So this podcast is kind of a big deal for me and negotiations.ninja. It's a milestone podcast! Podcast number 10! And I couldn't think of anyone better to celebrate it with than Anthony Iannarino! Anthony is a speaker, a best-selling author of two books - both are fantastic - and a sales leader. He has worked for and spoken to global giants like Accenture, Abbott Labs, NetJets and Wells Fargo, and is one of the 50 Most Influential People In Sales. In this podcast (an extension of our first conversation) we dive deep into how procurement and sales overlap and how we can collaboratively drive more value for the business when it comes to negotiation.
Guest: Anthony Iannarino
Mark: Good afternoon, and morning, and evening, wherever you are in the world. We've got Anthony Iannarino on the line with us. Anthony, how are you?
Anthony: I'm wonderful, Mark. Good to see you again.
Mark: Yes. Thank you so much for joining us this morning. I'm super excited about today's conversation. I really think that people are going to get a lot out of it. For those of you that are listening and that haven't listened to the first podcast that Anthony and I did, we talked very briefly about a topic that I think needs to get uncovered more clearly. We spoke about the role of sales and procurement in organizations, and essentially what they're trying to achieve and how both, sort of teams, I would say have, to use Anthony's words, "have behaved badly in the past." So today we're going to dive into that conversation a little bit more, and we're going to frame the discussion around where are we now within sales and procurement, where do we want to be, and how do we want to get there? How do we get more collaborative in meeting the needs of the business? Because essentially we've got the same goal. We're trying to meet the needs of the business, and we're trying to help each other to meet the needs of the business, so what are we going to do to get there?
I guess my first question for you, Anthony, is where are we? What would you say the environment and the culture is in sales right now?
Anthony: It's a great question. In sales, what we want to be, what we strive to be is consultative, but that's not always how we behave in sales. A lot of times we behave transactionally. I think what drives a lot of that for us, Mark, on our side of this conversation, is that we're measured on quarterly goals, and annual goals, and we have quotas, and we have metrics that we're measured on. Those measurements can drive certain behaviors.
While we want to be consultative when we get an RFP, a lot of the times one of the bad behaviors that I would say we're guilty of when you look at the environment and culture, is driven by the fact that because we're supposed to be driving revenue and we're supposed to be growing our business we can respond to an RFP and be very transactional, even though we know that that's not really how we would serve your business under other circumstances.
I think the conflict here on the sales side of this that drives the cultural behaviors, we want to be consultative, we want to be trusted advisors, we want to work very closely with the businesses that we work with, in B2B sales specifically. But a lot of times we behave transactionally in order to reach our goals, and sometimes we treat you transactionally, too. So on the other side of the table we're like, "Okay, so you want a price? I'm going to give you the price." And it doesn't really even matter if it's tied to the outcomes you want. You asked me to say yes to these questions and I did, and then we end up being transactional, which really doesn't serve us, and it really doesn't serve the clients that we're working with either.
Mark: Oh, I totally agree. Do you think it's industry specific? Do you see other industries being sort of "more evolved" in this process than others?
Anthony: I do. I think that there are, maybe not industry, but certainly there are players now who are more evolved in an bunch of different ways, where they, before they let an RFP, they do actually have a lot of conversations with sales organizations, and short-list a group of people that they believe have the potential to serve them in a more strategic way. I'm starting to see over the last couple of years the request for us to be more strategic on our side; the request in a conversation and an RFP in a situation where it's going to be competitive to say, "We really need to be more strategic here." And they're literally asking for that.
I think that that's a change now for salespeople who are looking at RFPs as if they're the same and the organizations are the same, where there is now a chance to have a conversation to say, "How do we get more strategic with you?"
Mark: Right, yeah. Very interesting. What do you think is the mindset shift? How do the more evolved or advanced sales players think differently than others?
Anthony: Probably the dominant theme in sales for the last, maybe call it 2011 until now, call it six to seven years, has been driven by CEB's The Challenger Sale, which is leading with insight. I don't know that even Brent Adamson, and Matt Dixon, and Nick Toman really recognized what a big deal it is when that book and Challenge Your Customer came out on how much different salespeople have to behave. It means it's no longer about the product, it's not longer about the service. It's not even about ROI, it's about, "Can you really be a business partner. Do you really have the advice to help me run my business?"
