This weeks task saw the teams take on a challenge of buying a set of items for the Savoy Hotel in London. Closed for three years for refurbishment, then hotel needed some last minute items and it was the teams who had to get them.
Lord Sugar reminded the teams that this task was about Negotiation, a key skill required by many leaders and business owners.
Project Manager in team Venture was Suzi and for Logic it was Gavin.
Team Venture agreed that the task was about cost and location, an agreement that sadly was not followed through as the task went on. They hit the phones and begun sourcing the items they had been asked to find.
Team Logic started by going through the list of items to understand what they knew about and what they didn’t. They also begun to hit the phones.
In team Venture, Suzi made a quick check with the team what they had found and set the team to work going out to find the items.
3 Hours later, team logic were still at the hotel with very few leads, and still a lack of understanding of what some of the items were.
It seems team Venture had the upper hand, but they missed out one of the fundamental parts of Negotiation – clear preparation. This is something that the other team didn’t do either, even in the 3 hours they were still sat in the hotel.
From a personal point of view, and I understand that the teams were under real time pressures in this task, preparing to Negotiate is key to a successful out come.
Flying out of the hotel to buy the items, team Venture had no real understanding of the true cost of the items they were going to buy. They mentioned at the start that this was about cost and location, but yet they headed out for the most expensive parts of London and with no thought to the location of the items they were looking for.
They simply went straight to the first place they found the items to do a deal.
Without understanding the true cost of the items they were looking for, how do they know where to start their negotiations? Their plan was to take the price that they were given and half it. This obviously puts them on the weaker foot as it shows the people they were negotiating with that they had no sense of the cost, meaning they could work their end harder.
This was shown true when they bought camomile tea. They were quoted nearly £900 for it but managed to get a substantial discount for it. The lady who was selling the tea knew the true cost of it, regardless of it quality and knew what she could get away charging for it.
The team forgot it was about cost and focused on quality – they bought the tea at the deal price, but still paid almost £300 more than the other team for it. Had they researched it, or even called a few more places they would have quickly realised that they were in completely the wrong price bracket.
The other team, Logic completely lacked structure. After their 3 hours in the hotel they set out to find the items, but didn’t know where they were going, how much to pay or in fact what some of the items were.
One of Logic’s sun teams were off to buy their first item. In the car one of the team members said to the Sub Team Leader that she had other numbers to call for the products, they may be further away but I have the numbers. The decision was made to carry on to the supplier they were heading for that was 13 miles away. Now, if they had taken just a few minutes to call to get a rough estimate of the price and their exact location, maybe they could have struck a better deal or at least knew where to start.
The teams 3 hours in the hotel were their downfall. If they had used some of this team to properly structure their preparation, they maybe they would have succeeded. In the end they were beaten in the task by other team by £8.
They went into negotiations using words such as ‘We’re Desperate’! Really, is this something you would sat to your supplier. They even called one of the hotels competitors to ask for their preferred suppliers list – something Lord Sugar of course thought was a great idea. Choosing his words carefully, he told them exactly what he thought of that idea.
Although the teams lost for different reasons, Logic down to lack of structure and Venture focusing on quality and not cost, there were some things that caused failings in both teams for me.
If they had spend even just a little time planning their negotiations, things would have been so much easier. Here’s what I think they should have done:
1. Called a number of places to get an idea of prices. This would give them a decent point to start from and not just guess.
2. Worked out the best route and product to buy. For example, maybe a product was slightly dearer at one supplier, but it was much closer. Bearing in mind they got fined for items they didn’t get, maybe this would have been better/
3. Build at least a little rapport with the suppliers. Charm will only take you so far and clear belligerence will get you no-where. Diving straight in with this is what we have to spend and what will you sell it for will put the other persons back up immediately.
4. Be clear about what you want to pay and what you will pay. If it goes over this, walk away. If you have done your preparation, you will know that you can walk away. Understand your BATNA (Best Alternative to a Negotiated Agreement). In other words, know when you walk away or use the second deal for leverage for the one you are currently negotiating on.
Easy to say sat on the sofa, but some clear lessons to learn.
Look out for my lessons from the first two episodes coming soon. I’ve been on holiday and need to watch them.
David
Managing Director
Revolution Learning and Development Ltd
www.revolutionlearning.co.uk
