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Author's profile photo Susan Galer

Taking Negotiations to the Logical Extreme

/wp-content/uploads/2012/07/bakedchickengl_124921.jpgQuestion: when does a negotiation to get healthy food on the table resemble a military operation? Answer: when a team applies the principles of design thinking to cut the best deal possible—for the company and its customers. This is precisely what a team of seven SAP employees has done at SAP Labs in India. Challenged by a global food company to find a better way of shipping products from source to shelf, the team focused on how to improve negotiations with carriers for the best transportation deal. However, instead of brainstorming within traditional confines of management practices, they did two things that are the hallmarks of design thinking. First they laser focused on the pain points of the people at the company responsible for shipment success. And second, they deliberately stepped out of the business milieu to examine the problem from a completely different sphere.

As SAP team member Pranav Saxena, tells it, the core issue the customer faced revolved around negotiation. The team found the most logical answer in the application of so-called ‘Extreme Negotiation,’ something that military strategists do to win battles. Saxena explains that military negotiations are the hardest kind because neither side will relax constraints nor do they want to walk away. Just like the military, this customer was bombarded by questions from all sides and had to make quick decisions based on thousands of data points, comparing various carriers, all with their own unique constraints.

Analogies can quickly fall apart, but not this one. Similar to military negotiations, the team realized preparation was everything if this customer was going to win. So they designed a strategic freight management tool, which is a fancy name for a brilliant piece of software that literally answers questions the customer couldn’t answer before. In place of manual spreadsheets that yielded too little information too late or not at all, the new prototype instantly analyzes scads of data across multiple variables. It even displays the results in easy to understand graphics. The customer can not only easily track shipments in the here and now, but just as important, negotiate from an informed position.

The new software gives the customer answers to pre-configured ‘what if’ questions, like what happens if they give a percentage of their business to one carrier and the price of oil goes up, or storms delay raw material deliveries? Like seasoned military campaigners, they can plot potential moves and counter-moves aligned with their budget plans and growth objectives. All they have to do at the negotiation table is follow the plan. Once on board with a carrier, business users can immediately answer senior management questions about whether or not a shipment will be on time. Best of all, the customer has a fact-based rationale for carrier selection, and it’s foundationally connected to what everyone in the company needs to get the job done right.

So what does all this prove? For one thing, there’s really nothing extreme about negotiating from a position of power. All it takes is having the right information where and when you need it.  And maybe, just maybe, managing complex transportation services across international borders and navigating enormous amounts of fast-changing data from multiple sources, doesn’t have to be a major battle. With the right software, it can be a breeze.

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