And now that we're starting to see companies respond to that and say, "I want to understand what you think about my business and what your point of view is, and what you think we should be doing, and what we don't know," that's a very high hurdle for a lot of salespeople to get over. It's no longer about features and benefits, and that's sort of why, in my opinion, why RFPs look the way they do. "I just need you to say yes to all of this, because it's really table stakes, but now what are you really going to do to help us drive better results?"
This is challenging for a lot of salespeople in a lot of sales organizations, but the best sales organizations right now get this, and they're really working on business acumen and situational knowledge, because if you want to be a trusted advisor, you need the trust, and you need the advice. Without the advice, you really can't serve people in the way that we're going to, especially on big deals where there's going to be two organizations that have to work together very strategically.
Mark: Yeah, I love that. I've almost finished your most recent book, The Art of Closing, or The Lost Art of Closing I should say, my apologies. The thing that I love in that book that you say is, "Sales isn't something that you do to someone, it's something that you do for someone and with someone." And I think that's a total and complete mind shift, at least from my perspective from the procurement side of the table.
When I think about a salesperson I don't think of them in that way. So thinking of salespeople as business partners as opposed to someone selling something to me, as opposed to selling something for me, is a totally different way for procurement people to think. I can only imagine how it's different for salespeople to think.
Anthony: It depends on what kind of a culture they've come out of. I mean, there are still some boiler-room type places, and there are still some trainers who are out teaching people how to be pushy and manipulative and use tacticals as solutions to problems and tie-downs, and things of that nature, that if you were to look at the whole of the way that salespeople sell now, I would say the tide has shifted too far in the other direction and they are too conflict-adverse to really help their clients.
You know this because of the work that you do: conflict comes with the territory. But we've gone from driving the conflict and saying, "Look, I'm going to push, and I'm going to be smarmy and manipulative," to "Now, I don't want you to be upset with me and I need you to like me," so a lot of salespeople avoid the conflict at all. But being consultative, it comes with a bit of conflict. What I mean by, "You're not trying to do something to someone you're doing something for someone and with someone," means we have to talk about what the real obstacles to producing better results are. We have to get them on the table, and we just have to be willing to talk about it.
I teach a class at Capital University, and I always ask the students to give me all of the words they use to describe salespeople, and they come up with a massive list of negative words that basically, anytime you think of the stereotypical salesperson, they have all the words for it. Then, I asked them to raise their hand if their mom works in sales. Then, I asked them if their mom is pushy, smarmy, manipulative, self-oriented, selling people stuff that they don't really need, and they're horrified that I would say that about their mom. But the truth of the matter is those kind of tactics haven't served salespeople for a long time. Though we've gone a little bit to, "Hey, you know what? Just say yes. Get the deal. Don't worry about having the real conversation about what it takes to produce results," and then we let our clients under-invest, not just in money, but in the time and the energy.
What The Lost Art of Closing really is about, is about change. I mean, sometimes you have to change more on your side to get the result that I can help you get than changing partners, and you could swap me out for somebody else. But if you don't make these changes on your side, you still don't get the result. Salespeople now have to engage there and say, "Look, to really help people we have to have big conversations now."
Mark: Agreed. Totally agree. I think in procurement it comes down to sort of a similar thing. The current environment and culture in procurement, and where people have come from ... And I know I asked you the question earlier about whether or not it's industry-specific. In procurement I find it's not necessarily industry-specific, but more leader driven than anything else.
So if the mindset of the leader is cost reduction, cost avoidance above everything else, then obviously his team is going to drive towards that. So the conversation becomes less about, "What are we doing to make sure that we not only meet the needs of the business, but ask the business difficult questions like, "Is this something that you actually need, or is it something else?" Because quite often the business doesn't necessarily know what they want. They know what the problem is they have, and they know that they need to solve that problem, but they don't necessarily know what they need to solve that problem. So asking the business those tough questions I think is sort of the next step in asking the right questions. When that question cannot be answered, being able to tie in, and being more evolved, I should say, being able to tie in a consultative or strategic salesperson to help us solve that problem is where the gap is.
