Sometimes we get so caught up in our external negotiations that we forget about what it's like to negotiate and create alignment internally within our organizations. David Hearn is known for creating alignment internally and explaining the need for good emotional intelligence, and the development of empathy to create that alignment. It's so, so important. but for whatever reason, we forget about it. So how do procurement leaders negotiate internally?
Guest: David Hearn
Mark: Hello negotiation friends. You've got Mark on the Negotiations Ninja podcast. Today, we've got a very special guest, David Hearn ... is on the show with us today. Hello, Dave.
David: Hi folks.
Mark: How are you today, man?
David: I am doing very well. It's a nice, shiny, bright sunny day here.
Mark: Well, that's a lot better than what we have. We had about 12 inches of snow in Calgary, Alberta. Now, it's minus 25 degrees Celsius. I don't know what that is in Fahrenheit, but it's ...
David: Ah, but it's a winter wonderland.
Mark: It's incredibly cold, but it does make the skiing and the snowboarding great; which is wonderful.
Mark: Just to give the listeners a head's up, I brought Dave on the show because he's pretty well known within the procurement industry on the West Coast of the United States ... and quite a well known guy when it comes to the issues that chief procurement officers and procurement departments face in general internally and externally. The purpose of today's show is really to talk about some of the major challenges that procurement and procurement leadership face when it comes to gaining alignment and closing deals externally. If you've been in procurement for a while, you know that we do as much or more negotiation internally as we do externally.
Having Dave on the show today to speak about that is quite fortuitous because I think it's a bigger issue than we like to talk about; and certainly we don't like to talk about it. I guess I'll kick it off, Dave. What are some of the major challenges that you see with procurement leadership when it comes to getting alignment internally with stakeholders?
David: Well, ... yeah, we all think that ... all the experience we've had in negotiation and how to understand how to work with suppliers, is equally understood internal to the company. Alas, we of course all find that's not the case. In fact, when you think about the goals of the internal stakeholders we work with, their goal is to just start working because they have a project.
Taking time for the art of negotiation to help get the right deal, the best deal, the right service levels, price, it's not something the internal stakeholder is necessarily motivated by. I Think that's why we're here and why we're professionals; but I think it's also why we as procurement professionals have to realize half our job is helping manage the internal stakeholder in a way that gets them those things that they need; but in the way they need it. I think that's lost on us a little bit.
We talk about traditional negotiation with the supplier. Think about negotiation training you've been to where you had to develop a negotiation plan for working with a supplier. Have you been a training where you had to do a negotiation plan for an internal stakeholder? I haven't. I've never seen one. Yet, it's equally as important to us.
I'm working on a project right now and as in any company, we have varying needs for a piece of software. We have a cross functional team of IT and of business stakeholder; and I'm having trouble. I'm having trouble with the internal team understanding that ... we are ... we're not opening our eyes to what this buyer is doing long term. I think that's one of the biggest challenges. They think it's just a transaction. I'm trying to open them up to what's going on in the marketplace in this software, what's going on with competitors in this area. Then, why they should negotiate a little bit differently than just feeling like it's a monopoly, which it has been for the last 20 years for this software. Now, in the last five years, there's plenty of options.
I've got to get a negotiation plan either on paper or in my head. That's, Mark, what I think ... we have to help develop in the skill set of folks to do supplier management.
Mark: Interesting. I want to dive into the differences between negotiating internally versus externally. Do you think there's ... a major difference between negotiating internally and externally? I know we don't like to think of it as negotiating internally, because really we're just trying to gain alignment more than anything else. Is it a negotiation, or are the two separate, or are they the same?
David: Well, I like the word you used, that internally we're trying to get alignment. In essence, even externally with the supplier, our goal is alignment; because until you get a mutually acceptable deal, which means alignment, you don't have a deal. Therefore, it's the exact same skills and process. Obviously oriented a little differently, but think about how we're successful with external suppliers. We have to understand what's going on in the marketplace, what other pressures are on them, what is the value to them that might be behind the deal that we can negotiate on.
Same with the internal stakeholder. What are other pressures are on them? If we don't understand that, then we're probably not going to be successful in influencing them, so let's call it influencing and alignment, rather than negotiation; but actually, it's the same thing. I spent a lot of time actually on the relationship; but I know a lot of people talk about relationship management internally with a stakeholder.
It's not just so that you can get to go out to a nice lunch. If I don't understand the pressures on that marketing person I'm working with, or the IT person that I'm working with, then I'm not likely to know how to influence them to mutual alignment; because it's not just on me to understand their needs as it is me to influence them on my needs.
I think it's the same thing both ways, because I don't believe in pound your first on the table negotiation with suppliers. I don't think that works long term. Therefore, the same application of getting to know the supplier and the internal stakeholder is the only way to then see how to get to mutual alignment. You don't shake hands and do a deal….the only way to be successful internally is the stakeholder has, in essence, totally aligned and you guys are agreeing. Same thing.
