Transforming Conflict and Harnessing Curiosity for Better Deals with Andres Lares

00:00 - Andres (Guest)
If you think of the best negotiators, I think in the movies and kind of stereotypes, they're smooth talkers and while there's a little bit of skill there in being persuasive, I think most of the best negotiators at least from what I know that we work with are typically that are very curious people and they ask great questions. And that makes sense, because the reason probing is so important is not only does it give you access to information, right which is kind of what people think of stereotypically but it's also how you develop rapport. Access to information, right, which is kind of what people think of stereotypically, but it's also how you develop rapport.

00:27 - Mike (Host)
My name's Mike Lander and you're listening to Higgle the B2B sales club podcast, where we bring you actionable insights about sales, rfps, negotiations and difficult procurement discussions from sales leaders, brand leaders and procurement leaders. Please subscribe to get updates when new episodes are released and procurement leaders. Please subscribe to get updates when new episodes are released. Andres, thanks ever so much for joining me on Higgle the B2B Sales Club podcast Great to have you as a guest.

00:55 - Andres (Guest)
Thank you for having me Excited to chat today.

00:56 - Mike (Host)
So, without further ado, let's get straight into who are you, what do you do and your favorite piece of music, and why.

01:04 - Andres (Guest)
Okay, so who am I? Andres Larez. I am the managing partner of the Shapiro Negotiations Institute and we are a global negotiation influence training, consulting firm. So that's a little bit about us, and we can take this conversation anywhere, but that's the context. And then, favorite piece of music is a very interesting question. Probably four or five ideas come to my mind, but if I had to choose one, I'd probably say tom petty free falling oh, what a great track. You know number one it's in probably the best parts of movies. When it's in the movie soundtrack it's always in a very positive place, but it's more so. That is essentially the reason that I picked up guitar so many, many years ago when I took the guitar. I love that song. It's a very easy song play and so I don't play as much as I'd like to anymore, but that certainly had an impact there.

01:47 - Mike (Host)
Brilliant. So our son plays guitar. He's 13 and I encourage him to play that track. Currently he's playing All on the Watchtower by Jimi Hendrix.

01:56 - Andres (Guest)
Different difficulty level. I don't think I could have done that one.

02:01 - Mike (Host)
So, yeah, he's learning to play that the full thing, which is interesting, but that's such a great track In fact, it's one of my all-time favorite tracks. Tom Petty sadly died, didn't he? Yeah yeah, reasonably recently.

02:11 - Andres (Guest)
I think I mean maybe not as recently anymore, but yeah.

02:14 - Mike (Host)
Exactly, but just such a great artist, brilliant, brilliant, brilliant artist and a great track, anyway, music. They're here to listen about negotiation and sales. So first question, andres, let's talk about the power of nice first. So that's a book that you wrote. What inspired the book and what's the essence of it?

02:32 - Andres (Guest)
So the power of nice is really about.

02:34
You know, I think when people hear it, they gravitate towards the word nice and that is it's behind me on the video here where you can see power and nice are two big words and nice is what gravitates people.

02:43
But I think the critical part there's power, and I think really the theory behind it and really what we very practically are striving to do when we're training folks, is that the power of nice is about making sure that you are in fact pushing for your objectives and advocating for your objectives, but you're doing it the right way, which means you demonstrate emotional intelligence and empathy. And really it comes down to kind of what the subtitle is, which is, in order to get what you want, you have to help the other side get at least some of what they want. It is that concept that you are certainly allowed to achieve your objectives and should, and especially for those that are for profit, whether in sales, whatever position you're in but you're not negotiating against the other side. Ideally, if you're properly collaborating, you're going to be negotiating with the other side and you should be thinking against the other side. Ideally, if you're properly collaborating, you're negotiating with the other side.

03:28 - Mike (Host)
You should be thinking of the other side not so much as an adversary Of course, putting yourself first, but you're trying to help the other side at least get some wins. So let's just talk about again, unprepared questions. As all my listeners know, the unprepared questions are the best. I do a lot of work, obviously, with salespeople who are selling into large organizations. I'm an ex-buyer and now I work with salespeople and what I talk about a lot is I don't know if you've heard of the Kraljic matrix.