There's a huge spectrum in procurement of on the one side we're driving for dollars on the left, and then on the right we're consultative, strategic, thinking about what the business needs. There are businesses that fit within that spectrum and that range. And I find that a lot of that has to do with the leadership mindset.
Anthony: I think that's true on both sides. I do wonder about this. I've had this thought over the last couple of weeks since the last time you and I chatted, just about how lean organizations have gotten, and if cost reduction and cost avoidance is still really the biggest challenge they have. And in my experience, just thinking over the different things that I do, I wonder if we've gone too far in that direction on both sides, one, with procurement saying, "Look, you have to help us reduce the spend in this category," when we on our side have said, "You can have better, faster, and cheaper," even though there's no company on earth that can deliver all three of those things: better, faster, and cheaper. But we go along with the lie and say, "Yeah, just swap out partners and we can be better, we can be faster, and we can be cheaper."
Then, we disappoint you, because there really isn't any way to do that. I wonder if we've gotten so lean. I ask you this because I'm starting to hear more people take more of a supply chain view saying, "I need you to help me reduce my cost, and I'm willing to invest more now to get that result, because I understand that when we've gone to the lowest price you've put my supply chain at risk, and I need you to be more strategic with me and teach me more about how we need to operate, because taking money out of this doesn't produce any better results for us."
I think that we both go too far one direction or the other, and we may be a little bit too tight on this side. I'd be interested to hear your thoughts on that.
Mark: Yeah, and a great question. I think there's definitely, on the one side, the cost avoidance, cost reduction discussion about, "These are, you know, price was X, and now it's price X minus one. We can show that very easily." So I think that's the, I hate to say this, but I think that's the lazy man's approach to procurement, to be perfectly honest with you. You're not investing in time to identify areas in the business where you can become more efficient. And so you default, really, you default to the grinding discussion that you have with the salesperson. So if I have you on the line I say, "Hey, I need a discount of whatever it is," or, "You need to sharpen your pencil," or whatever the standard phrasing is for the procurement person.
I think that's really a lazy approach. In the more advanced organizations and the leaders that I speak to, guys like Greg Tennyson, even guys like Don Klock, who's teaching now at Rutgers, the conversation is moving from not just, "I need you to sharpen your pencil," but, "How do we make this more efficient? I don't mind paying what I'm paying now. In fact, I don't even mind paying more, but if the total cost of ownership of this product goes down, then that's a win, and how we get to the total cost of ownership doesn't necessarily just have to be price. In fact, very rarely is it just price. Can you provide to me a better tool that's more efficient or more effective? Can you give me better qualified people who can do the job faster and easier than before?"
And so if we look at the total cost of the labor hours that are going into it, the tools that are being used to become more efficient, the processes, which is huge, the processes that are being used to become more efficient, then I think the conversation changes, and then no longer is it about, "I need you to reduce cost," but, "I need you to reduce total cost of ownership." Then, that conversation becomes very different. But that's a very difficult conversation to have, and it's not easy to dig and get into the weeds on process issues that exist in the business, because that's a very painful conversation for the business who's buying something to have. Right? Because essentially you're pointing out the flaws of the business when you're having that conversation. So you're saying, "Look, you have process issues over here, and over here, and over here. And if you want to make this faster, in fact, you don't even need to buy anything from me, you just need to fix that process."
Anthony: Yeah, make the changes.
Anthony: Well, I think there's, you know, a curse on both houses. On your side, you do have leaders who don't want, and may be embarrassed by exploring where they have gaps in their own performance. There's a lot of people where they lack a certain maturity as leaders, they feel very defensive about the things that are going wrong. Then, you have very mature people in business who are like, "I would love somebody to come in and tell me what they see, because this is the best we've come up with so far, and I'd love to get an outside perspective of somebody who's looked at 26 businesses that look like mine."
On our side, the same thing though, is because there's sort of the lazy man way to say, "Reduce the price." We go ahead and reduce the price to win the business, which is also the lazy decision on our side, too, and it's mostly driven by a lack of ability to come back and say, "Mark, listen, we have two choices here. We can focus on price, which is one way that you may reduce your cost. Or we could focus on your actual cost, which are very different than your price, and where I think there's more value. And the cost, that means I'm going to help you eliminate this waste, I'm going to reduce your labor hours on this kind of project, I'm going to reduce your need to reorder this thing as frequently as you have to, and I'm going to get you back all the time that this equipment ends up being down. Is it okay if we explore that and see what value we can create there?"
