What CIOs Need To Know About Negotiating Better Deals

What CIOs Need To Know About Negotiating Better Deals

It turns out that too much negotiating can be bad for a CIO
It turns out that too much negotiating can be bad for a CIO
Image Credit: Commonwealth Foundation

Let’s face it, one of the most important jobs that a CIO does is to negotiate deals. No matter if we are dealing with outside vendors or internal departments, it sure seems as though because of the importance of information technology a great deal of our time is taken up with trying to get the best deal for our IT department. This is a skill that most of us have learned along the way. That’s why it may come as a bit of a surprise to learn that if we do too much negotiating, it can backfire on us.

The Back-To-Back Problem

In the world of business in which the person with the CIO job lives, we like to think that if we have one success, it can lead to more successes. However, it turns out that when we are talking about what happens when we negotiate a deal, this is not always the case. The people who study how CIOs negotiate have reached some interesting conclusions. What they have discovered is that when the person with the CIO job engages in back-to-back negotiations (how many times have you done that!) with different counterparts, the happy glow of success from the first negotiation can result in you getting a poor outcome in the second negotiation.

So what’s going on here? The people who study how we behave in these types of situations have run multiple studies using different groups of people. What they have discovered is that the key factor here is our pride. Most CIOs believe that pride is a good thing. We think that having pride should lead us to having positive results. However, that is not what the studies revealed to the researchers. Instead, what they discovered is that when CIOs experience pride, they tend to do more poorly in their next negotiation. This leads to the question of what is the problem? It turns out that CIOs tend to over-attribute their success to themselves when they are feeling pride. The result of this is that a CIO may start to feel overconfident.

When researchers have taken a look at how CIOs negotiate, they have only recently started to understand the social factors that can play an important role in a negotiation. These social factors can include such things as relationships, emotions, and culture. Most of the research on CIO negotiating that has been done has focused on CIOs negotiating over and over again with the same partners. The findings from these studies have been that if you are able to achieve a positive outcome from one of these negotiations, then it will probably lead to a better outcome in the next negotiation with the same party.

Solving The Negotiating Problem

The changes in the researcher’s understanding of how CIOs negotiate has come about as they have changed their studies. Now they are starting to take a closer look at what happens when a CIO engages in what is called “sequential negotiations”. This occurs when a CIO engages in multiple negotiations in a short time with different parties. Excessive self-confidence can end up providing a CIO with a false sense of confidence. The result of this is that you can end up underestimating the next person that you are going to be negotiating with.

There are many different results of this type of having a false sense of confidence. One is that you simply may not prepare enough for your next negotiation. This can be a real problem for CIOs and we need to find a solution for it. It turns out that the solution to the challenge of negotiating back-to-back is quite simple. What we need to do is to take a break between negotiations. The proper amount of time would be to wait until the next day before starting your next round of negotiations.

When we are wrapping up a negotiation, what we want to do is to take the time to ask ourselves some questions about the negotiation. What we want to know are things like what went well in the negotiation? Also we’d like to find out what we could have done differently. The goal of collecting this information is to allow us to use it to tailor our negotiating strategies for our next negotiations. In the end, the lesson for CIOs is that we need to learn how to be flexible. This means that we need to space out our negotiations in order to ensure that we’ll be able to get the best deal out of each one of them.

What All Of This Means For You

The job of being a CIO requires us to do a lot of different things. One thing that we seem to do a great deal of is negotiate. We’ll spend time negotiating with vendors, suppliers, and other internal departments. After a while we may start to believe that we are pretty good at doing this negotiating stuff. However, it turns out that we may actually be doing it wrong.

The problem with our negotiating comes up when we engage in back-to-back negotiating. We can do well in the first negotiation and this can lead us to doing poorly in the second negotiation. The problem is that when we do well in the first negotiation we start to feel pride. This leads us to feeling overconfident and this can negatively impact the outcome of the second negotiation. Researchers have only started to take a look at the role that social factors can play in a negotiation. When a CIO engages in sequential negotiation excessive self-confidence can end up providing a CIO with a false sense of confidence. When we are feeling over confident, we may not take the time to prepare for our next negotiation. What we need to do is to learn to take a break between negotiations. Taking a day off is the best thing to do.

There is no changing the fact that the ability to negotiate well is a key part of the CIO job. However, we need to become aware that if we do too much negotiating, specifically if we engage in back-to-back negotiations, we may find ourselves creating deals that are not very good for us. Instead, we need to recognize the problems poised by back-to-back negotiations and make sure that we start to work breaks into our negotiating schedule.

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World IT Department Leadership Skills™

Question For You: How can a CIO make sure that they don’t get trapped into doing back-to-back negotiations?

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What We’ll Be Talking About Next Time

One of the most important jobs that the person with the CIO job is asked to do is to secure the company’s networks because of the importance of information technology. The good news is that the tools that are available to do this are always getting better and better. The bad news is that the weakest link in the security chain, your employees, seems to be becoming weaker and weaker. Too many CIOs are making it easy for the bad guys to get in to their network. What can a CIO do to create a cybersafe company?

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