Report 103

Your newsletter on applied creativity, imagination, ideas and innovation in business – delivered to your e-mail box on the first and third Tuesday of every month.

Tuesday, 1 May 2007
Issue 104

Hello and welcome to another issue of Report 103, your fortnightly newsletter on creativity, imagination, ideas and innovation in business.

As always, if you have news about creativity, imagination, ideas, or innovation please feel free to forward it to me for potential inclusion in Report103. Your comments and feedback are also always welcome.

Information on unsubscribing, archives, reprinting articles, etc can be found at the end of this newsletter.

CREATIVE NEGOTIATION

We have a tendency to see negotiation as being a zero sum game. If you gain more out of the deal (such as a better price) the other side loses (through not getting as much for their product). Yet, by taking a more creative - or three dimensional approach - to negotiation, we are more likely to achieve a win-win situation where both sides walk away from the negotiating table happy.

In spite of business taking creativity and innovation more seriously today than ever before, few are applying creative principles to their negotiation strategies. And that's too bad. Not only is creative negotiation more likely to lead to a win-win scenario, but it is also more fun.

The creative component of creative negotiation comes at the planning stage and involves looking at four perspectives:

1. Your situation
2. The other party's situation
3. The 'package' being negotiated
4. Everything else

Let's look at each of these perspectives in more detail.

1. Your Situation

Prior to any negotiating, most people tend to consider only their personal (or their firm's) situation. If they are buying, they think about what is the most they are willing to pay for the product in question? If they are selling, they consider what is the least they are willing to accept? What are they willing to give? What must they walk away with in order to be happy?

These are valid points, but if you are going to the negotiating table, you should also do some creative thinking while planning your strategy. This starts with asking some wide-ranging questions. Ask yourself: aside from the obvious issues, what else you might bring to the negotiating table. If you are selling a product or service, ask yourself what else you might offer the buyer. Get creative. Additional service related to the product – such as training and consulting are obvious. Think about services unrelated to the product you are selling. If it is a business sale, you might offer to have your public relations team prepare and distribute a press release about the buyer. Perhaps you might offer to introduce the buyer to business associates who might become clients of the buyer. If you are selling machinery, you might provide a team to manage the machinery. And so on.

If you are buying, you should ask yourself similar questions, but ask what you might want from the seller. Think about their entire product and service line as well as their expertise. We will look at this in more detail in a moment.

One thing you should consider not bringing to the negotiating table is your dignity. Indeed, a lot of people do not like negotiating for fear that they might make fools of themselves by paying far more than is necessary for a product or service; or by offering such a small sum that they are laughed at.

Worrying too much about your dignity inevitably prevents you from getting the best deal and will almost certainly discourage creative thinking. If you cannot offer a creative alternative confidently, you may not be taken seriously by the other side.

2. The Other Party's Perspective

Just as important as your own needs are the needs of the other party. Think about all the things they might bring to the negotiating table. If they are not creative negotiators – as you will be by the time you finish this article – they may not think through all the possibilities. Even if they are creative negotiators, you may recognise something they can offer, something they may not even realise would appeal to you, in the negotiations.

Years ago, a previous company of mine was printing up some brochures for a client. The size of the brochure was such that every large sheet of paper (that would be fed into the printing press) would include a significant area of unused paper. I asked the printer if we could use that space to print a separate small brochure for our own firm. They agreed and we got two brochure print runs for the price of one.

When considering the creative options of the other party, it is also important to think about the well being of the other party. If you represent a large company, buying from a small supplier, you might be able to use your muscle to push the small supplier into giving you an extra attractive price – perhaps with the implication that you will bring a lot of business to the supplier. And you would very likely succeed. Many small companies value big clients overly much. Big clients (such as Fortune 500 companies) make for prestigious clients and often provide a lot of opportunities. But not always.

If you push your small supplier to reduce their prices too much, you might drive them them into bankruptcy. I have seen this happen in more than one occasion. Bankrupting a supplier, of course, does not lead to a long term business relationship. Nor is it particularly creative!

3. The Package Being Negotiated

Of course you also need to consider the overall package of products, services, guarantees, warranties and anything else that is on the negotiating table.

Think about what is being included in the deal, what is not being included, what should be included and what might be included to make the deal more interesting.

