Bid Ops Interviews Brian Gunia

 
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This week we interviewed Brian Gunia, Associate Professor at the Johns Hopkins Carey Business School and author of the recently-released The Bartering Mindset: A Mostly Forgotten Framework for Mastering Your Next Negotiation.

Could you tell us a bit about your background?

I’m an Associate Professor at the Johns Hopkins Carey Business School. I study three ways that people commonly jeopardize their careers: by acting unethically, negotiating ineffectively, and sleeping insufficiently. Instead of focusing on self-defeating choices themselves, though, I focus on simple, theoretically-motivated steps that individuals can take to act more ethically, negotiate more effectively, and sleep longer or better. I teach a variety of negotiation and organizational behavior courses. Before my academic career, I worked as a consultant at Deloitte. 

Why are you passionate about this topic? What excites you about it? What fascinates you?

I’m passionate about negotiation, in particular, because it’s an area in which people can readily improve their own lives. Most of us negotiate every day, multiple times a day—with family members, coworkers, and yes, vendors. By changing our behavior in a few simple ways, most of us can lead significantly happier and more prosperous lives.

What is one thing you think most people don’t realize about negotiations? What are some common misconceptions?
The biggest thing people don’t realize about negotiations is that they’re everywhere, all the time. When someone says “negotiation,” most people think of buying a car, asking for a higher salary, or sitting across the boardroom table from a business partner. They don’t think of discussions with a spouse about restaurants, discussions with a bank about fees, or discussions with a coworker who hasn’t been pulling their weight. Anytime we depend on somebody else to achieve our own goals, we can negotiate. By associating negotiation with a few limited contexts, however, we severely limit our ability to reap the benefits of negotiation.

The second-biggest misconception about negotiation is that it’s all about figuring out how you can beat someone else. That’s far from the full story. Negotiation is about solving a problem in a way that benefits multiple parties at the same time. Sure, you’ll eventually have to nail down the price. But most people assign that aspect of negotiation far too much emphasis, often completely ignoring the many other (and potentially more important) aspects of the deal that can benefit everyone at the same time (or at least help one party more than they hurt the other).

What do you think is the safest bet for ‘state of the art’ for effective negotiations five or ten years from now?
The safest bet is that the misperceptions in the previous question are not going to disappear anytime soon. So we, as committed and aspiring negotiators, need to help ourselves and others see the negotiations all around us. And we need to be vigilant in treating negotiations as opportunities to find unexpected value, not just opportunities to crush our counterparts.

You seem to be looking at three inter-related practices: unethical behavior, ineffective negotiation or sleep deprivation. Have you noticed any deep connection between these three topics that might escape the untrained eye?
I think the deepest connection is that most people think these issues are not going to threaten their own careers or personal lives—until they do. In other words, most people think they will never fall prey to unethical temptations, already know how to negotiate, and can deal with sustained sleep problems. But then they find themselves unwittingly slipping into a scandal, inexplicably failing at the bargaining table, or letting their sleep problems severely damage their work. Don’t let it be you!

Our audience for this blog is predominantly procurement professionals who must negotiate optimal commercial terms with vendors. How can some of your best practices that are applicable to a salary or professional negotiation provide insight for this use case?
The key word is “terms.” Fixating on one price with one counterpart is sure to produce an impasse or, best case, a deal that nobody finds satisfactory. Treating negotiations with vendors as opportunities to trade several of your priorities for several of theirs is likely to produce some much more creative (even exciting) deals, especially over the long-term. 

What’s some advice that you can give to people who might be interested in generally improving their negotiation skills?
I would honestly suggest reading my book, The Bartering Mindset, which offers a new and different way of thinking about negotiations. Briefly, we often negotiate badly because we treat negotiations like monetary transactions (adopt a “monetary mindset”): We think of ourselves as locked in a battle with one party over one issue, on which the other party wants the opposite. The book teaches you to treat negotiations like bartering trades instead (adopt a “bartering mindset”). In other words, it teaches you to see negotiations as opportunities to make a series of mutually-beneficial trades with multiple partners. The latter is not only much more beneficial. It’s much more fun!

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Why Making It Easier For Vendors To Do Business With Your Organization Is A Vital Competitive Advantage

 
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Edmund Zagorin
CEO & Founder

Ask yourself this question: What is the difference in value between your organization’s best vendor relationships and average vendor relationships? Is it significant? 2x difference? 10x difference? What is the true value of reliable, consistent, trustworthy excellence in a supply or service partner?

During periods of rapid technological acceleration, most leaders will tell you that the difference in value between the best and the rest is more than 2x. In other words, the distribution of excellence in your vendor portfolio looks more like a ski slope down from your y-axis (e.g. a “long tail”) than a bell curve.

