Saturday, September 22, 2012

Negotiauctions book review

Last year, I worked as a supplier for a German company. Cost reductions hit said company and my services were subject to revision. All of a sudden my offers were pitted against those of  other purveyors by the purchasing manager. Caught off guard, I could not effectively draw up a winning proposal and was outbid. I had been in the center of a negotiauction and had played badly. I vowed this would never happen to me again.

Somewhere in the back of my mind I recognized the situation for what it was. I remembered having read about it in Negotiation Genius. Sure enough, when I checked back later, there was a mention about it and  found that there was a book by the person who coined the term, which I promptly ordered. Negotiauctions by Subramanian is the book.

A negotiauction is the murky middle between pure negotiation and a pure auction. Sharing traits from both, negotiauctions are a completely different animal and strategies are needed to play them effectively both as a process setter and taker. This book, probably the first in the field, sets itself to deal with them. First, we get an introduction to negotiauctions, which describes them and illustrate the ways they differ from old, regular negotiations and auctions. The author, in fact goes so far as to hint that most "negotiations" nowadays, are in fact negotiauctions. The rest of the book is divided into two parts. The first one, describes the existing theory of both negotiations, and auctions taken separately and the strategies to treat/confront them.

The second part deals with negotiauctions proper. One of the characteristics of negotiauctions that makes them special, is that rules are more flexible than the pure extremes, which lend themselves to better deals, that is, more value extraction, if the situation is played well. This means that not only the process setter, who is generally thought to have the upper hand, can end up with a better deal, but also the process taker, if she plays her hand well. Throughout the book, there are very handy charts, which easily let the reader see if she is in fact in a negotiauction, and what steps she can take from both sides of the table to arrive to a safe harbor. The strategies described in the book are not a surefire approach to always winning. Rather, they are sensible ways to dealing with the situation, permit the reader a good shot at the table, and reduce the downside risks.

Examples from real life are given by the author, but I found them a bit complex on my first read, so I had to take pen and paper to disentangle them. Once done, they became clear.

It surprises me that this book hasn't had more impact, judging from the small number of reviews at Amazon. However, if you choose to read it, this may come to your advantage, as you'll have an edge at the negotiating table, while the other side may still be groping in the dark.

Totally recommended if you're a supplier or purchase manager.


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