But to do that, as a salesperson, I have to understand those concepts, number one. I have to have what I call situational knowledge. I have to know enough to walk into your industry and say, "I know enough about how these things work to even have a conversation to help you see the difference between price and cost." Because for most of us, if our client could invest more money, we could help them get a better result, but because so many people have been focused on price on the purchasing side, and because we've been so focused on saying yes to that, which means that I'm going to promise you better, faster, and cheaper, I don't know that there's the trust there to have that conversation unless both parties are willing to say, "Before we decide to do anything, let's just explore and see what's here."
I do think that there are good people on both sides really, really with a high-level of skill here to say, "I want to see what's possible, and I'm not letting an RFP right now. I'm really just in a stage where I want to discover and spend time with people so I get a different understanding in who has what kind of views."
And inevitably there's a lot of salespeople who are really good, have deep industry knowledge. And there's now, I think, a growing number of people who think of themselves in a different role, as, "I'm responsible for managing the supply chain, and that means I need to make sure that we're producing the best results that we can and not just getting the lowest price."
So I think we're coming to this point where maybe both sides are starting to realize, "Wait, we need each other more than we think we do." And if we have the kind of conversations that we're talking about, Mark, then there's a greater ability for both sides to say, "We can both do better work. We can both create much better value for each other and with each other. Then, we'll both be much more profitable in these relationships and partnerships than we are now."
Mark: I totally agree with you. I think people need to really reflect on their mindset, and how they think about their role in the business, and how they think about the opposing party or the other side of the table's ... See, there I even said it, "the opposing party". I think we've got to stop thinking about the other parting being the opposing party.
It's got to come to more of a collaborative viewpoint. I think it's definitely got to be focused more on that effort. So in thinking about that, what is the end goal? Where do we need to-
Anthony: Let me go back, just before we get to the end goal I want to ask you about evolved procurement people.
Mark: Okay, sure.
Anthony: I want to ask you, what's happened on that side? And before I do that, I want to comment on what you just said. We do have to get on the same side of the table. I think salespeople behaved badly for so long, and we're so transactional, and so aggressive and pushy that we got this certain stereotype. Then, I think it switched, and as the defense, systems like PECOS came out. Then, to defend the organization, purchasing people started to become very tactical back. I think that's just a very natural occurrence. I wrote this this week just thinking about this conversation we were going to have about what an advantage relationships are. There's such a competitive advantage that organizations have built a process to prevent from relationships for counting for as much in a deal, even though I think that they still belong there.
But I do think that it is time now where we need each other more than we ever have before, because it's more difficult to get results, and we both need to evolve. It would be interesting to hear what your thoughts are on evolved procurement and supply chain managers.
Mark: Yeah. I mean, to get to the level where I think we need to be is going to take a lot of effort, and I think it's going to take a lot of people being willing to go through the pain of change. And change can sometimes be very difficult. For a lot of people, change is very painful.
I think recognizing that once we figure out where we know we want to be, which is more of the collaborative, solution-oriented type of supply chain organization, and what do we need to do to get there? I think it really comes down to a mindset shift. I mean, you'll hear guys like, and I use him a lot as an example because he's the most advanced procurement executive in North America, his name's Greg Tennyson. He works for a company called VSP Global, which is an eye healthcare provider. He previously held the chief procurement role at Oracle and Salesforce. The way that this guy thinks about procurement in general is so far ahead of everyone else. I mean, he's the leading edge, but I think that's where, ultimately, the goal needs to be for procurement.
The conversation is not about cost reduction, cost avoidance. I'm not trying to minimize that. I mean, obviously people need to pay attention to that, and that's still really important. But it becomes more about what tools are we using and what processes are we using and owning to become more efficient? Because, ultimately, the role, I think, in supply chain, I don't know if it's necessarily going to change in that our job is going to be sort of the people that identify ways to reduce total cost. I think that role's still going to stay the same, but I think it's still, it can be significantly more strategic. So things that he's doing are looking at things like predictive analytics, and artificial intelligence to drive the conversation more away from focusing on the grinding discussions that we have with salespeople and essentially empowering and helping procurement people to become more strategic by providing them with the tools to become more strategic, and the education.
