Adapted from “Negotiating with a 900-pound Gorilla,” by Lawrence Susskind (professor, Massachusetts Institute of Technology), first published in the Negotiation newsletter.
Does your company ever have to negotiate with a behemoth that dominates your market–the so-called 900-pound gorilla? Whether they’re big-box retailers with aggressive pricing strategies or well-established computer software providers, one or two companies seem to set all the rules in many industries today. As a negotiator, you face an apparent choice between taking what little the other side offers or being squeezed out of the market entirely.
When a stronger party is taking a tough financial stance, it’s easy to believe that the negotiation is entirely about price. The fact is, non-monetary considerations are often more important to one or both negotiating partners than you might expect. You can identify these other factors by questioning the other side’s team about their interests. Once you’ve identified the standard or underlying principle that the other party is following, you’ll be in a better position to brainstorm problem-solving strategies.
The trick is to determine how the other side is measuring its success, then think of a way to help them meet that goal at the lowest possible cost to you. Here are just a few of the appeals to principle that you might make in your business negotiations:
- We’ve worked well together in the past—and profitably. Remember, it took some time for us to work out the kinks at the outset. You would be sacrificing reliability if you switched to another provider. Are you sure you want to start all over again with a company that can’t guarantee uniform, reliable performance?
- We know this business better than anyone else. If someone is offering the same service at a lower price, he’s lowballing you simply to get in the door. You’re going to have a lot of unhappy customers on your hands because the supplier won’t be able to deliver quality service at that price. Isn’t quality important to you? Those unhappy customers are going to be on your doorstep.
- We have a great working relationship. Some of your stores were delayed in opening, but we were willing to wait. Isn’t our flexibility and loyalty worth something to you?
It’s possible the response to such appeals will be, “Take it or leave it. We have someone else ready to step in.” But wise executives recognize the importance of focusing not only on increased short-term profitability but also on solid relationships and consumer satisfaction.
Of course, it’s important to present an appeal to principle to the right person. The middle manager with a mandate to get the best deal possible may not be the right audience for such arguments. Whenever you’re dealing with a stronger party, nurture contacts with top management on the other side—throughout the life of your partnership. At the moment of contract renegotiation, there won’t be time or opportunity to build such ties.