Chapter 7. 1:00 PM Vendor Negotiations: Winning When You Don't Have the Strongest Hand

1:03: Mike Preps Kim and Himself

Mike jumps into his car in the parking lot of the restaurant where he just finished the successful lunch with Colleen. He turns the ignition but leaves his car in park. He pulls out his BlackBerry and uses his thumb to turn the power back on. He had turned it off as he saw Colleen enter the restaurant and put it in his suit coat breast pocket during the lunch.

He lowers the volume on the Phil Woods sax solo he was listening to on his way over to meet Colleen and begins to check his messages. Both Kim and Jonathan—the vendor he is meeting—had called him back. They both received his calls explaining he would be late. The meeting is still on track. He relaxes some and decides to call back Kim to go over the game plan one more time.

"Hi Kim, this is Mike, thanks for letting me know you got the message." Mike holds his BlackBerry up to his ear. It's not very comfortable, even when he isn't driving. For months he'd been admiring Chad's Jawbone earpiece, but he had never gotten around to picking one up or even ordering one online.

"That's fine, Mike. Did you have a successful lunch with Colleen?" Kim, like all of the managers in the department, knows whenever Mike is about to add to the team. He keeps them abreast of not only his hires, but also his off-site meetings throughout the day. He wants his staff to know where he is and what he's doing. That way, they can judge whether or not to disturb him with a phone call.

"Yes, I did. She'll be on board with us the week after next. It was a great lunch," Mike says. "Listen, I want to go over the game plan for our presentation to Jonathan one more time."

"Oh, I'm ready, Mike," Kim says. He preps his managers for all of their presentations thoroughly to raise their chances of success. Kim continues, "I'll keep the numbers to a minimum and the pictures and stories in which we describe how we are growing to a maximum."

Mike has been working with Kim to dump her "just the facts, ma'am" communication approach, which hurt connections with employees and vendors. It has been a struggle. Kim continually defaults to numbers, charts, and graphs. She told Mike it is frustrating to her that if she takes the trouble to lay everything out, those listening should at least be able to "put two and two together."

"You're right about that," Mike would assure her. "But sticking to being right instead of being good is standing in the way of you becoming a stronger leader. You've obviously worked hard at the numbers. Now, work a little more and tell them what the numbers mean. That's the difference between being right and being good."

Kim would scoff, "I hate all this feel-good stuff," but she understood. Mike would lay on a little harder, "Kim, please don't look at it as 'feel-good stuff.' It's not. It's the type of work real leaders accept as the price of building connections and achieving greater performance from those they rely on."

For the first five or six times, Kim would often respond with "whatever," but she would still follow through on Mike's specific instructions. However, in the last month or so, she had accepted the coaching without the sarcasm. Mike is pleased at Kim's progress.

"I'm going to let you lay everything out," Mike says into his BlackBerry, "then I'm going to take the lead and ask Jonathan about what his plans are for his company. Feel free to join in along the way during my part."

"I will," says Kim. "I'm not shy, and I like how Jonathan has positioned his business. See you in a few."

"Great, see you in a few," says Mike. He clicks off the call and turns the audio on Phil Woods's saxophone back up just a little while he goes over in his head what probing questions he will ask Jonathan. Even though Mike is a powerful communicator, he once again takes time to prepare mentally for his upcoming meeting.

1:10: Chad and Randy Unveil Their Request

Chad pulls up into the parking space next to Randy's car and rolls down his passenger window, "Hey, Randy, how long have you been waiting?"

"Just a minute or two," Randy says. "I was going over the final stuff that Phil sent. He did a good job of getting his stats in. The numbers are now complete," Randy reports. Chad is relieved that he made peace with Phil. This meeting now has a better chance of succeeding.

"How do you handicap our chances of success with Tracy?" Randy asks as the two head toward the main entrance of their vendor's building.

"It's going to be tough with her, based on what we're going to present. But, no matter what, we'll emphasize to her that we're a player in the industry. Eventually, she's going to have to cut us a break," Chad explains. "I think we've got a fifty-fifty shot at getting something out of her today." Chad's insight is good, and his response to Randy is clear. Even if they don't get what they want today, he is smart to stay in front of her.

Tracy's company is the leading vendor of the suppliers critical to the success of Chad's division. Everything they do is superior: top-notch production, on-time delivery, and a small but innovative R&D department. Tracy's company keeps Chad's division looking good with its customers every quarter.