Mark: Mm-hmm (affirmative), interesting. How ... if we wanted to learn how to influence internally, what's the easiest thing that someone could do to help develop that skill set?
David: You know I might be the poster child for that. I ... came out of engineering school and I was already with a mindset that was highly slanted towards the analytical. I had very poor, I would say, interpersonal skills and influence skills. I basically went to my first job and I remember presenting the facts and data, and just assuming that everybody in that conference room would see the same facts and data, and come to the same conclusion. I literally remember that. I was working with General Motors. It was this huge wake up that no, no, they saw it differently. The same data and facts, came to different conclusions.
I'm like, "What?" Okay, that's rewound 25 years. It took me, I think the first seven years of my career, to realize it was important to actually understand what was going through their head; because I didn't use to value that. I'm like, "Hey, that's ... You know, that's not important. Facts and data are important." But, I actually did start focusing on it. I had a boss who was pretty honest with me that I needed to develop it.
I used to say, "What am I supposed to do? Just go out to lunch with people? I hate that kind of small talk." It's not about going out to lunch, but it is going to meet the person, talk to the person on the phone, and ... ask questions that are not directly related to how you think you should negotiate. Ask open ended questions. What goals does this ... is this person trying to accomplish? You've got to fish, because people don't just give this data out immediately. You have to extend yourself in a way that seems sincere, that you do care about their goals; and then they open up.
They say, "Yeah, you know, my butt's just getting beat up. I'm going to lose a head count. X, Y, Z's going to happen."
I don't think this happens overnight, the development of this skill. I've written a couple articles about this, emotional intelligence, and understanding other people and why it's so key to procurement; because you will not be able to influence them until you can make an emotional connection and understand what's important to them.
It's lifelong for me. I think I'm better at it now. I'm not perfect at it, that's for sure. Some people are naturally born with it, that's awesome. But if you think on this podcast you're a person who's a little more analytical and you wonder why people don't understand your points in meetings, it's hugely because you're not opening up and understanding what's important to them. You've got to put some effort into doing it.
It was very awkward for me when I called people and said, "Hey, can we get together?"
They're like, "Why? Just, you know, do the contract."
I'd be like, "Ah, well, let me come over and I'll bring the contract." I really had to put myself out there in an uncomfortable situation because I wasn't very good socially. That's my story of development. Everybody's is different.
Mark: Yeah, I think the development of emotional intelligence and empathy are big things that the vast majority of us tend to ignore on a whole. We tend to forget about it. We all know it's important, right? We all know that you need to have a certain level of emotional intelligence. It's a skill that you need to develop, and you need to empathize with the other party. For whatever reason, we get caught up in the situation. We're too busy to try and understand the other party, and sort of see the bigger picture from their perspective.
Developing that empathy and trying to put yourself in their shoes is ... it's certainly a skill set that I think is incredibly, incredibly important. What do you think makes ... negotiating internally with procurement leader ... Speaking of empathy, let's put ourselves in the shoes of the other party. What do you think, from another executive's perspective, whether it be finance, or HR, or whatever it is. What do you think is different from their perspective with talking to or negotiating with procurement leadership other than the other discussions that they have? What do you think could be the issues that they identify, or some of the major heartburn that they experience when they talk to us?
David: Yeah, a good question. I ... tend to think that ... when they look at us, ... they don't see us delivering a business result. They see themselves at the marketing person delivering a business result, or a engineering person, a manufacturing person, finance, IT, whatever. They all have projects. At the end of their projects, they deliver something that the company needs. When they see us, unfortunately, they initially see the history of procurement; which is a very tactical, 'I need a purchase order,' right? We have to overcome that first, which is helping them understand that we have evolved to a more value added way of helping them get the best suppliers. We have to overcome that.
Then secondly, there's still saying to themselves, 'This guy is asking me to slow down, to think of other aspects; but I don't understand why because all the company wants is for me, the marketing person,' or finance, 'to deliver this project.' They don't see any alignment with our goals.
Now of course, we know that if you talk to their CFO, the CFO would say, "No, I see the alignment in their goals. They're going to help you get ... competitive price, and service levels that you need." It's not that it's not there, it's just for a business person who's driving a project, we just seem like bureaucracy; and I do believe that, from their perspective.
If you're not able to first apply the soft skills of knowing them, and sincerely convincing them that you would add value to their project, you're not going to be successful in influencing them. Until they have that 'aha' moment, 'Oh. Oh, Dave actually can help us in this project because ... I happen to like the service levels of this supplier, so maybe he can help get better service levels.' Until they make that 'aha,' and relate you to the benefits of their project, you are a stumbling block, time sink, bureaucratic ... group.