03:50
There's no reason you should, but it's all about so the guy Kraljic you probably do know, given you're in negotiation was all about. Basically, when you're dealing with suppliers as a buyer, if it's got big impact on my company as a buyer and there's a market of one and there's a market of one, so one supplier that can fulfill the need, then obviously you're going to collaborate. But if you're in a market whereby it's perceived as a commodity and it's perceived as adding little value to your business, you'll get treated as a commodity. I always talk to people about the onus is on the supplier to educate the buyer about why this is such a critical buy, where the impact is, where the value lies and why they're unique and the underlying theme there is and that takes you into collaboration. Can you just talk about that a little bit, the collaboration piece and how you get to collaboration versus competition.

04:35 - Andres (Guest)
Yeah, I love that, and I think there's some overlap with that matrix with something called the Thomas-Kellman model. There is exactly Conflict resolution model, conflict resolution model, exactly. And so I think the concept there is just basically, and there's simple models I love because they're very practical. And so the Thomas Killen model is just how much do you or the other side care about the relationship in one axis and then how much do you or the other side care about the outcome of the other? And they both give you the same result, which is the sense that if's a sole source, meaning that I cannot buy this item anywhere else, I'm going to have to play ball and that means you have most of the leverage and you got to work through that.

05:09
Now it doesn't mean that I can't negotiate things, and if I'm properly prepared and a good negotiator I can. But I'm probably negotiating many of the fringe aspects right, the warranties and the payment terms. I'm probably not putting a lot of pressure on the price and lot of pressure on the price. And then the flip side is if you're a commodity and you're selling something that I can buy from you or 50 other people and I don't care which one because they're all the same, then the leverage will be on me and so you can do as much as you can and want to differentiate or try to, but it's going to be very difficult and of course there's things that are somewhere in between. But the other layer of that is how much you care about the relationship and I, because that's still an important purchase for you.

05:52 - Mike (Host)
And you're never the only supplier. I mean suppliers need to understand this idea of the USP unique selling proposition. There is no such thing in this world today broadly as unique. There's always someone that can provide something similar or a substitute that will do the job.

06:06 - Andres (Guest)
Exactly. It's always just a matter of how well it'll align and how much work will be for your organization to swap.

06:11 - Mike (Host)
What's your barrier to entry and?

06:13 - Andres (Guest)
friction. So what I like about it is then, if you start thinking that way, you start to realize that even when it's a sole source, the only one, you can still push some around the fringes, but even when you are essentially almost a commodity, that's when you start to realize service and the relationship is so important. And I'll give you an example that you know we were actually so. We trained lots of sales. We also train lots of procurement and we train a very large procurement buyer in the aerospace industry. And one of the things that they said is it is before covid, we start training them. They we're the 800 pound gorilla and most people kind of came to us because of the size of our organization. But what happens is when we need something we don't always get it because they're almost kind of like they got to crawl back all that.

06:53
So it was interesting.

06:53
They brought us in and said we still want to hit all these KPI, all these objectives.

06:58
We want to do it in a way where we're developing relationships and I'd say the best testament to our work potentially could be this account where COVID hits there is all of a sudden where you've got to pick essentially your favorite vendors to provide the very little resources that you have and pick who you're selling to basically and they're being sold to because they had developed relationships over the last two or three years based on a lot of the training we had done, so that, rather than saying I'm going to stick it to them because they've been screwing me for the last 10 years, they were saying, hey, this actually has developed into a real partnership and I want to help them.

07:27
And so I think that's what I'm real proud to have at Company Moments is that they still were not giving up KPI, but they had deeper relationships. They understood a lot more of the other side's business, how they produce something. They were giving them additional value add, changing the way you negotiate to really collaborate, and so to me, that's another example of proof that this stuff really works where they are not completely mutually exclusive. You don't have to be a pardon my language a total asshole to get out at the right multiple and the right premium and there's nothing wrong with that.

07:53 - Mike (Host)
That's a straight commercial transaction. We'd come in as procurement and our job is to drive EBITDA improvement. But we always said to people you know, I've certainly always said look, any fool can cut costs. What takes skill is to cut cost and improve innovation and drive quality and build partnerships and reduce risk. That's much more complex because you do need some give and take, because we will be asking suppliers at some point to do things that they're not contracted to do. But it's part of the partnership going forward and so you segment your supply base. There are some commodities, there are some very high value, high collaboration partnerships and there's some in between.