But there's a problem. Chad's division is smaller than many of its top competitors, who wind up getting more attention and preferred treatment from Tracy's team. Mike and Randy have set up the meeting with Tracy in hopes of seeing a faster turnaround time on shipments and a slightly lower price.

Last quarter, Chad spent a good deal of time on the phone with Tracy; but he couldn't get her to budge an inch. "Listen, Chad," Tracy explained, "I love you guys. You're good to work with and you process our invoices promptly. And you are one focused son of a gun, Chad. But look at it from my point of view." She made a powerful argument that she had to keep her priorities on her highest volume customers. "If you ordered more," she says, "I could move you up in the production pecking order and even look at our pricing. But you're not there yet."

Both Chad and Randy like the fact Tracy doesn't play games. She's direct and professional. She's also fair. Tracy agreed to look everything over again once Chad had his purchasing budget set for next year.

Now, three months later after Chad's last plea for a better delivery schedule and lower pricing, the two of them are sitting in Tracy's office, ready to go over the numbers and plead their case. Chad has a lot more confidence in their presentation with Phil's West Coast numbers in his reports.

"Guys, I hear you're weathering the storm out there pretty well. Congrats." Tracy isn't one for small talk, but she is always polite. Chad notices she started out with a sincere compliment that demonstrates she is following the market. She puts them at ease, even though she's in the driver's seat at this meeting.

"Yes, we are, Tracy." Chad jumps in. "We're not growing as quickly as a type A personality like me would like, but we are holding our own."

"All you Ivy League guys are type A, aren't you Chad?" Tracy turns to Randy, "But mere foot soldiers like us," Tracy nods at Randy, "who don't carry the weight of the world on our shoulders, will live longer, won't we Randy?" She smiles at both of them.

Yikes! This is a pretty good jab at Chad. While Randy mutters, "Sure, I guess so," Chad resists the urge to correct her—his alma maters, Williams and Northwestern's Kellogg School of Business, are not Ivy League institutions—and instead smiles weakly, wondering why Tracy is giving it to him. What did he do to offend her so quickly?

Randy doesn't nod or wink to Tracy. That would be breaking ranks. But he knows why she's poking at Chad, who never seems to catch on that his not-so-subtle self-promotion is irritating. Chad is always giving himself labels that sound like he just came from a self-affirmation seminar. Today Chad called himself "type A personality"; but it just as easily could have been "leader of the 'go-to' team," or the guy who believes that "failure is not an option."

Randy feels that Tracy is indeed a pretty smart cookie. She knows that Chad and he are sitting there, mutual hats in hand. She doesn't want to start the meeting letting Chad get away with his promotional crap. Randy also finds himself wondering what it would be to like to work for someone as insightful as Tracy.

1:21: Mike Lets Kim Take the Lead

"Thanks for your flexibility, Jonathan. I got behind and I couldn't catch up," Mike says to Jonathan as he and Kim got settled in their supplier's small office.

"That's okay, Mike, I understand. It gave me a chance to do a few extra things," Jonathan says.

Kim marvels once again at Mike's leadership and skill. It would have been easy for him to throw that new hire under the bus. After all, it's Colleen's fault that Mike was running late. Instead, he just simply apologized and didn't trouble Jonathan with the reasons. Elegant, Kim thinks. It's an elegant way to get back on track quickly.

"Jonathan, your products are critical to our success with our clients. We want more of them, faster, and we want to pay less for it. We're here to ask you for a couple of things," Mike says. "First, we want a shipment schedule of 14 days instead of the 21-day schedule we've been on with you for a year or so. Second, we are looking for a price cut of 5 percent. We've done our homework and we hope to get you over to our way of thinking. Both requests will be good for your company, as well as ours."

Jonathan smiles. "Boy, Mike, you don't mess around, do you? Okay, I knew you were going to ask for something; but I didn't know it would be so specific. Well, I'm not agreeing to anything yet, and I won't promise that I will, either. But I'm willing to listen. And thanks for admitting you need us. Most of our customers would never say something like that when they're asking for a price break," Jonathan says.

Kim is again amazed at how quickly Mike gets Jonathan's attention and starts a negotiation with such positive vibes—even after he was late for the meeting. She makes a strong mental note: Mike is a great boss because he rarely, if ever, blames others for his problems, even when others affect his performance.

