Getting people to buy into new ways of working may be one of the trickier transitions one has to manage. Most people are armed with an instinctive resistance against change; which often turns new process adoption into a trench war of old versus new. I’ve seen a multitude of seemingly simple transformation programs grind themselves slowly into the ground by the most illogical reasons.
Take e-auctions for instance; from an outsiders perspective they seem like the perfect tool for any purchaser; yet e-auction usage can still be a hot potato.
To overcome this resistance; some of IBXs senior category managers have introduced a concept where the negotiation really turns into a place to be (sourcing) event. All you need is a (LCD) projector, a conference room and some snacks. And to top it off; a well prepared e-auction that is shown live in real time on the big screen.
The snacks bring in the folks who may at first reject the new process yet still enjoy the company of their colleagues, the projector allows everyone to see the action – and anyone who’s ever been monitoring an e-auction knows the rush of adrenaline that comes as the bids start dropping in – and if you’ve chosen and prepared your event well enough (a select group of bidders who are familiar with e-auctions and really want the contract), the bidding and results will win over even the most stubborn of e-auction opponents.
At a recent event; an incumbent supplier was set against a very aggressive opponent who dearly wanted to gain market share, so the dynamics (and the drama) was apparent from the start. Over popcorn and soft drinks the staff followed the negotiation in real time and as the negotiation was finalized, the winning bid was more than 50 percent lower than the price paid according to the previous contract – and the difference between the two lowest bids was just about 0,5 percent, calming everyone who might be worried about switching costs or quality differentiation.
Though it may seem like a cheap trick; fact is that this cheap trick has worked time and time again and accelerated e-sourcing adoption at many companies.
February 26, 2009 at 7:44 am
I think a key issue when addopting e-auction is to present it as negotiation tool instead of a IT solution.
All (or most of them) pride them self in being a good negotiator. But theese days a good negotiator also manage e-auction.
In conclusion; negotiation courses should include the famous book “Getting to Yes” as well as “how to set up and conduct a e-auction”.
February 26, 2009 at 12:20 pm
And let’s not forget the fact that many of the practical skills necessary for good negotiations are just as viable when you’re using e-auctions as a support tool.
Market/category knowledge, being prepared, well written RFX(s), etc. Getting these things done are crucial in any negotiation situation – and as you point out – e-auctions are a support tool, it doesn’t take away anything, it adds transparency and speeds up the process.
February 26, 2009 at 1:35 pm
To run an e-auction well requires at least as much skill as a traditional negotiation. The transaparent nature of it means everything must be prepared very thoroughly if a true and meaningful market price is to established. The precise format and nature of the e-auction can also have a tremendous influence on the outcome, and as buyers build up experience of e-auctions, they typically find the results get better and better – another sign that it’s not the tool itself, but how you use it that really drives benefit.