08:43 - Andres (Guest)
And I love that, because I think then you got to be thinking about their business too, right? I mean, again, that's where the emotional intelligence comes in. Michael, the procurement director can't ask me just randomly to lower my price by 10%, because that's the key. He's being tracked. But if all of a sudden you realize that look, if we were able to produce 30 more of those goods, we are able to set up a new plant and that plant would bring a lot of cost savings, and so now you're able to pre-purchase and so like those things that there sounds so cliche but they happen all the time everywhere. And that starts with kind of the mindset which I think with private equity. When you're getting that pressure you said, it's easy to just cut costs in the short term.

09:30 - Mike (Host)
But to be able to do that in a way where you're not then affecting your business long term, it requires real skill, real patience. And it's a different ballgame Because something else. I read a great book many years ago called Second Bounce of the Ball, which was by an investor. But the principle that I take away from it is, if you look at the flip side of that private equity-backed investment, in three years they're going to sell it. So let's say they kind of go to market and they try and sell it three years after we've done our work, if we haven't done our work effectively and driven quality into that supply base during due diligence it all unravels Because the commercial DD people will talk to suppliers and they'll find out that it's actually a bag of spanners and the whole thing's a mess and liars. And they'll find out that it's actually a bag of spanners and the whole thing's a mess and there's no one really running procurement anymore because it's just been cost out and then basically take the headcount out All of that gets found out.

10:09
So you have to think about it in a more structured and more refined and more strategic way. Otherwise, the very thing that they try and do drive the cost base down to improve EBITDA and then come out at a high multiple on EBITDA unravels because the buyer goes, yeah, but all you've done is strip cost out. You've not added any value to the business.

10:29 - Andres (Guest)
For sure, and then you're stuck with it and then you've got a problem. Yeah, exactly.

10:33 - Mike (Host)
So let's move on to question two, because, andres, we could talk. Obviously, negotiation is a huge passion of mine. We could talk forever about it. So now talk to me about your practical negotiation framework that anyone can follow, and the headlines of it and people. If you're listening, you'll come back to this segment. I suspect is prepare, probe and propose. Just unpack that, andres, and why that framework was developed and why it's important.

10:58 - Andres (Guest)
Well, I think one of the reasons you and I like the Thomas Killam model same type of thing in this case which is that you know you cannot obviously explain relationship development and caring about outcomes all in one easy X and Y, just so you can't describe all of negotiation in three words, three phases. But it does still to its essence in the sense that preparation is the only aspect of a negotiation over which you have control, right. So, starting off with that, you can't control and we talked very briefly before we started about, you know, uncertainty, economies, wars, all these things that are impacting markets and economics, and so you can't control that. But what you can control is your level of preparation. And there you're being efficient and effective, right. If you spend your entire life preparing, you're not acting. That's also not great. If you're ill-prepared and not prepared enough, underprepared, that's a problem too. So it needs a really efficiency and effectiveness. And so there it's about having a checklist to help guide you. So you're being you consistently take the same process, follow the same process, which means you're going to be more efficient and effective. So that's kind of what preparation is all about.

11:54
You know, if you think of the best negotiators, I think in the movies and kind of stereotypes of their smooth talks.

12:00
And I think, while there's a little bit of skill there in being persuasive, I think most of the best negotiators at least certainly that I know that we work with are typically that are very curious people and they ask great questions. And that makes sense, because the reason probing is so important is not only does it give you access to information, right, which is kind of what people think of stereotypically but it's also how you develop rapport. I mean think of personally the people that you enjoy speaking to the most right having conversations with, and most of them are probably pretty good. You know they ask great questions and they're good listeners and I mean that's part of the reason you enjoy having conversations with them versus those people that potentially already you can kind of sense I'm talking to Michael and they already have kind of an answer right, go. So I could say whatever I want to Pick elephants, and then they're still going to go where they were going to go, it doesn't matter what I say.

12:44 - Mike (Host)
Because they're waiting for a pause in the conversation so that they can say what's always been in their mind. Irrespective of what you've said, I completely agree.

