“Negotiation is the DNA of business” as Lord Sugar pointed out this week on BBC One’s The Apprentice. And he’s right. In business, negotiation is essential to creating the the biggest profit margins, which ultimately leads to the success of a company.
Negotiation can either create a deal where both parties are happy and want to move forward, or an imbalance which results in resentment festering, and ultimately ends up destroying something that was initially inspiring.
Wednesday’s episode of The Apprentice saw the return of the classic buying task. Lord Sugar set the two teams the challenge of buying items at the lowest possible price through effective negotiation.
If you didn’t see it, the episode is below, along with my thoughts on the negotiation lessons that I hope the teams learnt from the successes and challenges they encountered (the times in brackets will help you find the spots in the programme I’m talking about).
1. Plan of attack (8:00)
Before you go in all guns blazing, at the beginning of a task (or a negotiation) performing an Opportunity Analysis and effectively planning your time and efforts can be make or break. In Wednesday’s episode, Team Summit undertook an opportunity analysis to plan their approach to the task – including creating timescales and choosing the people best suited for each negotiation. However, as we saw, when their planning went out the window, so did their productivity!
2. Back to basics (8:30)
Even though they lost, Tenacity showed that by getting out of the office and meeting the suppliers in person, they could deliver better prices in the long run and drive the intensity of the negotiation. By going back to basics and using the yellow pages to source the right suppliers, Tenacity lowered their costs, and ultimately would have won the task, if it wasn’t for that pesky skeleton!
3. Chicken for cheap (11:00)
One of the most impressive negotiations of the episode was Daniel knocking over 30% off the price of a single chicken with an initial selling price of £6.19. He played on his Jewish heritage and heckled his way to a great bargain. It just goes to show, it pays to play to your strengths – and never be afraid to negotiate, whatever the price!
4. A sinking feeling (12:20)
Wasn’t the sink amusing? Notice how the supplier completely broke confidential promises (which he didn’t give but the buyer tried to impose)? What lesson can we learn from that?
5. Diamonds are a girls best friend (22:00)
Another key reason for Team Tenacity’s failure was the Diamond negotiation. Roisin took over the negotiation for Team Summit and had the dealer in the palm of her hand from the start. She started the negotiation low, pushed and pushed, and managed to agree on an incredible £50. Sex is a proven weapon, especially when paired with perseverance!
Whereas the diamond dealer with Daniel in Team Tenacity, who leveraged one of Cialdini’s methods of persuasion – weakening his competitor by claiming his initial “low offer” of £150 was disrespectful and naturally pushing the price up, rather than down from that point. An anchor had been established and there was only one way to go.
Daniel settled on £172. The opening was £250 on one side v £150 on the other: look where they met – virtually bang in the middle. So, a comfortable zone, which was all created by the £250 anchor thrown down at the beginning…so most people think the result of £172 was great. Aim high, ask high!
6. Desperate for the deal (26:00)
In negotiating for skeleton, Team Summit made the mistake of showing their hand. By revealing to the supplier that they had been “looking for a skeleton all day”, they proved that they were desperate to close the deal and subsequently gave the seller the confidence to stand his ground (much like Bianca did in the “Coach Tours” episode). You can imagine how comfortable the seller felt: “no risk of losing this sale” – £260 came down to £230.
7. Search for the “oud” (29:00)
One of the most inventive sourcing strategies in this years task: finding a local online dealer and paying cash in hand. This removed the delivery charge and the team had instant access to the product. Compare this to Team Summit, who simply bought the “oud” from a fancy shop. The costs of fancy lighting and the creation of the ambience meant sizeable overheads which made the shop’s Oud significantly more expensive. Research into alternative suppliers created surprising good results.
8. Skeleton specifics (36:40)
Unclear goals on either team can lead to both parties not getting the desired outcome from the negotiation. The vague specifications of the skeleton highlights this, with Lord Sugar not getting the product he wanted. This small mistake was ultimately responsible for Team Tenacity’s failure, and subsequently, the success of Team Summit. They missed the deadline and also failed to purchase all the items, so without the other team’s skeleton fine, they clearly would have lost the task.
Who else thought the £310 fine was more like a penalty that, in law, would have been rejected because in the overall scheme the only outcome was that it forced the team’s loss?
9. From hero to zero (44:30)
The law of Social Proof shines through from the master Cialdini as, under the criticism from Lord Sugar, Team Tenacity quickly crumbled. Where previously, the team had backed and supported Felipe’s “genius” idea, they were quick to point the finger and the genius became the victim. This highlights a weakness within many negotiating teams that without solidarity, internal tensions begin to arise.
10. The result (40:30)
Can you imagine a public sector tender failing to meet the minimum acceptance criteria and being submitted late but that still won the bid? Private sector principles definitely apply in the Apprentice…but, were they right?
11. You’re fired (54:00)
Notice the body language of Daniel when Lord Sugar summed up yet another time in the board room? The eyes quickly rolled up to left hand corner. What do you think was going through his mind at that point?
Recognise the comfort zone: as soon as Lord Sugar started to say “Daniel how many more times can I give you a warning?” we knew he was still in the game (even if he didn’t). In a negotiation, the seller would know that they had an agreement at this point and now needed to close the deal
Controversial! Was Lord Sugar right from a procurement and contractual sense to fire Felipe? He met the specification: it was vague. How many real-world specifications are similiarly vague? A real lesson in strict interpretation. Personally, I’m with Felipe
In the end, it was sadly a lesson in pure tactical negotiation: innovation was stifled and indeed made a mockery of. Right from the outset it was about buying products for the cheapest price, with fines. No incentive were given for early completion, coming in under budget (which was a £1000), nor was quality assessed at any point (other than the shambolic hijacking of the skeleton). Was it just TV drama after all?
How do you think the teams got on? I’d love to hear what you think about the task in the comments below.
Interested in learning more about Negotiation? It’s a key part of almost any job, so being able to hold your own can not only be a huge advantage for you, but also the company you work for.