, compensated, and managed. This notion that once the deal is closed the negotiator's work is "done" shapes their negotiation strategy, the way they prepare, and what they do at the table.

"But signing the deal does not instantly and automatically create value because the parties have to then go on and do something together to achieve the deal's aims. The handshake or the signature is just a milestone in the value-creation process," Ertel says. "Tactics designed to gain you some sort of advantage that can't be sustained - for example pressuring the supplier to sign the deal before the quarter ends, or letting them make erroneous assumptions about baseline usage patterns - can and do come back to haunt you during implementation."

That's a premise Neiditsch and Smith both heartily agree with.

"If you procure services you need to be mindful not just of the actual price you get, but of the relationship that you need to build up, because most of our services are complex services and you rely on the relationship to cover things that come later on that are not expected," Neiditsch says. "If you've got a poor relationship the cost of dealing with the unexpected is likely to be much higher than whatever savings you can make by being particularly reckless or tough in your initial negotiations. It doesn't mean that you must accept any price that you get, but the overall relationship does weigh very heavily in the negotiations," he says.

"Negotiation is all about making sure that both parties get something out of it," Smith says. "If the other party is just looking to get the most out of it, and that is quite apparent, then yes I will walk away from a deal, depending on circumstances.

"The key thing is to know what the end goal is and keeping in mind a balance between the two parties. If I am in a competitive bid where I have a number of parties to choose from, that puts me in a stronger position and I can push a bit further, but I wouldn't push so far that it becomes uncommercial for the other side. If it is too uncommercial for them then they will cut corners and your services will degrade over time."

Another common problem, driven by the same set of assumptions, is that deal-makers tend to exclude stakeholders from the process who may be critical to implementation.

"We see IT vendors do this all the time, leading with their more polished sales and BD teams, keeping project managers and delivery leads out of the team because they tend to raise uncomfortable questions," Ertel says. "Buyers do it too, often ignoring or actively hiding some of their more demanding business unit customers for fear of what they might say or ask for during the negotiation. The problem is that the concerns about whether the commitments the sales team makes are achievable or the fears that internal customers will not really be satisfied with the deal do not disappear when the ink dries on the contract. Ignoring these potential problems, instead of putting them on the table and working through them jointly, only makes dealing with them later much more difficult."