12:54 - Andres (Guest)
Someone said that line that listening is very different than waiting to speak, and I think that's exactly what's occurring in that situation. So that's the second P. And to speak, and I think that's exactly what's occurring in that situation. So that's the second P. And the third is when people think of negotiating, they think of the bartering in a flea market or something, and so you know that is the tip of the iceberg, right?

13:09
If you've done all your preparation work, if you've asked lots of questions and you really understand what makes the other side tick, what motivates them, what their needs are, then ironically, that's the easiest part. You've set yourself up for a proposed phase. But the proposing is about as we talked about at the beginning of this, which is you have to be thinking of the other side. It's in order to get what you want, you have to be thinking about what the other side wants, and so you're proposing solutions, typically, that achieve your objectives while satisfying the other side. And that's because, quite frankly, when the moment you shake hands, that is the beginning of the relationship and the extension of it. You know that is not where it all goes away. The negotiation quote, unquote is done, but it is the beginning of the extension of the relationship and you've really got to be a lot more forward thinking than just kind of we'll burn that bridge when we get there type of mentality.

13:51 - Mike (Host)
Exactly right and I know from kind of the negotiations that obviously I've done in the past and hundreds that you've done as well. Is that that kind of proposing? Whenever I talk to sellers and anyone that's listening, that's worked with me, will know I've got a bit of a mantra which is stop discounting, start trading. Well, the only way you can trade is when you have multiple variables, when you've got lots of things that you can talk to your counterparty about and you can trade what's important to them and what's important to you and you can structure a commercial deal. What's your experience across all the clients that you work with about that? Preparing them for what actually is important to both sides? What are those variables that you can start to move around?

14:32 - Andres (Guest)
So what's interesting is I'm going to go for a second. I think the best example to kind of talk about this is one that we technically don't deal with very much. So we are a B2B company. We train people in really exclusive B2B cases where salespeople, m&a buyers, leaders, whatever it may be. But I'll go to one that no one can relate to, which is a salary negotiation. What's interesting is we often get asked about this, and so there's kind of a PR around this, because we're using our principles and they certainly apply to this, and so what happens? Making 60,000, I'm going to ask for 70,000. And so okay, and they're trying to figure out. How am I going to justify that? What's interesting is the first thing we would say to them is well, if you're distilling the entire compensation to just salary and you're at 60, you're asking for 70, it is a 100% fixed sum negotiation, right, exactly, you pay me 60, pay me 70, somewhere between every dollar more that I pay you is a dollar less. You know, that's it. It's just very simple.

15:30 - Mike (Host)
It's like you've gone down the market and you want to buy a genie's lamp and you're working out how much you're prepared to pay and how much they're prepared to accept for that genie's lamp.

15:41 - Andres (Guest)
And so then there's no way to add value in that negotiation. So what happens, though, is and people, so you are shocked when you say this is, look, if you want to be more successful in negotiating compensation, you actually then have to come up and say look, I'm at 60,000 and I want 70. I'm at 20 days of vacation time and I want 25. My title's early manager I'd like to be a director, and my title's early manager I'd like to be a director. And so they are shocked when you tell them that, because they're like, oh my goodness, like I already felt bad about asking for the raise. How do I do that? And I said well, then, what happens is when you ask for those seven or eight things, which you need to be prepared and justify and have real precedent for, and those are your variables.

16:14
That is how you're now trading, because now you put seven things look, I can't give you a 70,000, give you 65, but at no cost to me and high value to you, I can make you a director rather than a manager. And so to your point. I think what's interesting is you need to be, and that is exactly the point of preparation, which is, if you didn't think about that beforehand, you're coming with one variable. There's nothing to trade, it's fixed sum and you therefore, by definition, cannot add value in the negotiation. But if you had thought about beforehand, you've actually generated negotiables and tradables. You have, which then you can trade for. And then the last thing I would say is that the best negotiators are probing to find out what are the things that are valuable to me that don't cost you a lot to give.

16:51 - Mike (Host)
Exactly right. What are the?

16:51 - Andres (Guest)
things that are valuable and vice versa, and you're trading those and that's where you've significantly added value to both parties.

16:58 - Mike (Host)
Exactly right Now, before we get to the back end of this, let's talk about BATNAs. So obviously in negotiation circles we love the phrase I think it was William Ury that created it back in the day the best alternative to a negotiated agreement. Why is that concept? First of all, unpack the concept. What is it for people listening and why is it so critical to anyone negotiating any commercial deal?

