Value is a concept often debated in business. How is value determined? Is it solely monetary? How can we monetize non-monetary value? Is that necessary?
On a recent episode of Negotiations Ninja podcast, I spoke with Stephen Kozicki, Australian negotiations consultant and author of multiple books, including, The Creative Negotiator. Stephen believes value can come in many different forms and can be used to help negotiations as long as you can show that it is tangible, measurable, and tradable.
To be tangible means to be something you can touch or hold in your hands. Money – even though it mostly lives digitally now– is a tangible thing. It is also measurable and can be traded. Money has value.
To illustrate something that you might think has value at the negotiation table but doesn’t fit into Stephen’s criteria, Stephen talked about a brand. “The concept of a strong brand isn’t a tangible item that can be paraded at the negotiation table,” he says. “The intangible has a very strong connection at a relationship level and an emotional level, but you can’t trade .03 of the brand to get the deal across the line.”
Even though a brand can be measurable, these days, through social media followings, etc., it’s not tangible, and it can’t be traded.
So, where can we find value that isn’t directly money or a brand? It comes down to finding creative ways to increase market share, return on investment, or revenue through ideas like efficiency, marketing, etc. and being able to prove it.
“The full element of the value creation is what I can reduce for this client or prospect and prove it. What can I increase for them, whether it’s around market share or revenue growth or profitability, and show them and prove it,” says Stephen.
Procurement teams are tasked with finding the best price on everything required by the company. The idea of value for the procurement team is something they want to push aside. They will walk into a negotiation thinking their role is to take the concept of value off the table. Are procurement people missing on opportunities by not considering value?
According to Stephen, yes. There is value to be found beyond nickel-and-diming in a negotiation based on how and where you are measuring. If you only look at the cost of materials last year and all you are thinking is it has to be less this year, then you might miss out on a value opportunity. If you are thinking, “How will this change affect our market share and revenue growth,” you might see value elsewhere.