The reason for this phenomenon is profoundly connected to the acceleration and diffusion of digital technology that can reduce the cycle time of a business process by an order of magnitude. Some of your vendors are probably fast adopters, meaning that they are able to answer your questions quickly, adapt to changing market circumstances faster, respond to your emails and answer your questions in real time. Consider that the phenomenon of a greater than 2x difference is observable in many other parts of the enterprise, including:

-          departmental cycle time

-          sell-side product market share

-          employee talent & compensation

In other words, your organization’s best department has a cycle time more than 2x better than your organization’s average department. The market share of your organization’s best product or service has more than 2x greater than your organization’s average product or service. Your organization’s most compensated employee is paid more than 2x your organization’s average employee compensation, and is likely to have skills that are worth more than 2x your organization’s least skilled employee. In each of these cases, the difference between the best and the rest is more than double. What does this mean for your supply chain?

 
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After three decades of outsourcing, it is likely that some of your greatest levers of enterprise value work for your vendors. Consider that there may even be people who work in your office, side by side with your FTEs or on site in other locations across the globe who are actually employed by your vendors. They are helping your teams create and launch new products, they are making sure that your contracts are being sold, they are driving important commercial results for your organization. And they are part of your supply chain! This is why talent is only part of the value creation story: awesome vendor relationships will likely play a key role in company biggest outcomes, especially in technical and creative roles that are challenging to hire for.

The classic example in Silicon Valley is Uber and Twilio. Twilio enabled Uber’s ride-hailing service with the technical platform to create a phone number in any country to connect driver with rider, and to enable text messaging. The rest in Silicon Valley history. Would Uber have been able to grow as fast or spread as broadly if drivers and riders couldn’t call each other to ask where the other was? What would the market share versus Lyft look like if the vendor relationship had shaken out differently or was done on unfavorable terms?

This same dynamic is ultimately true of all globally integrated manufacturing supply chains over the next decade, particularly as 3D printing and CAD workflows become ubiquitous. We are already entering an era of extreme price volatility, where commodity prices in different parts of the world fundamentally alter what contract manufacturers will be competitive for the Bill of Materials (BOM). What happens when innovation itself begins to drive price volatility, as a companies prices are literally impacted by their speed of adoption of connected, distributed, autonomous machines? (Think: 3D printers but for everything and everywhere, from metals, plastics and even human tissue, from integrated circuits to nanoparticles). What happens when the use of new fully automated production affects bottom line revenue more than any other single factor? What happens when the disruption created by autonomous manufacturing makes the disruption from autonomous vehicles look like child’s play?

It is quite possible that over the next decade there will come a sudden, urgent tipping point where all manufacturing companies will have to rethink their approach to sourcing, contracting, transporting, assembling and managing all of the materials that go in all of their physical products. Ask yourself: how ready are my vendors for this tipping point? Who are my top vendor partners and my top relationship managers, and what are they doing to prepare for this? How many of them will have retired by 2025? Executives are already doing that math and realizing that if this tipping point for autonomous manufacturing has even 1% the force of what’s described above, then the speed of their procurement’s status quo digital transformation looks a lot more like the speed at which Blockbuster adapted to Netflix (by going bankrupt) than the speed at which Microsoft adapted to Dropbox (by launching Sharepoint). Microsoft has had an amazing turnaround and in some parts of the world Sharepoint is and will remain dominant. The story of the VHS rentals business model provides a cautionary tale.

The good news is that change is possible. The best insurance against the unknown investing in excellent talent is either in your team or in your supply chain partners.

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Bid Ops Webinar: Friends Don't Let Friends Run Bad Bids

Bid Ops CEO, Edmund Zagorin, discusses insights from the private and public sector on how to improve and develop efficiencies related to solicitation, vendor management and vendor negotiation. Click play below to watch the full webinar.

To view additional information and register for our next webinar, click here.

 

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Art of Procurement Podcast: Automating the Negotiation Process w/ Edmund Zagorin

 
 

During ProcureCon Indirect West in September Bid Ops CEO Edmund Zagorin sat down with Philip Ideson from the Art of Procurement Podcast to discuss the impact of emerging technologies in sourcing and their importance in the negotiation process. Listen as they discuss the opportunities automation unveils when introduced in complex sourcing events.

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THE FUTURE OF PROCUREMENT Q&A PANEL: HAL GOOD

THE FUTURE OF PROCUREMENT Q&A PANEL: HAL GOOD

I think one of the exciting things that's happening is the whole cognitive idea where we basically don't allow things to break down, but we basically rely on smart sensors to be able to do predictive analysis and to be able to sense when there's a problem and intervene with no downtime.