17:21 - Andres (Guest)
So what is it the BATNA is really? If you don't do this, what would I do instead? And that really goes for both parties, right? So if you're not negotiating, you're thinking about your own. If you're a good, skilled negotiator, I'm also thinking about your BATNA, and actually, in particular, that's more important. That's where leverage comes from. So if you think about where do you develop leverage, you develop leverage by creating more alternatives and improving those alternatives, or vice versa.

17:43
So we do a lot of work in sports. We help teams negotiate player contracts, and so, for example, if you're a player, let's think about this way, right? An example I'm helping a team, you're a player, and there's three landing spots for you. If I were to trade a player of mine to one of the other landing spots because I don't need them anymore, and that fills that void that you were going to fill, I now move you from three options to two options. That increases my leverage and my probability of landing here, right? So that is a real thing, and so I am not only playing with my own alternatives, but yours as well. And so then what happens is that's number one is those alternatives are key for leverage, but number two that's also going to very much affect your confidence level and your mindset. And then if you're coming in where you're a, well, that's a very different mentality. I'm going to come into our conversation where I will be respectful, I'll be thoughtful, I'll go through the sales process, but if you say no, I'll move on rather quickly and you will sense that ironically and probably want it more, versus if I look I haven't had a sale in two years and I definitely need this and the same conversation occurs and you say no, then I'm not going to move on very quickly and probably going to stick right there. And I'm not going to move on very quickly, I'm probably going to stick right there.

18:52
And so what happens is I find this is the part where it gets very interesting where a baton and alternatives. We do a bunch of simulations where you start to realize this is essentially. It's almost poker-like, where you want to be thinking about how would I be acting with Michael if I did have multiple good alternatives, including a very good baton? And so then you know it's like for the poker players out there two, seven offsuits, the worst hand in the game. But if I can tell you have that in your hand rather than aces. You're in trouble because you're playing the hand as much as you are you know the opponent, if you will, and pretending as much as you are the actual cards in your hand.

19:19
And I think that's where negotiation comes in, with one asterisk, just before anyone goes home and starts doing crazy things, which is, first of all, you want to be ethical about this and, secondly, you have to have a plan in mind. You can't be loose in poker. You can't play two sevens and go all in. Every time you will lose and equally, people will call your bluff. But there is some level of signaling to the other party that you do have alternatives, because if you don't, you've essentially eroded entirely your leverage, absolutely.

19:46 - Mike (Host)
And I think that the ethical piece is critical. My view is never bluff In business. Poker's different In business, when a supplier's negotiating with a potential customer. Never bluff, never threaten, because if you try that with me as a buyer, you'll find out exactly what happens next.

20:04 - Andres (Guest)
And false deadlines I mean the other one, I guess that goes into threats is like false deadlines. You know everyone loves to use deadlines.

20:09 - Mike (Host)
False deadlines? Absolutely, If you don't tell Colleen by Thursday.

20:12 - Andres (Guest)
But the problem is now you've pressured yourself that you're going to actually have to do something by Thursday. I very much agree because that erodes trust, right, and so I think you know what I was talking about earlier. An example would be if someone says and again, in a buyer-seller relationship, when you're going through a salesperson, if they're very savvy, may ask how many people have you down, selected? You know, and so then you've got to think about how your response is going to be. Now, just flat out lying and saying hey, when it's actually two? You know that's just wrong, unethical, you're eroding trust. Eventually we'll find out.

20:39
There's lots of reasons you should not be doing that. But then the question is you know a handful, you know, versus saying exactly four want to be. You have to decide when you're protecting a little bit of the information, but yeah, the flat out lie. If you think about that is the exact point of the power of nice is you have to build relationships and they require trust. And how far does that go when you've got exploding deadlines? When you're lying, when you're threatening, I mean it all goes out the window pretty quick.