I mean, I really want to dwell on this piece for a little bit. I think education of procurement people has to change, too, because what you'll find is that even in the designation, or designated bodies, there's a strong focus from the instructors who are from potentially a different time or a different industry, where they focus very strongly on those issues. So you get procurement people coming out of these educational institutes that have this mindset because they're literally being taught that that's the way to think. So they really aren't thinking necessarily as critically as they could be. I think that critical thinking aspect really needs to find its way into the educational institutes.
There needs to be a shift in mindset, number one, but that shift can only happen if the education changes and then the leaders drive that change. I mean, you've got guys like Greg Tennyson who are driving that change. The more people realize that, "Listen, there are tools now that totally change the way that people do business." Yesterday, for instance, I had a conversation with a guy named Tarek, who, he runs a company called FairMarkit.com, that's Fair Markit with an I-T at the end and not an E-T. Essentially, what that company is is that it's a glass-door sort of type of company that provides price transparency in the software space. So it takes the conversation about grinding on price totally off the table and moves the conversation to more of, "How do we implement this to make it more strategic, more efficient, more effective for our team?"
I think that role is going to mold, and change, and shift, but it has to, in order for us to become more evolved, it has to start with people who care, first of all, and I think that's big: people who are taking the time to listen to this podcast, people that are taking the time to read material on procurement, negotiations, sales, people who are investing in their own education in those areas, those are the people that are going to drive the change. The more and more we can get people like that to drive change, the more and more it's going to become more of an evolution.
My hope is that we get some sort of critical mass to use a Malcolm Gladwell point, we get some sort of tipping point where the critical mass outweighs the other, and everyone starts doing it. But are we there yet? No. I think we've still got a significant amount of more work to do.
Anthony: You and I might have just put the car on the road, so we might just be getting started. I think what you said is interesting. There's certainly a lot of lazy behavior on both sides. I think what procurement needs to think about as the end goal is, "I need a strategic partner when I'm making big purchases that impact the future of my company, who can help me think about the processes, and think about how we do business, and help me become more efficient and drive cost out of it without having to reduce price, and to give me new concepts and new ideas."
I think what procurement wants is a partner who's accountable for that. On the sales side, where I think a lot of us are missing it, is you have to be accountable for that. That means it's not about what price you put down on an RFP and putting something in a ARIBA, or some sort of a software solution. It's about, "Are you going to be accountable for helping me run a better business?"
I think that's what procurement people ultimately want, is a partner that they say, "These people are going to go from value to value, and strength to strength with us. They're going to be accountable for this, and it's worthwhile to make an investment in a relationship like this." And on the sales side we have to say, "It's worthwhile to make the investment of time and resources and energy to serve these kinds of clients, because ultimately this is what helps both of our organizations do our very best work together." And those are hard partnerships to find, which is why I see in my world, I see companies that let an RFP every two years, always trying to find a price reduction. They're always going to find the price reduction, and then they're going to have greater and greater challenges. Then, I notice from year to year that the RFPs get more specific: "You agree that you will do this, and you will do that, and you will do this other thing," which is contractually obligating the company to do it. But the company's taken the money out of it and they can't do it.
It's interesting looking at my own experience. I had a client that I was doing a couple million dollars a year worth of business with, and they let an RFP. I only had them in one market, and they let a national RFP. So that was problematic for me from the beginning. But I sat down with them by myself, I think there were nine people on their side of the table and me in a room with them. Actually, we were all around a big round table. Ultimately, they said, "You said no to a half a dozen of the things that all of your competitors said yes to in this RFP."
Now, I'd been working with them for probably five years, so I had all of their data, and I had it with me. I said, "You asked for this, and I want to tell you why that's impossible and why we can't agree to it." And I sort of went line-by-line. One of the people in the room said, "All of your competitors have agreed to this." And I said, "I understand, but I can't, in good faith, do that, because I've been unable to produce those results for you for five years, and here's the data." And they had a lawyer sitting at the end of the table, and he hadn't said a word the whole meeting, and he said, "That's the first honest person to sit at this table." And he said nothing else.