"Then I'm happy we're off to a good start," Mike says. "And now it's going to get even better. I'm going to have Kim take over and present our plan for the next couple of years."

"Thanks, Mike," Kim says. "Jonathan, we plan everything we do around what our customers need to make their customers happy. We say that our mission, vision, and values are determined by whether we're succeeding in helping our customers to be in great shape with their customers. As long as we do that, we figure we're going to stay in the picture and grow for a long time."

Kim goes on to explain to Jonathan how all their growth opportunities focus on a detailed examination of their customers' growth opportunities. She uses five different examples in five different market sectors to demonstrate how this plan led to steady increases in sales and gross margin in the last two years. Then she talks about what they were doing this quarter—and had planned for the next quarter—to come up with several new market segments to go after once they understood their future customers' customers.

While Kim did include several critical sales figures and buying projections along the way, they were all there to punctuate the happy ending to another customer story. She would have been much more comfortable beefing up this report with at least three times as much data justifying her conclusions, but she knew Mike would have told her to take it all out. She had the data memorized, though, just in case Jonathan questioned anything.

It's an unusual presentation for Jonathan to sit through. Usually, customers and suppliers came in for meetings with lots of spreadsheets and charts regarding market expansion or contraction, costs per unit of production, and quality control figures. Kim only talks about her customers, using a simple PowerPoint presentation that featured a single clear text headline or main idea on each projected slide and minimal graphics. It's easy to follow, especially as Kim becomes more and more excited about the success her customers are having.

Mike sits quietly but attentively. He never takes his eyes off Kim and her presentation slides. He knows that if he concentrates on what Kim was saying, it will set the tone and also a visual tableau for Jonathan to stay tuned in as well. Mike coaches all of his managers to focus attention on the speaker in all customer meetings, despite the intense urge to peruse their notes or even glance at an incoming e-mail on a BlackBerry.

He's taking mental notes along the way. He realizes that Kim has come a long way in the last year. She's really connecting with Jonathan. As a result, Jonathan is gaining a clear and compelling insight into what Mike's division is up to and why it's different from the much larger players against whom they compete.

Mike worked hard with Kim to get her to this point. As an engineer, she had been trained that the more detailed facts, figures, and data she could present in a meeting, the better for everyone involved. Using a consistent and strong hand during brief coaching sessions following each of her production meetings, Mike had pushed Kim to concentrate more on what the numbers mean for everyone in the room. He told her it was a low percentage tactic (he figured she would love his choice of words) to merely spout number after number and hope everyone could connect the dots as easily as she did. It was the same type of firm and unending coaching he delivered to all of his key managers.

Mike didn't let up on Kim, despite all of her hard work and obvious talent. It led to more than one tiff between them along the way. "So you're telling me I've got to dumb it down for everyone, aren't you? Even experienced engineers pulling in over 85,000 bucks a year?" She was almost spitting with frustration.

"No, I want you to show them the power of your numbers so they'll follow your lead and direction," Mike said quietly after a pause. "Otherwise, you might as well just send them an e-mail and attach a spreadsheet. When you talk to your team, you've got to connect to them if you expect them to do what you need them to. Make the numbers mean something. Give them a specific value that demonstrates how they're helping our customers, every time you present to your team. Do that and you're starting to act like a boss who people will want to work for, instead of one who's merely smart."

Then Mike delivered a devastating blow to Kim. He had prepared for this moment, waiting as she kept pushing back after every coaching session. "Kim, you are a bright engineer, but I can find bright engineers anywhere. You are a hardworking manager. But you'll never be as successful as you want to be unless you take the time and exert the mental calories to make your words meaningful, to everyone."

Kim started to say something—once and then twice—but she never finished the sentence. Instead, she took a long pause, and said, "You're right Mike, I'm going to get better at this. I want to be a stronger leader."

That breakthrough was about eight months ago. Since then, she'd improved in every meeting and had made even more strides as head of the strategic planning process.

Today Mike had granted her another great opportunity. The meeting with Jonathan wasn't critical, but it gave her a chance to demonstrate her leadership skills to others, outside of the company. She's succeeding. Jonathan is sitting forward and engaged from the first slide. He stops her frequently to ask questions.

Mike pauses to savor the moment. Kim has not only gone from being a strong employee who completed tasks successfully to a strong leader who can coach others to complete successful tasks, now she's also showing a key supplier that Mike's division is deep in talent.

