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Negotiating Tactic: Foundation (the Test Order)

Posted by Andrew Hupert on May 23, 2017 10:24:29 AM

Tactics:  Foundation

Negotiating tactic FoundationAKA: Start Small, Slow and Steady, Building Block, Short List, Test Drive

Description: You’re taking a building block approach. Maybe it’s your idea – maybe it’s his.  But someone wants this to be a test drive – or the foundation of a strongerrelationship.

Intent: Build trust – very intentionally, and very slowly.

Sample Usage:  

Bob: “Maybe we’re moving a little too fast here.”

            Alvin: “What are you talking about?”

            Bob: “We’re going from occasional client to full partners pretty quick. What do you say we find a way to test things out a little?”

            Alvin: “ I understand why you would want to do that, but from my perspective it’s a different situation. I’ll do the design work and navigation systems. For a major one-off project we’d have to talk about licensing and residuals. Or pay me standard rates for a job this size – with this kind of IP.

            Bob: “My client’s not going to want to hear about that.”

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Category:   Relationship Manager

Style:   Compromising. It can be Collaborative – in the long term. It may be Avoiding, if you are using it to disqualify a potential partner.

PIFH (Power/Influence; Hope or Fear): Hope. You’re letting him down easy. It’s a qualified “yes”, but you’re telling him he’ll have to work for that relationship. Even if you have Power, you’re using influence tactics because you want some form of relationship. May be uneven relationship. Ex.: Amazon.com and retail partners.

Counter: Hard to do, because it is basically an extreme form of Appeal to Reason. You can try to get him more excited with a Big Story.

Combination/Related: Try Baby, Benchmarking

Note:  Foundation, as in “start by building a solid foundation,” is the good-news-bad-news joke many negotiators dread. The good news? You and that big, famous counter-party will really do business. The bad news? You will make very slow, methodical progress.

Foundation negotiating tactics make your deal stongerFoundation is the logic behind every test order, every annual review, every credit application, and every platinum level buyers club – anything where one side is taking control of the relationship. If you use Foundation, you are telling your counter-party that yes, you can do business, but it will be on your terms.

 Perhaps they want to go fast, and they are using Marry Me or other relationship-builders. They are using Big Story to get you excited about the potential size of the market. They are trying to get you to make emotional decisions based on Hope (and greed). They may even use a Take Away to scare you into acting quickly.   But you are not having it. You’ll use Foundation to build this relationship or partnership according to your own orderly plan.    

Foundation is about timing, scope, and power. If you are using Foundation techniques like:

  • Test orders
  • Probationary periods
  • Applications
  • Periodic reviews
  • “Preferred partner” or “preferred supplier” designations
  • Contingency compensation programs (like commissions, or earning excusive territory through good performance)

- then you are exerting control over the business relationship.   You are probably putting the brakes on at the beginning – slowing or at least regulating the way new business relationships grow.

Foundation is a building-block technique. One side has already mapped out the path to cooperation. In large, bureaucratic organizations, the terms and conditions are probably going to build in to the initial proposal. Internally, the conditions for partnership have been hammered out between legal, accounting, operations, and all other relevant stakeholders. For the more freewheeling entrepreneur or owner, Foundation techniques may show up later – when the boss feels things may be moving too quickly, or if there are questions about the counter-party.

Foundation tactics build stronger dealsOn the surface, being told that you can get the deal and relationship you want, but it will take 5 years instead of 3 months sounds like a reasonable compromise. In fact, though, Foundation can sometimes be a power play. One side is imposing its process agenda on the other. It may turn out just great – but if you are on the receiving end of Foundation tactics, then be aware that the other guy may think he is running things.

Different cultures have their own version of Foundation.

Americans like the test order and “preferred supplier” programs.   Europeans favor the limited scope JV that may lead to a full-scale partnership. Asians will banquet and relationship-build until they have some level of trust. They don’t have to love you, but they have to think they know how you’ll act in the future.

Benefits to the user

For the side using Foundation techniques, the benefits are a controlled and orderly on-boarding of new suppliers, clients, and partners. You have controlled timing, gathered more information, and exerted influence over the process.

Threats to the receiver

If someone has Foundationed you, two issues arise. First, Foundation is usually used to moderate time, scope, and relationship. Second, this initial deal will be smaller than you had hoped.

Final Word

This is where MANY successful negotiations end up. It’s either a test order or a provisional cooperation that may build into a strategic partnership.   This is not for one-off transactions, but as a “test drive” it could mean a steady stream of freelance assignments and gig-type strings of deals.

It’s useful when the other side is looking for a bigger or riskier deal than you want. It’s good to have a low-risk or no-commitment form of the deal in your pocket, so that you can push back with a compromise offer. Alternatively, you can introduce a new Benchmark to tilt the value of the deal in your favor.   That is a good way to re-Anchor. He says he wants a long-term commitment. Your answer, “We can talk about that when we meet in 6 months to discuss our annual performance”.

Avoiders can use this one as a face-saving NO. Make a ridiculously small offer, or try getting the other side to work for free (i.e.: write a detailed proposal or do a sample project “on spec”).   Anything to have the other side “prove himself” – and gives you a justification to say “no”.   

Topics: Tactical Tuesday, Tactics, Foundation

Written by Andrew Hupert

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