The Language of Negotiation: Why Good Negotiators are Better Interpreters

the-language-of-negotiations.jpg

Have you ever participated in a negotiation where the stakeholders just can’t seem to understand each other?

Between the business unit, the lawyers, and the supplier — it’s almost as if everyone is speaking a different language. And lucky for you, you’re the one who has to try to make sense of it all.

The truth is that these misunderstandings don’t occur when there’s a solid contract in place with clear definitions of the what, how and when of a supplier’s deliverables. They happen all the other times.

The 3 Languages Every Negotiator Needs to Understand

To negotiate effectively, the negotiator must understand the language of each party involved to ensure everyone understands what’s being said.

  • The Customer’s Requirements - In a technology negotiation, the customer is typically represented by a technology group or business unit within the organization. They will work with the supplier’s sales engineers to develop their technical requirements and deliverable timelines using Gantt charts and project plans that are sometimes hard to understand.
  • The Lawyer’s Legalese - Good technology lawyers understand the customer’s business well enough to know the tolerance threshold for things like confidentiality and intellectual property infringement, and will use very complicated language to mitigate potential risks on negotiation.
  • The Supplier’s Pricing - Suppliers are in business to make money, and will often add some very subtle “gotcha’s” in the contract to maximize revenue while mitigating their own risk.

As contracts negotiators it’s our job to make sure all of these dialects are being translated properly for each party every negotiation.

Organizations can spend weeks having internal negotiations between the business and the lawyers on the contract before the supplier even sees the first draft. And then they can spend months negotiating with the supplier because neither side seems to understand what the other side wants.

How to Simplify the Dialogue in a Technology Negotiation

Here are a few things a negotiator can do to simplify the dialogue:

Step #1 - Translate the Requirements

Lawyers, for the most part, have a very good command of the English language. But without context, even the simplest English sometimes doesn’t make sense.

If a lawyer’s concerned about protecting intellectual property, and they’re told that the supplier will provide offshore development and support services, they’ll instinctively tighten up the contract with very restrictive confidentiality and IP indemnity clauses which the supplier will usually push back on.

Giving the lawyers more details about what (if any) sensitive data may be exposed in offshore development and support services will allow them to tailor the clauses to offer appropriate protection while still enabling the suppliers to conduct business

Step #2 - Translate the Legalese

As in the first point, most technology professionals can fully comprehend English. Unfortunately, the legalese in technology contracts sometimes barely passes as English.

All negotiators speak legalese, but the really good ones can translate it into something that makes sense to the business as well.

Remember, the business usually sits in on the negotiation and can easily derail the talks by siding with the supplier on something they may not fully understand, like why the lawyer added a carve-out for breach of confidentiality in the limitation of liability clause.

Step #3 - Translate the Pricing

20 years ago, when I was first cutting my teeth in procurement, technology acquisitions were more focused on physical hardware as opposed to software and services. Consequently, the pricing was much simpler. Every widget had a price and the more widget’s you bought, the greater discount you received.

Since then we’ve seen a paradigm shift in the way organizations acquire technology. Hardware’s been reduced to a commodity, like office supplies and furniture, as more and more customers adopt virtual, cloud-based technologies and utilize cost-effective offshore resources to run their business.

Technology suppliers also understand the shift, and are constantly coming up with new ways to squeeze revenue out of virtual technology that’s becoming faster and cheaper to run.

Good negotiators need to know the nuances of pricing in the virtual world, and make sure the customer understands its implications. Some of the larger software companies have made a fortune over the past 2 decades simply because their customers didn’t understand how “per core” licensing works in a virtualized server farm.

Clear Communication Reduces Time and Complexity

Technology negotiations are often complex and time-sensitive. Helping everyone understand each other’s language will simplify the negotiation and position both sides for success.

What other languages have you translated as a negotiator? Which ones do you find most challenging?

Are there cost savings hiding in your Procurement Process?

Download our free report to discover the step-by-step process we use to identify and realize Procurement cost savings -> Click here to download the report