1:23: Chad Hands the Reins to Randy, but Doesn't Let Go

Chad flushes at Tracy's pointed sarcasm, but he ignores it. He is a "go-to" guy, he'll tell himself at a time like this. He'll just power through, not sweating what he considers the small stuff.

"Tracy, I'm going to let Randy handle the bulk of our discussion today. I'm just here to show you how important our relationship with you is and how much we're counting on your help," Chad says.

Tracy nods and smiles. She doesn't believe for a second that Chad will really keep his mouth shut for long. Randy is thinking the same thing.

"Tracy, as you mentioned, we're having a pretty decent year, despite everything going on," Randy starts. "And next year we're looking at more improvement in all areas, which is why we're here to chat with you."

Randy starts running through detailed sales and financial statistics that he and Chad carefully prepared. It's a ton of financial and market information, with chart after chart filling the screen. The first couple of times that Randy made a minor mistake in his delivery—or pointed to the wrong cell on the screen—Chad kept silent. He even patted himself on the back for allowing Randy to be a star.

Then Randy comes to the critical part of the presentation. "Tracy, we've completed our projections for the next four quarters and we want you to know we'll be ordering more from you next year—as much as 8 percent more, in fact, according to purchasing forecasts I've collated for our different regions."

Chad can't hold himself back. "Hey, Randy, may I jump in for just a minute to clarify just a point or two?" Chad is pleased at his polite request.

I knew he couldn't keep quiet, thinks Tracy. Randy is handling himself well. He's sharp and well spoken, even when he's laying the data on too thick. I wonder if he's happy working for Chad?

"Of course, Chad. Please go ahead," Randy says, surprised Chad has let him go this far without butting in.

"To tell you the truth, Tracy," Chad begins, "Randy is underselling this a little bit. Probably just due to his modest nature, I guess."

Chad is a real piece of work, Tracy thinks. First he interrupts his guy after he claims that he won't. Next he slaps his guy right in front of me and tries to make it better with a lame, back-handed compliment. Well, let's see how badly Randy screwed up to deserve this. Not much, I bet, she thinks.

"That magenta line labeled with 8 percent, which demonstrates our projected purchases from you for next year, actually represents a real increase of 8.42 percent. Randy must have rounded down in displaying his calculations," Chad explains, and turns to Randy. "Hey, Randy, that's okay, I do it all the time. You've really done a great job explaining to Tracy where we stand. I'm impressed," Chad says.

Wow, an order of oversized ego with a side of condescension to boot, thinks Tracy. She is unimpressed with the difference 8 percent and 8.42 percent makes to their argument.

"No, you're right, Chad. Please, proceed with this." Randy says, correctly predicting his time in the spotlight for this meeting has come to ignominious end.

"Okay, thanks, I'll just wrap up, if that's okay," Chad says—relieved to be back in the driver's seat.

1:50: Mike Starts Asking Jonathan Questions

Kim completes her customer-focused stories with a simple slide with a number on the screen:

Our Projected Dollar Order Increases: 8.42 Percent

"So, Jonathan, this is our case for the price break and faster delivery schedule. We're going to be helping our customers serve their customers better and better in the months and years ahead," says Kim. "That's why we want you to agree to a shipment schedule of 14 days instead of the 21-day schedule we've been on with you for a year or so. That, along with a price cut of 5 percent, would help us to help our customers and become a stronger industry player in the process."

Good finish, Kim! Mike wants to scream with joy. She followed all of Mike's rules for a powerful end to any presentation. She repeated "the ask"—what she wanted from Jonathan—with a very similar cadence and words to the ones Mike had used as the meeting started.

Mike is especially proud that Kim did not make reference to the fact that she was repeating something Mike had already said. This is a huge communication breakthrough for Kim. She, worse than most of the people who work for him, had used the expressions "Let me repeat" and "As I said before" ad nauseum in all of her meetings. Mike had ordered, pushed, and even begged her to stop using these expressions.

"Repetition is great. Repeat. Repeat. Repeat to get your headline or directive across," Mike preached." But do not draw attention to the fact you are repeating. That ruins everything. You sound like you're a stern school marm or a nagging parent when you do."

Kim must have finally gotten the message, because she ends this presentation to Jonathan with a bang. Now it's Mike's turn. But he doesn't jump in immediately. He waits for Jonathan to comment.