If you are buying a house, you would certainly expect the building and the land to be included in the deal. You would probably expect fixtures and fittings (lights, curtains and that kind of thing) to be included. If you envision extending the house, you might want to include building permission in your consideration. And if the present owner of the house is an architect, you might include her designing an extension as part of the deal.

4. Everything Else

What else might be relevant to the deal? This is the time to think about it. Are there other suppliers you want to consider? Is there a time limit by which time you need to have bought the product? Is there a time limit by when you would like to have completed the sale? Perhaps the season makes a difference.

In considering all of the perspectives, you will probably want to do some brainstorming, alone if you are acting individually; as a group if it is a big deal or you are negotiating on behalf of a medium to large organisation.

You will probably want to brainstorm each perspective separately, look for overlap and come up with some creative ideas about what you might bring to the negotiating table. Don't be afraid to have some wild ideas to propose. They are often the most appealing ideas. Moreover, wild ideas work to your advantage in that they are harder to value and hence are less likely to result in a corresponding change in price or other component of the negotiation.

When the actual negotiation starts, it is generally best to keep your creative ideas to yourself. Initial negotiation over price and standard terms helps set the stage and ensure both sides have a similar view of each side's perceived value of the items being negotiated. Once this has been done, you can throw in your creative proposal.

Some Examples of Creative Negotiation

When I bought our present house in Erps-Kwerps, the owner had a published price. As is usually the case when buying a house, I made a significantly lower offer. The owner came back with a lower amount than his asking price, but higher than my bid. Normally, I would be expected to make a counter-offer and this would have continued until we met somewhere in the middle. But, in fact, this house is bigger than our previous house and I knew the owner – whose children had grown up and who was retiring – was moving into a smaller home. So, instead of making a counter offer of money, I told the owner I would accept his offer if he included certain pieces of furniture, all internal fixtures and his ride-on lawnmower in the deal. He readily accepted. As a result, he got more money for his house than he expected and also got rid of excess furniture and a lawnmower. We were both happy.

A small consultancy firm selling services to a large state enterprise offered to reduce their fee in exchange for office space in the state enterprise. Excess office space was available in the large organisation. So, the small firm got a nice office, access to big company facilities and more. The state enterprise got a reduced price and had extremely convenient access to the consultants – which resulted in more business for the consultants. Everyone won.

A software company selling to the Benelux Headquarters of a car manufacturer, took part of the software license fee in cars. The car company had excess stock. The software company was expanding quickly and needed company cars for staff. So, the deal worked for all concerned.

It is worth noting that in all of these examples, the creative solution gave everyone an advantage they probably would not have experienced had the negotiation continued in the traditional manner.

CREATIVITY IN YOUR SPARE TIME

This journal focuses on creativity, imagination, ideas and innovation in business. As a Report 103 reader you probably have an interest in applying creativity to your work in order to make your business more innovative. But what about at the end of the day when you go home? Do you still try to apply creativity and innovation to your private life? A lot of us do not. And that is a shame. Being creative in our personal time as well as during company time is good mental exercise and tends to encourage continuous creative thinking and creative problem solving.

If you end your day at work by going home, popping a processed meal in the microwave and watching television, you are not helping your creative mind much at all.

Creativity in our personal time comes in two categories: productive creativity and inspiration.

Productive Creativity

Productive creativity includes doing creative things, such as drawing, painting, knitting, cooking, making music and other activities which require your creative input in order to happen.

Some musician friends of mine tell me that when they were growing up, the whole family would play instruments and sing together in the evenings. As a result, making music is second nature to them. Now that beats watching television, doesn't it?

Inspiration

Inspiration includes activities which may not be creative in themselves, but which inspire creativity and exercise the mind. Inspirational activities include reading books, listening to music (especially more mentally demanding music such as classical and jazz), visiting art galleries, visiting museums and travelling.

Inspiration provides the creative fuel that helps you devise creative ideas and innovate more effectively.

Family Creativity

Of course if you have a family, being creative at home becomes vastly more important than if you are single. You doubtless place great importance on the creative development of your children. And that means doing activities that require creative participation from everyone. Such activities might include making music, playing with creative toys (such as building blocks, dolls, Legos, cars and any toys that require imaginative input during play), drawing pictures and similar activities.