21:04 - Mike (Host)
And also imagine, andres, is that let's say you're a supplier and you say to me Mike, I've got this time expiring deal. We can do a deal today and I can do a deal at 3% off the price we finally negotiated, but it expires. If you come back tomorrow, there's no deal. I say, okay, andres, thanks for that. And you go well, what are you going to do? And I'm like I'll have a think about it, put the phone down and I come back to you, not tomorrow, but the day after, and say hi, it's me, I'm back. And you go yeah, the deal's off the table. And I go really, is it Shame, because actually we were kind of considering using you. But you know, if that deal's off the table, there's not a lot of point. And in that moment, if you say, actually the deal's back on the table, I'm like, okay, here we go again, tell you what, andres, you know that deal you had. Well, if you take 10% off the 3% discount, then I might be interested. And you're just back in the bazaar selling a genie's lamp.

21:56 - Andres (Guest)
And without any strategy or None. That would be totally different if, for example, I've heard it and it's not our style, but it is at least a different approach. When CRMs, for example, when they sell lots of monthly and quarterly quotas, and so you'll find people that, with transparency, they'll lean into it and say, look, mike I mean we get a 10% bonus on all the commissions that we sell I will split that bonus, I'll remove 5% that comes out of my bonus if you sign by tomorrow, because I literally get the 10% and so I'm basically taking some of that personally and giving it to you and all of a sudden, now again you're collaborating, you're being transparent and you're very clear. Now for some people that's you know it starts to get into like, why are we talking about your salesperson's commissions? And it gets personal and that you get each their own, their style. But it's a discussion. But now it's a discussion and now it's real. There's transparency and there's a reason for it. This is not some random, not some random made up stops.

22:48
Exactly, you know, and the sale stops Really, and that goes to your word. The ethics and the authenticity and those things, those are all coming to play.

22:55 - Mike (Host)
That's a different animal at that point. So I'm very conscious of your time, Andres, and I could talk about this for a lot longer, but what are your top three tips for anyone negotiating a commercial or sales deal Out of this conversation? What are the top three things you'd say which will increase value for both parties?

23:13 - Andres (Guest)
So what I'll do is I'll go back to the three Ps but kind of give a little bit more on each one and I think hopefully that'll be a really kind of practical takeaway. So the first we talked about preparation and we have an acronym which is easy to remember, that you prepare to get paid P-A-I-D. So you want to be thinking about precedence, which is, when have I seen this before? When have they Alternatives? We talked about BATNA. What alternatives do you or they have Interests? What do I really want to achieve and what do I care about? And then deadlines we talked a little bit about deadlines and threats and that really helps to guide kind of a timeline. So that's about preparation. Think of it that way and you go a lot.

23:52
But is, if people say, how many questions should I ask, and it's usually for 99% of cases, if you think you've asked enough questions, you probably ask a couple more. And except for in an interrogative fashion where you know, the one tip I would say don't do is it is not a CSI episode where you've got a flashlight to Mike's face and say where are you on the night of the 14th? Because you're not asking their questions out of curiosity, you're asking to catch someone. So there, the real recommendation is to ask out of genuine interest and curiosity, and that will be felt by the other side, they will share more and you'll get a lot more out of it. So you're not asking what we call silver bullet questions to catch someone.

24:28
And then the third propose is if you're making a proposal, you should be thinking about how that impacts the other side before the words come out of your mouth, right? So if, whether it's I'm going to provide three proposals because I want to give them the sense of you know they have some control or one proposal, but you should never provide a proposal of any kind, especially certainly in B2B, if you're in sales, if you have not thought about the impact on them and how that relates to all the conversations and discussion you've had beforehand. And so if you're thinking about those things when you make a proposal, that means it's in the structure, in the way you communicate it you are much more likely to be successful. So those are kind of the three takeaways I'd share.

25:02 - Mike (Host)
Andres, what a fantastic conversation. Thank you. Three very practical things at the end, with a bit of detail behind each one. So, andres, where can people find out more about you and about SNI?

25:13 - Andres (Guest)
So probably the easiest would be our website, shaparonegotationscom, although actually, ironically, it's having a couple of server issues at the moment, so it's fluctuating, but that is a variety and so, if not, the other is LinkedIn as well, so we try to post a lot there, from podcasts like this, which I'm excited once it's released, to any other content we come up with. But it's been a pleasure and I appreciate you having me, mike.

25:35 - Mike (Host)
Andres, thanks for joining me. Thank you, Thanks for listening to Higgle the B2B Sales Club podcast series with your host, Mike Lander. Please subscribe so that you'll catch all the next episodes.