That's why I say ... I said this yesterday to my boss when we were hiring a person, I said, "Listen, I will take a super strong ... interpersonal relationship person over an expert in procurement, because I can teach a dynamic, driven but highly sensitive, emotionally intelligent person. I can teach them the skills to sourcing and bidding, and contracting." But unfortunately, it's harder, ... although I'm an example where I changed, but it's harder to change a person who's great at bidding, and sourcing, and negotiations, but not good at emotional intelligence and internal influence. I don't think it's impossible. It is possible to help them, but it just takes longer. I've had examples, including myself, where a person that wasn't good at it developed over time. It literally took me decades.
Mark: Why do you think that is? Why do you think it's harder for someone who's analytical, and sort of colder and data-driven to develop that emotional intelligence skill set?
David: Wow, I ... Now I may be beyond my expertise. My armchair psychology says that ... there's a big difference between innate skills that seem to be part of our psyche, meaning how I identify myself. I felt like I was an engineer at that time. To somebody telling me I wasn't an engineer, I had to act like a sales person. Oh man, I hated that concept; because I was not a sales person. I was an engineer.
Whereas if you just say to me, 'Hey, have you ever done bidding? Well let me explain to you how to do bidding.' That doesn't fly in the face of my ... vision of what I am about. Soft skills are very tied to how we think of ourselves, and are very hard to change, therefore. Whereas technical skills, I call them, easy. If somebody wants to teach chess tomorrow, I can figure that out. If they want me to act like ... a marketing person in how I think, a lot harder. A lot harder.
That's about all the psychology I know, and it's very little.
Mark: I'd say that's pretty good answer. I love that answer. I think ... we need to get out of our own heads more than anything else ... and just be open to the concept. I know there's a lot of discussions that I've had recently around ... We have these mental blocks of, for whatever reason-
Mark: We're not good at something, or we can't do something. Those kinds of beliefs are self fulfilling in a way. The more and more you repeat that kind of stuff, the more and more it becomes true. Eventually, you start getting more and more closed down to it. But, if you start to ... and I know that sounds cheesy, but if you start to open up your mind to ... even the idea of getting better at that skill set, then naturally, you start to ... attract opportunities where you can get better at that skill set. I think you're bang on with that.
David: Now, I wanted to add, this is where managerial courage and leadership comes in; because since it's a hard skill to sense that you need, and then help you develop it, I was lucky enough to have managers that were courageous enough to call me out on it, even when I disagreed and did not like the concepts they were talking to me about being more interpersonal. But, they stuck with it. I think as leaders listening to this podcast, if you have a group of people ... If you see that in people and you're not calling it out in an effective way that's helpful to them, we're not doing our job as leaders. I want to thank the couple of bosses that actually helped me.
One of the things I've done with my teams, is for instance, ... for my sourcing managers at one company, we went through sales training. Actually went to a internal ... It was internally offered, but it was supposed to be for sales people in our company. I put my sourcing managers through it; because I wanted them to think like sales people in terms of when they went to internal stakeholders. They did think it was nuts that I was asking them to go to sales training. You got to have some courage. You got to recognize people are going to think that you don't know what you're doing at times. But they will absorb some of it, and then you have to continue to work with them. It's not just the one hit ... They change overnight.
Managers and leaders out there, help your own people by having the courage to push them in areas where they don't want to go on this soft skill.
Mark: Yeah, that's really good advice. I think the more we can put ourselves into situations, ... the other party experiences, like putting a procurement person into sales training, the more we get ... we develop that empathy, because we understand sort of what they're going through from the other side of the table. It helps develop that skill set as well. You're getting a dual benefit out of that. I think if we could start doing that, we would make huge grounds on negotiations, both internally and externally. I love that idea.
A lot of what we talk about on the show is based on the experiences that you or others have had. We also like to talk about failure, because failure is where we get most of our learning done. I'd like it if you could share a story about an internal negotiation or an alignment failure that you've had. How did you deal with that failure? What did you learn from it? What would you do differently today?
David: You know ... I actually think that I have a failure every time I work with a stakeholder, because the initial work of trying to both develop a relationship and understand what's important to that person. You are going to be probably wrong in your initial thinking. We all have predispositions of thinking, right? That's not going to go away. I can't tell you not to think about it.
That means that the first meeting I have is almost always a failure, depending on how you look at it, of course. What I mean is I will get it wrong. However, how you deal with failure is the important thing, right? Not that you failed.
If you deal with failure by taking that first rough meeting and saying, "Okay, what did I hear the person say? What did I distill out of this that I saw that I was on the wrong path, and they gave me clues as to what was important to them, their project, their ... their personal motivation?" Then, I'm okay.
