Chapter 1: Adapting to Change

In light of these shifts, it’s crucial to understand the evolving deal terms. Many conventional practices are being re-evaluated as organizations renegotiate long-term contracts. The volatility stems from various factors, including:

• Industries starting anew, such as automotive and aerospace, which are recovering from low demand.
• The entertainment sector facing a dual challenge of increased streaming demand and production limitations due to health protocols.
• Potential mergers among distressed companies, leading to fewer available buyers or suppliers.

Pricing is also subject to rapid fluctuations, as suppliers grapple with meeting customer demands. Buyers may find themselves willing to pay a premium for priority treatment when supply is constrained. This marks a departure from traditional price negotiations and long-term volume agreements. Suppliers who can introduce flexibility in payment terms will likely attract more partners.

Exploring non-financial terms—such as intellectual property rights, exclusivity, access to innovation, risk-sharing, and contract flexibility—can also present valuable opportunities.

Organizations that adeptly navigate these changes can expect improved margins, greater supply chain resilience, enhanced service levels, and prioritized access to sought-after technology and innovations.

Section 1.1: Prioritizing Key Terms

To leverage these new opportunities, negotiators must prioritize effectively. Conducting scenario analyses to determine which terms warrant focus is vital. Additionally, working closely with senior leadership has become increasingly important. In the past year, CEOs and CFOs have taken a more active role in negotiations with key customers and suppliers, which has allowed them to gain leverage. Negotiators should continue to engage these leaders in critical discussions.

Section 1.2: Leveraging Digital Tools

To excel in today’s digital negotiation environment, consider the following strategies:

• Create a Comprehensive Agenda: Collaborate with your counterparty to draft a detailed agenda. Allow time for each party to share insights on how the pandemic has impacted their operations, backed by credible data. Schedule breaks for teams to regroup based on emerging information, and ensure ample time to confirm agreements and outline next steps.
• Schedule Shorter Meetings: Securing an hour for multiple shorter meetings is often easier than arranging a lengthy session. Without the need for travel, you can efficiently conduct several brief discussions in succession.
• Include Diverse Stakeholders: In negotiations, invite relevant stakeholders from various locations to participate in the same meeting. This facilitates direct discussions on cross-functional issues, ensuring that all perspectives are heard.
• Utilize Video Technology: Employ video conferencing to capture non-verbal cues and build trust. Familiarize yourself with the technology being used to avoid distractions during discussions.
• Establish Back-Channel Communication: Coordinate with your team to use messaging platforms like Slack or text for real-time observations during meetings. This enables agile adjustments to the conversation and strategic breaks when needed.
• Initiate Personal Check-Ins: Take time to gauge your counterparty's well-being before diving into negotiations, fostering an atmosphere of empathy and trust.
• Mind Privacy Concerns: Be cautious with what you disclose, as virtual meetings can be recorded. Avoid oversharing and ensure that sensitive information is handled with care during screen sharing.
• Create Breakout Rooms: Use breakout rooms for private discussions among your team, allowing for informal conversations similar to hallway discussions in face-to-face settings.
• Follow Up with Summaries: After the meeting, send detailed summaries to both your counterparty and your team to clarify agreements, unresolved issues, and action items.