Ultimately, I kept their business, and they asked me to help them make a decision on who they chose to be the national supplier because of the trust of somebody saying, "Here's why you can't have that, and here's what you can have instead, and here's the investment that you need to make to be able to do that." And they're strategic that way because, in this case, what they were buying was labor, and it was an enormous part of their ability to generate results. But I think we have to get to that point where we can say, "Look, we're no longer just going to say yes to all of these things. We're actually going to challenge this and have real conversations about what is necessary."
And I think if I'm a procurement person I want the person who's going to tell me the truth and be accountable for helping me produce these results. Because I don't want to go and sign a two-year contract with somebody who says yes, but really doesn't feel the accountability and doesn't have the capacity to think this way and help me generate the results I'm trying to generate as the person buying this. And ultimately, as the supply chain manager particularly, I'm going to be measured on how I do with this decision, right?
Mark: Yeah, you're absolutely right. I think the only way that we can get to that point is to ... and we talk about the RFP process, and we talked about the RFP process in the last conversation and it being fairly broken depending on the organization that you're working with; that procurement people need to be more open to having the business involved in those kinds of discussions, because when you don't include the business that's when you see those sorts of shortfalls happen and you hear something from a salesperson that says, "Can you do this?" "Yes." And as the procurement person, unfortunately, you don't necessarily have the knowledge to be able to ask a followup question of, "Okay, well, give me a for instance, or give me an example of what would happen if ... " And without that kind of a conversation happening, I mean, you're always going to fall flat on your face as a procurement person.
I cannot count the amount of times early on in my career where I've agreed to put together a contract, and the salesperson's agreed to put together a contract, and I've got a long list of promises, and we all agreed that it was fantastic. Then, two months later the contract is failing, and the contractor is failing, and then I have to grab the contract and go through all of the KPIs and say, "Well, you said you could do this and now you're not doing it." And then we have the roundabout conversation that always happens in that type of a discussion of, "Now you're failing and now we have to potentially find another provider for this service, but you promised me X and now you're not delivering, and essentially we wasted each other's time."
Anthony: Yeah, and that's the accountability that I was talking about. You actually have to be accountable for those results. Which, as sales organizations, we need to have the courage to go to our prospective clients and say, "Listen, I can be accountable for this result, but I need you to make this change and invest more over here than you want to invest to give it to you. But we can give it to you if it's important, if the ROI makes sense. Let's find out if it makes sense and have that conversation."
Again, that takes a grownup salesperson who's mature about their business, and willing to walk away from business where they're being asked to do something that they can't actually deliver. That's an immature behavior in some sales organizations, is, "Say yes anyway and we'll keep them for two years and deal with all the complaints for that period of time, but at least we've got their revenue."
Mark: Yeah, exactly. Exactly. And so in thinking about that, where do we need to be, and what's the end goal for us? I mean, we've spoken about the areas I think we can improve on, but what does nirvana look like?
Anthony: Both parties getting rid of the concept that this should be adversarial. I think that's the starting point. Mark, my opinion as a grownup person is that somebody has to go first, and somebody has to say, "Listen, I'm willing to be completely transparent with you, and I'm not talking about transparent by showing you our operating costs. That's not any secret. Most companies are netting out some average net margin at the end of the day. But I mean being completely transparent in the relationship saying what I want to do is explore with you and then we'll see where we are." And somebody has to go first and say, "If this is wrong and I can't serve you, I'm going to be honest and tell you that, and I'm going to be honest and tell you where I see the challenges in your business and what you have to do."
I think the same thing has to come from the other side saying, "Listen, we are willing to listen to you talk about cost reduction instead of price reduction, and we're willing to hear you talk about execution, but you now have to understand our goals and help us get there," and we both need to be just much more willing to go first in those conversations and say, "I'm going to open myself up to some uglier conversations about what's wrong with both of us and see if we can't have a better conversation about what we can do about it."
I think that if we have that, if there's just a vulnerability to say, "I'm happy to share with you everything that we know and how we know it, which we don't like to do because I'm giving you free consulting, is what a lot of people call it. I'm telling you what all of the answers are, and you could give it to my competitor." But somebody has to go first in the relationship, and I think if both sides were trying to do that, this gets really easy really fast.
