Integrative Power and the Sales Negotiation.
I’ve been doing some work on my old Smartchive site, developing a mash-up of an online class from University of California Berkeley, Introduction to Non-Violence, the Claroline open source learning management system, Wikipedia, and Youtube. You can check it out, if you’d like. It’s at http://www.smartchive.com/s.
Well, we all have times when we can take information from other disciplines, and apply them to our own. And this is one for me.
The lesson that I was working on discussed the work of Kenneth Boulding, who wrote a book called “The Three Faces of Power“. In his book, Kenneth writes of the three types of power:
- Destructive: Power based upon force. The fist
- Economic: Based upon the amount of resources a person/organization has. Using exchange to make others do things. The carrot.
- Integrative: The capacity to obtain what we need and want, in concert with others. The handshake.
Some examples
I’d argue that most airlines actually use destructive power as much as they do economic power. The penalties for changing flights or high pricing for last minute flying is more than economic power. They airlines are taking advantage of the power they hold in being the most efficient way to get you where you need to go.
It’s interesting to see that when Southwest comes into an airport, the ability of the other airlines to practice this type of power diminishes greatly. If force is used, the oppressed will revolt when an alternative becomes available.
Wal-Mart is the king of using economic power with their purchasing department. If you want to sell with Wal-Mart, you are going to have to succumb to their hard core negotiation strategy.
I’m going to focus on integrative power for the rest of this post, because I haven’t been exposed to this term before, yet it is evident to me that it is the most important type of power for long term sales success.
Integrative power involves both sides working together for a mutual goal. The best outcome for an integrated solution is for both sides to win, the second best outcome is for both sides to suffer equally. Integrated power involves persuasion versus coercion, and because of this, both sides feel as they are on the same page.
I think integrative power is the Nirvana of a sales relationship. Your customers realize that you are in this for their and your mutual benefit, and your customers realize that if they squeeze every bit of profit out of you, you’ll either not stay in business, or resent having their business.
It’s funny, and totally organic, but in the 15 years I’ve been in sales, I’ve found that I’ve pretty much drifted away from all of the customers who have either used force or economic power in negotiations. When I have engineers or managers come from out of town to meet my clients, they often comment on how nice my customers are. Part of that is a by product of my customer base, Federal Civilian Agencies, but also it has been a part of a natural selection process that has driven me to customers who work with me.
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I’m working on another post right now, but I felt it was more appropriate to add this here. One of the things I’ve seen is that in the long term, relationships based solely on economic values almost always fail as well. I think this is largely to desperation from the standpoint of the seller, who negotiates at such a thin margin that it becomes difficult to satisfy the customer after the sale.
Knowledge and Power
When I started writing on Intregrative Power and Selling in my last post, for some reason it reminded me of the process of buying a car. Before the Internet, it was pretty difficult to get information on how much the dealer was making, what the average true price was for a car, what average finance rates were for a given credit rating. The car dealers used this lack of information as a form of power, and took advantage of this information gap to achieve higher profits.
The end result was that the car dealer won, but the car buyer felt that they were ripped off.
So I started thinking about the relationship between information and power, and how it is used. It was interesting to find that there is so little on this subject on the Internet.
Obviously, the preceeding was an example of information being used to maintain economic power. The elimination of the information gap, brought on by the Internet in this case, negated to a large extent the auto salesperson’s power. The customer now can look at multiple factors and make purchase decisions based upon costs and alternatives.
It’s pretty easy to see how information hoarding can be used in economic situations. But it can often be used in situations that involve force. One could argue that Ronald Reagan kept our country out of war during his presidency by making it appear that he would use force when necessary, even though enemy states never knew for sure. But I’d like to give an even subtler example, this from my own life.
When I was an engineer, I was working on an install at a customer site. In order to be successful, I needed some basic information from a senior engineer. This engineer did not want me there, so he did not provide me with the information necessary, and as a result, the install failed. I believe that his withholding information to me was a use of force, because there was no economic motive on this engineer’s part to not provide me with this information.
By definition if a relationship is Integrative, information must be as equal as possible on both sides. Both sides must know what the other side’s pains are, and what they can offer to the process. Integration involves both parties feeling that they are on a level playing field, and having equal information is part of this.
Free Management “Library”
Authenticity Consulting has a pretty capable resource http://www.managementhelp.org/ , that has good overviews of a number of areas in management. I don’t think “library” is the best descriptor. The site has a good number of high level overviews on a number of business related topics.
Wikiversity Section on MBA
Wikiversity has a great outline of the subjects you need expertise in to advance you MBA.
http://en.wikiversity.org/wiki/Topic:Master_of_Business_Administration
Papers from the Stanford Center on International Negotiation
These studies have more of a focus on negotiations from an international conflict standpoint, but I felt that they were of such high quality, they merited entry.
http://www.law.stanford.edu/program/centers/scicn/#scicn_papers
Building Trust In Negotiations
A superb article on building trust in negotiations can be found at Harvard’s Working Knowledge Website. From the site:
All negotiations involve risk. That’s why establishing trust at the bargaining table is crucial. Professor Deepak Malhotra presents strategies to build trustworthiness. From Negotiation.
Harvard Program on Negotiation Poncasts
An audio supplement to the Harvard Program on Negotiation. Great articles on all kinds of negotiations, even raising your kids.
Confronting Terrorism: Lessons Learned
I know it doesn’t sound business related, but I found these notes on negotiations at Los Alamos National Labs, and thought they had some value beyond the original topic.
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