The best deal is not the best deal

When negotiating with a supplier in business, it’s a natural desire to want to get the best deal. And when we think of deals, we think of the value equation: The product or service as a function of price.

If we take this approach and succeed the net result is this: The party we are dealing with gets their margin squeezed and they make less money from dealing with us.

This isn’t the best deal. In fact, it is not a very good deal for both parties. Low margin customers usually get sub optimal service, attention and effort put into their account. In startup land what we usually need is love and attention more than sharp supplier pricing. Which is why best business practice is to leave something significant in it for the other guy.


Definitive Advice

Advice is an interesting thing to give because by it is opinionated in nature. It is influenced more by the previous experience of the giver, more than it is by the taker. Because advice we give is usually one of many possible courses of action, there will always be doubt in the recommendation. The only way of really knowing what advice to take, only becomes evident after it has been taken.

Where doubt is an omnipresent reality, the best advice we can give is definitive advice. Advice which is acted upon quickly and fervently. When advice increases self belief in the receiver, it is often more valuable than the advice itself.


Negotiation and motivation

I recently had to negotiate a resolution with my next door neighbour. We had a problem where their hot water service was broken and heavily leaking. While this wouldn’t usually be a neighbours problem, all of the excess water was leaking under my house and flooding the sub floor of my home as the street is on a slight angle. I was very motivated to get it fixed (his leaking hot water service) as it was potentially going to ruin my house. The difficult situation was that my neighbor for some strange reason was not so motivated. After pointing out the problem numerous times he failed to attend to it for many weeks. He even made a failed effort to create a channel to direct the water down a storm water drain, which is curious given the fact it would have been easier to fix the problem itself.

After many failed attempts to motivate my neighbour to ‘do the right thing’ and fix it, I went to the authorities. First I called the water authority who informed me that his water bill was in the thousands of dollars this quarter (much more than a new water service would cost) due to the amount he was using and wasting. They also said that this level of water usage had been going on for months. But they also said they could do nothing, unless it was their pipes that had failed. It was then that I found there was little I could do without legal action. So I started by informing him that I would start legal proceedings if he failed to taken action. Again, no action was taken. It was not until our plumber told us the stability of our house would be at risk unless it was fixed quickly. So I then took the altruistic route. I offered to fix it for him and pay for it myself, no strings attached. I just wanted it resolved. Miraculously, he fixed it the very next day without my help.

While I was happy the issues was resolved, I was curious about his seemingly inside out motivations. Yesterday I had a discussion with my neighbour on the opposite side, at which time we discussed the now famous water issue. I told her what had transpired. Her response taught me a little bit about understanding the true motivation of people. Here’s what she said:

“I’m not surprised, he’s not a very helping person. And he doesn’t like being told what to do and prefers to take the high status position in everything he does. See his giant lemon tree, he wont even let us take a single lemon or share them with anyone who lives in our street. In fact, he never picks the lemons himself, he just lets them fall to the ground. Apparently it is a sign of prosperity. He must want people to think he has lots of money or something.”

As soon as I mentioned paying for him, he fixed it. He was more motivated by our perception of his financial position than he was by  helping others, doing the right thing, wasting water, having a decent relationship with his neighbours or saving money with excessive water bills.

It’s another great reminder that what motivates us, is rarely what motivates others, especially during a negotiation.