"Nice job, Kim," Jonathan says, "very impressive mission and execution. You guys are definitely on your way to making your mark with that 'helping your customer with their customers' thing. I like it." Then he pauses and turns to Mike. "Well, I'm ready to respond to your request, unless you have something to add."

"Well, I don't have something to add," Mike says quietly, "but I do have some questions for you." He then spends the next 10 minutes asking insightful and pointed questions about the mission and future plans for Jonathan's business. He follows up Jonathan's initial responses with additional questions that demonstrate his understanding and concern for Jonathan's market position. The questions are so well researched that Jonathan is flattered about the homework his customer has done on his operation. That, coupled with Kim's compelling presentation, sets the stage for Jonathan's response to their request.

"Okay, guys. I'm a fan. I was before you walked in, and even more so now," Jonathan begins. "As for the shipping terms, you've got it. As of tomorrow's orders, you'll have the 14 days, just like our top customers. It's easy to see we have to move product to you so you can keep your customers and their customers happy. I'm not going to move on price right now, though, because these are just your projections. Even if you hit these numbers, you still won't crack our top 20 customer list.

"But I'm going to give you a goal to shoot for," Jonathan continues. "If you guys hit this over 8 percent increase for three straight months, I'm going to give you your price break for the next three months. As long as you keep the increases steady and on track with what you've promised, you'll enjoy the discount. If your orders slip—even for a month—we'll have to start over again. How does that suit you?"

It's a solid win, Mike thinks. "It suits us just fine, Jonathan. Thanks for your time and your help."

"You're welcome, Mike," Jonathan says. "Kim, I found your presentation creative and easy to follow. Believe me, I sit through them all day, and yours was a delight."

"Thank you, Jonathan," Kim says. "Can we come back in six months and do it all again? We might have some more surprises for you."

"You bet. You have my number," Jonathan says.

Mike is beaming as he walks to the car. Six months ago, Kim had deflected every compliment with averted eyes and the lame-sounding, "Just doin' my job." Not only had she performed incredibly well this time, but she also accepted a compliment gracefully and used that positive karma from Jonathan to ask for a follow-up meeting. Kim is becoming a strong leader very quickly.

1:52: Tracy Bursts the Bubble

"Okay, guys, you came here for an answer. And I've got one for you. It's the old good-news, bad-news deal," Tracy says. "Bad news first: I can't move on price or shipping dates. Your projected increase is great. We appreciate the business, and we're glad you're moving forward with more for us. But you're still not in our top 20 customers. I can't even consider helping you until I see these numbers pan out for at least two quarters. I hope you understand."

"Sure, Tracy, we do," Chad says. "But you said there was some good news?"

"Yeah, there is," Tracy says. "You guys know your stuff. Randy, your numbers were organized and thorough. I want to give you another shot in six months. Come back then and we'll look at your actual orders and further projections and we'll see about that discount. I can tell you it won't be as low as you're asking, but we may be able to move in your direction."

"Fair enough, Tracy," agrees Chad. They all shake hands.

"As usual, it's been an honor and a privilege, Tracy," Chad says on the way out.

"Sure has, Chad," Tracy turns to her computer as they leave her office. Chad, you should really dial it down a notch or two, she thinks when they were gone.

Note

1:00 PM

Don't Be That Boss Lessons
1:03 Mike Preps Kim and Himself
  • Spend time with your B+ and A− players, pushing them to improve their communication skills even though they may already be a strong asset to the management team.

1:10 Chad and Randy Unveil Their Request
  • Don't use adjectives to describe yourself. Good bosses let others come to their own conclusions.

1:21 Mike Lets Kim Take the Lead
  • Coach your employees vigorously to improve their communication skills; and then allow them to demonstrate what they have learned.

1:23 Chad Hands the Reins to Randy, but Doesn't Let Go
  • Resist the urge to correct your employees in front of others outside of your company. It makes you and the employee appear to be weak.

1:50 Mike Starts Asking Jonathan Questions
  • Asking meaningful questions builds rapport and increases connections, especially when you follow up with even better questions.

1:52 Tracy Busts the Bubble
  • Unless you're having a sit-down with the President of the United States, the Pope, or the Dalai Lama, don't end a meeting with the words, "it has been an honor," because it's just not true.

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