Mark: Yeah. I totally agree. It's funny that you brought up vulnerability. I'd recently just wrote about that, and in thinking about that and the culture that exists in procurement, procurement hates to viewed as vulnerable.
Mark: And weak. I think there's definitely a thinking change that needs to happen around vulnerability being equal to or somehow associated with being weak, because it's not. I think the emotional intelligence that's required to change that thinking is significant; that if people put in the effort and exposed themselves, essentially, to being more vulnerable, they're not necessarily weak, they're just thinking better, being more progressive with the way that they think about their business, and being honest, essentially, in saying, "Look, these are the issues that we have. Can you help me?"
With procurement people and salespeople, I think we're very similar in a lot of ways. We're very goal-driven, and we're very focused on achieving a goal. I think that's very different than a lot of other disciplines could say. I think the similarities that we have with each other allow us to achieve a lot more together than they do necessarily apart. What are your thoughts on that?
Anthony: I think that if we were both on the same side of the table and we recognized that, that the ability to make real change inside an organization, and the ability to produce greater, more consistent results would be shocking to the businesses that we work in. I think if we could get past the adversarial negotiating part of this and say, "Let's figure out what the right investment is, not how to make it X minus one, or in our case, X plus one." No, I think it's, "What do we really need to do together?"
And I think that you're right: the goals should be the same. I think that it's been set up as adversarial and it's unnecessary. We're back to talking about vulnerability, because vulnerability is actually the strength. If I'm willing to share with you and speak very, very openly about what these challenges are, and what your challenges are, without having to decide that this is going to do anything except further our relationship, then it opens it up for somebody else to say, "Let me tell you about our side." And then we can get really, really honest about that and say, "Okay, then how do we work through these two things together?" And I think in both sides when you have smart people that are both looking at a problem together and collaborating, the odds of getting a better result go up astronomically. But when you have two sides that have both decided that they're adversarial and that they're both trying to do something to the other side, and instead of it being a collaboration it's a conflict, then I think it's really difficult to get those results.
Both sides, because we both do want the same thing, I think that it's important to say, "Let's get past that. Let's get on the same side of the table and look at this." And I think that to get there we have to start thinking differently about what that relationship looks like, and it means that we probably need, on the procurement side, a lot of people to open up and say, "I'm going to take meetings with salespeople. I'm going to allow the business to take meetings with salespeople. Because we ever do anything where anything turns into arm's length, we're going to let people come in and have real conversations with us about our business so we can decide what kind of things other people have seen that might be beneficial to us and who we might like to work with over time. Who has the ideas, and who do we believe would make a good partner? After that, we can get back to having a conversation about what value we're creating and what kind of accountability we're each going to have."
And I think on the sales side if we want this to change we need to bring something to the table, too, to say, "Look, I can help you with cost reduction, and it may require a greater investment when you look at price, but I'd love to show you the math and see if it makes sense, and maybe we can get very clear about what your data looks like so that we can be specific about what this looks like and have these conversations so people know what's possible. I think if we can do that before we engage in any kind of contractual relationship or conversation we can get to a much, much better place."
Mark: Not viewing procurement as a barrier to success I think is a way for salespeople to really think in terms of the future of our relationship. For a very long time we've been viewed as a barrier to success, or to the sale from a salesperson's perspective. I think being able to be honest with each other about, "Look, we're in this together. We're trying to create success for the business together." That's where we need to be.
I think having that kind of maturity between us is definitely the right way to go. I don't want to be viewed as a barrier. I don't want to be circumvented as a procurement person by a salesperson for them to just essentially get to the business. When we talk about having conversations and bringing in salespeople more, I think if both sides can be more mature in terms of looking at what the real root cause of problem is, what the actual problem is, then we can develop a better solution around what's the opportunity to succeed. And I find that too often procurement people jump really quickly right away into the price discussion. Right? "Well, how much is this going to cost me?" When in fact you haven't even fully assessed what the issue is.
So more time needs to be spent upfront having those really honest, frank discussions, and bringing in all of the different stakeholders that are involved. So I 100% agree with you on that approach. I think that's the right way.