One of the biggest things I also tell my people is don't be afraid to go in to either a discussion with a stakeholder, or any meeting, actually, with a starting point. If you go in with nothing, you kind of look like you didn't try very hard. But if you go in with some idea that even if people attack it in the meeting, and it's wrong. By attacking it, they will likely, if you're good at it, ask some questions about what would be right. You turn the conversation.
The reason people don't like to do this is because it's very uncomfortable when you first go in and put something up if people rip it to shreds. People try to ... People tend to avoid this from happening by playing it conservative, and not going in with some thoughts. Wrong strategy. Go in with something and don't feel bad when ... actually, feel good when it's ripped up and then you guide the discussion to something that you learn from. It won't lesson your credibility. People think, 'Oh, if I go in there and they rip it into shreds, my credibility is shot.' No. You have used that as a learning, and you will come back stronger next time. This is really important.
When people, a team will come to me and I'll say, "Okay, you got a big meeting coming up. What are you thinking? What are you going in with?" They won't have enough, or they'll have nothing. I'll say, "No, no. I want you to go in with a first proposal or idea to put on the table to get the discussion started."
They'll be like, "Well, we don't have enough information."
"I know we don't have enough information. With the information you have, come up with an idea." I'll have to go back like three times and my motto to them is, "If you earn the seat at the table with the business partner, which is what everybody wants, every time you show up at table, you better come with some value to put on it. So I don't want you going to staff meetings with business partners, and just sitting around the table and listening, and taking notes. No way. You're going to get kicked off that staff. They only want people there that add value. So every time they're having a key discussion, come in with having some done some research, whatever. It may not even be right, but you'll have shown that you tried and from the discussion that ensues, you will learn what's important."
Failure is a necessary part of getting to success. I don't think I've ever had an immediate success. Never.
Mark: I totally agree with you. I think being able to have the courage to show up like that is a big part of learning. Certainly having the courage to put yourself in a situation where you're probably going to fail is also a big part of learning. I think it really stems from what you said earlier about having the courage to face that as an opportunity, rather than look at it as a potential for where you could drop the ball.
Given your experience both internally and externally, and moving through the different functions that you've had in procurement, I'd love to hear where you may have maybe three tips or some top tips for our listeners today on what they can do to improve their negotiation skills, or what negotiation skills you consider to be the top negotiation skills that people should develop.
David: Good question. Boiling down the top negotiation skills, I'd say number one ... develop the skill to understand the other person's drivers, motivations, both personal and business. That applies to a internal stakeholder, as well as a supplier. Both are needed. You don't change that.
Second, do your homework and you've been taught this on how to do a negotiation strategy on paper before. You show up at the supplier. Well, I want you as your number two skill to do the same discipline before you approach your stakeholder internally. Think about what's important to them, put it on paper. How can you help influence them? How can you help meet their need, both emotionally and from the business perspective?
Number three, and I think we all know this, but every once ina while, I see negotiation styles that are not there. Number three is the old adage of win/win; but let's peel the onion on that. There is never a benefit of negotiating a supplier into where they lose because it will come back to haunt and you, as a company, will lose eventually if you put them in a bad situation ... either on price, or service, or anything, where you beat them up.
If you don't think that the goal of internal and external negotiation is alignment of mutual agreement and benefit, you need to go back and think about what it means to be a negotiator. Especially folks just entering their career in working with suppliers tend to think negotiation is beating them up. So no, mutual alignment.
Those are my three.
Mark: Love it, those are awesome. Very, very good advice. Dave, it's been such a pleasure to have you on the show today. I think we get so caught up with external negotiations that we often forget about the internal discussions that we have, and the internal negotiations that we have, and getting alignment, and what that means, and being empathetic, and developing that emotional intelligence. I think having you on the show today has really illustrated the importance of that; because as most procurement people know, you're going to do the vast majority of your negotiating internally versus externally.
The advice that you've given us today, the tips, especially around trying to put yourself in the other party's shoes, developing that empathy, trying to understand what their needs and their wants are. I think that's excellent, excellent advice. Thank you for that.
David: Oh, I've really enjoyed it.
Mark: Awesome. Listen, if people want to find out more about you and what you've got going on, what you're up to, how do people do that?
David: The easiest, I think, is LinkedIn. You'll find me there, David Hearn. Right now, if you also search on SunPower Corporation, I'm the Head of Indirect Procurement there. You'll also see some articles. I tend to do ... put all my articles on LinkedIn about topics in supplier management and negotiation. Feel free and you can also drop me a note in LinkedIn, and I'm happy to talk to folks about this.
Mark: Awesome. For the listeners, as always, I'll be linking out to Dave's profile in LinkedIn; as well as maybe some additional resources for you to reference when it comes to developing that emotional intelligence and that empathy that's required to help negotiate internally with your stakeholders. Dave, thanks again so much for being on the line. I really, really appreciate your time today. Enjoy your weekend.
David: Thank you so much. Appreciate it, Mark.
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