It Takes Two to Tango

Dec. 4, 2015
In supply chain negotiations, there is always middle ground if both sides are trying to find it.

My preceding article on the Hastert Rule generated a lot of comment. Some readers felt I was unfairly picking on one specific political party. I wasn’t. Rather, I was making a point about current political practice.

A related point that needs to be made is that when politics is conducted more in line with effective business practices, it produces better results. If businessmen don’t work together to produce positive business impacts, they get replaced. Unfortunately, our elected representatives (who are currently receiving an approval rating in the 10% range) continue to get re-elected, time after time, regardless of congressional accomplishment—go figure.

One element of effective business practice (which I have written extensively about in past columns) revolves around finding the middle ground, which also applies in politics. In that last article I was trying to show that individual politicians (regardless of their true feelings) may have difficulty representing their constituents due to artificial boundaries that have been put in place. I used the Hastert Rule to make this point since it is probably the most highly visible such boundary and it has led to recent negative impacts relative to the lapse in reauthorizing the Import-Export Bank.

Even though there was a certain amount of pushback about featuring a rule associated with a specific political party as the example of how not to conduct effective politics, no one actually came forward and tried to defend the Hastert Rule. I believe that shining-a-light on such practices is the first step needed to getting them removed and/or revised so at least now I can check that action off of my list relative to that specific rule. Make no mistake about it: The Hastert Rule is very bad medicine.

Don’t think that similar anti-middle ground “rules” don’t occur in business. When I worked in corporate America I had to work to operate with them in mind, the same as everyone else. But I’ve found that in business, leaders—at least the leaders I worked for—were open to revising questionable boundaries if a sound business case could be made for doing so. The best approach I’ve found, again, is to shine a light on their non-optimal impact, as was done with the General Electric example in the last article. I encourage you to challenge arbitrary business practices in your organization with your leadership by documenting similar examples.

All people—whether in business or politics—have different perspectives on principles and goals. The issue, then, becomes how they can be melded into actionable accomplishments that contribute to the overall good. Since supply chain negotiations have become paramount to good business results, it is appropriate to tie them into our discussion on increasing political effectiveness.

If you’ve read this column over time you’ll know that a fundamental difference between Next Generation Supply Management and traditional purchasing is in negotiation. Next Generation Supply Management focuses on finding the middle ground since through this approach you increase the “size of the pie” to be divided. Sure, supplier companies are responsible for looking out for themselves, but I’ve found that when the up-front intent is understood to be one of collaboration, it leads to significantly better results.

As I’ve previously written, traditional negotiations are a zero-sum game. In other words, for one side to win the other side must lose. The strategy here, then, is to impose your will on the other party. The success at doing so is usually associated with the amount of negotiating leverage a side possesses, i.e., whether or not they hold the “high cards.” Traditional purchasing can led to short-term successes but sustainable business does not run this way. For that reason you seldom see the blatant “imposition of will” in business that you do in politics. U.S. politicians, on the other hand, seem to have descended into an extended period of looking for high-visibility, short-term successes. And it’s not necessarily because of the up-front intentions of the side holding most of the cards. Let me explain.

Another related axiom of Next Generation Supply Management is that “there is always middle ground if both sides are trying to find it.” Bear this in mind in the following discussion. Negotiations are typically conducted where both sides hold at least “some of the cards,” i.e., negotiating leverage. Certainly, there are instances where this is not the case. In business, an example might be where a supplier is overly dependent on one customer. In this case they have put themselves in a position to accept whatever terms that customer imposes. In politics, this usually occurs when one side or the other holds all executive and legislative power. But even in such cases, middle ground is still always available and usually desirable—but only if both sides will participate in the “finding the middle ground process.” But in negotiations as in dancing, it takes two to tango.

It needs to be understood that not all good ideas come from the side holding overall leverage and that some “good idea” proposals from the side not holding many “high cards” may be acceptable to the side that does. And in the end, those “good idea” proposals that get accepted contribute to a better overall result—but they have to be brought up in negotiations to be recognized. In business it is not unusual to see this happen. What is amazing to me is that in politics you often see the side without the leverage walking out and/or stonewalling negotiation efforts, perhaps in the hope that the party with leverage will abandon what they consider to be their mandate (fat chance!). As if by burying their heads in the sand they can make it go away. In this type of “idea vacuum” it is only reasonable to expect the side holding all of the cards to do what they think is best.

Extremists in both parties believe that compromise leads to non-optimal results. Exactly the opposite is true. After all, how many times have you seen the party holding all of the cards back down because the other side decides to not participate in negotiations? Everyone should be interested in trying to forward their ideas in terms that the other side may consider palatable. This happens in business. Too often in politics today you find people using “ideas” as a weapon for poking the other side “in the eye.”

It is embarrassing to see our elected officials acting like spoiled adolescents, for all intents and purposes saying, “If you don’t play by my rules I’m going to take my ball and go home,” only in this case, they don’t even own the ball! In fact, by electing not to play, rather than making an effective point, they end up “biting off their nose to spite their face.”

I’ll end by returning the subject back to business. Think about the best contracts and/or agreements your company has entered. I bet they were developed through collaboration, and also I bet that all sides of the agreements felt they were a good “deal” for their side. On the other hand, consider the times you’ve taken advantage of the other side, to your company’s short-term benefit and the other side’s short-term disadvantage. Did that other side ever have a chance to “return the favor” and, if that occasion presented itself, did they take advantage of it? I suspect you’d answer “yes” to both questions.

As promised at the end of the last article, I hope in the next article to take a less serious slant and discuss an illustrative experience I once had revolving around corn dogs.

About the Author

Paul Ericksen | Executive Level Consultant; IndustryWeek Supply Chain Advisor

Paul D. Ericksen has 40 years of experience in industry, primarily in supply management at two large original equipment manufacturers. At the second he was chief procurement officer. He then went on to head up a large multi-year supply chain flexibility initiative funded by the U.S. Department of Defense. He presently is an executive level consultant in both manufacturing and supply chain, counting Fortune 100 companies among his clientele. His articles on supply management issues have been published in Industrial Engineering, APICS, Purchasing Today, Target and other periodicals. 

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