Anthony: You know what's interesting about that? Is that I think that avoiding procurement people is not going to be possible in big deals that are strategic and come with risk. I do think though that salespeople underestimate how useful a purchasing person is in this conversation, because there are leaders and managers in companies that do not understand the cost structure of the business well enough, and a procurement person has a greater likelihood of, when you can explain, "Here's the investment I need you to make and here is what the cost reduction looks like in other companies, and I can show you. Look, here's the ROI. This is what we tend to be able to drive out of the business in labor hours." They have the sophistication to build a model around that and say, "Okay, I see this now. Let me build it on my metrics internally and see what does that savings look like for us, and is there a better way to do something. Can I automate this?"
I've worked with companies who have the ability to have you spend three times as much on a product that you're spending now, but drive the labor costs, which are about 80% of the total costs down by 70%. It's very difficult for somebody to conceive paying three times as much as they're paying right now for a product, and especially a disposable product. But then when they try it, and ultimately, they have to try it to learn this for themselves, but when they try it and they realize, "Wait a second. A 70% reduction on 80% of my total cost of this project massively increases my profitability by an amount that I have a tough time even believing." But salespeople will sell them the cheaper product because they don't know how to have the conversation, and they're not having it with somebody who can understand the business model well enough.
But a procurement person with a spreadsheet and a model can say, "Wait a second. Let me explain to you what the savings here looks like and why we have to try it. We don't have to go deep on them, but we have to try it, because if it turns out that what you're saying is true, we can do more work with the same number of people we have now at a greater level of profit. Who doesn't want that?" But it takes a salesperson who knows how to do that, and a procurement person who knows how to do that to get that done.
In fact, the analogy I'm giving you is true. When this company would go to the business leader to have this conversation, the business leader just didn't want to believe that they should ever pay three times as much for the product, and couldn't conceive of saving money on labor. It's not something that they believed was possible, because in their mind it was a labor business. But the technology replaced the labor, which we're going to see more and more over time.
Mark: Oh, definitely. I think that comes to that mindset shift that I was talking about earlier. Collaborative negotiation or integrative negotiation, whichever words you want to use there versus distributive negotiation. And it becomes more about not necessarily dividing a finite pie, to use an overly-used term, but that pie could become a lot larger for the organization and for the sales body if they just spent the time to look at all of the options that were available.
Anthony: Yeah, I think the mindset shift is to start saying "cake". You know? We don't even have a pie anymore. And I don't have a pencil. You can make much larger cakes than you can pies.
Mark: And cake is more delicious, really.
Anthony: We just have to change the whole metaphor around it. We are trying to make something different. But it's not a pie anymore. We're trying to think of something radically different. How do we get something that isn't even that anymore, but now it's this? And there are sales organizations and companies that can do this together.
Mark: Absolutely. Now, listen, I know you've got a hard stop coming up here, so I'd like to wrap up. But I think there's more here that we can talk about in terms of what are we going to do to get there, what are the tools that we can provide to the listeners that will help them get to this point. And I'd like to save that conversation for another time if you're okay with that?
Anthony: I'm fine with that.
Mark: Fantastic. For everyone who doesn't know Anthony, Anthony, maybe you could tell people where they can find out more about you and more about what you're doing?
Anthony: TheSalesBlog.com. That's my main hub. You can find everything that I've written. There's a number of things I've written about; our responsibilities to each other through these kinds of processes. That's why a lot of purchasing people follow the blog, is because it really is about having this kind of a conversation.
Mark: And for those of you who are listening, this is going to be a joint podcast effort between both Anthony and I. So you're going to be able to find information about this on his social channels, as well as on his blog, as well as on negotiation.ninja. So thank you so much to all of the listeners who have listened today. I've really enjoyed this conversation. I think this is a great move forward.
Anthony: I think that I'm going to share the negotiation that you and I had over the type of technology we were going to use in subrights, and had the division of profit from sales of podcast revenue, et cetera.
Mark: That's going to be a great conversation for people to listen to. Awesome. Well, thanks again, Anthony. I really appreciate it, man. Have a wonderful day. Thanks for joining us. And for all the listeners, feel free to reach out to Anthony on The Sales Blog and to myself on negotiations.ninja. Have a great day everyone.
FREE UPDATES BY EMAIL