Likewise, taking your family to art galleries, travelling to cultural locations, listening to music and the like all provide you, your partner and your children with creative inspiration that helps all of your creative growth.

Talk

When it comes to children, talk is an incredibly important creativity tool. For instance, my boys love to watch the Simpsons (a popular US cartoon series featuring a dysfunctional family) which comes on just after dinner. Although I am not particularly keen on television, I try to watch the Simpsons with my sons. And I find this series provides wonderful discussion points about being a good father (my responsibility, of course), being good children, love, and much else.

Helping your children to analyse what they see in the world around them – as well as on television, talking about how different scenarios might play out and discussing what is happening in the world around us are all good ways of helping your children understand their world, increasing their knowledge and providing them with the intellectual resources necessary for creative thinking.

CORPORATE INNOVATION COMMUNICATION

When organisations launch innovation initiatives, a critical component is the communications plan. After all, if employees do not know about your innovation initiative, they are unlikely to participate. And since most corporate innovation actions start with creative ideas from the workforce, employee participation is critical.

Innovation initiatives can include numerous components, including: the implementation of a state of the art idea management system (for example, our Jenni idea management: see http://www.jpb.com/jenni/), building an ad hoc suggestion scheme, providing workshops and more. The best initiatives, of course, combine multiple actions.

• Internal innovation communications can include any combination of these tools:

• Top-down communication via announcements in meetings

• In-house newsletter announcements

• Intranet home page announcements.

• E-mail announcements.

• Posters in lifts, staff canteens and other spaces where employees gather.

• Other actions relevant to your firm.

At the same time as innovation managers are promoting innovation initiatives to the employees, advertising firms and public relations agencies hired by the company are inevitably including the word “innovation” in every piece of corporate communication. No corporate advertisement or press release today lacks the word “innovation”.

Ad agencies and PR firms target customers, shareholders and the general public.

Curiously these two communications actions are never coordinated. So, employees are being fed communications detailing their innovation initiative. In theory, these communication plans should not only detail the specifications of the new idea management programme and schedule of training workshops, but should also include information about rewards, goals, benefits – to the company and to the individual participants – and underlying philosophy. In truth however, many of these factors are usually missing from internal communications – and that is a shame. Educating employees about the purpose of your innovation initiative helps encourage their participation.

At the same time, customers, shareholders and the general public are being feed communications which inform them that the corporation is innovative, but often fails to detail how or why it is innovative.

Employees often see both communications from both sides but fail to connect them. And that is not surprising as the internal and external communication plans are not in any way coordinated. One is an instruction book. The other is making use of the latest sexy business term.

The result is two half complete communication plans. Employees fail to understand why they should be innovative – and so are not as motivated as they might be to participate in innovation initiatives; while clients and shareholders are unimpressed because every company they deal with claims to be innovative.

So, why not detail innovation initiatives, goals and benefits in your internal and external communication activities? Demonstrate you are innovative by informing the public as well as your employees about your innovation initiatives. Statements like “using the latest idea management solution together with comprehensive creativity and innovation training, Acme Co, Ltd is tapping into our work-force's creativity in order to out-innovate the competition and remain the leader in our sector.” show not only that your communications people can use the word “innovation” in a sentence, but also demonstrate that the firm is taking concrete steps to really be more innovative.

You can use the same kinds of phrases in your internal communications. These statements not only make it clear to employees why they should participate in your innovation initiative, but also make your employees feel proud to be a part of your innovation initiative.

Indeed, by having the innovation manager collaborate with the marketing and corporate communications people, you can create a truly comprehensive communication plan that shows employees and the public that you are serious about innovation and really doing something about it.

Being a part of an innovative company is not only appealing to shareholders. It is also appealing to employees. After all, wouldn't you rather be identified as working for an innovation leader than as working for a hierarchical and bureaucratic firm? Wouldn't you feel even better to be an innovator in the former kind of firm?

Your employees and colleagues feel likewise.

WRONG PREDICTIONS

One of the amusing things about innovation is how it proves old predictions wrong. Here is an amusing list of predictions that have been proven drastically wrong over time.

The list is part of an article called: “Some very funny and totally wrong predictions of the past” and can be found here.

LATEST IN BUSINESS INNOVATION

If you want to keep up with the latest news in business innovation, I recommend Chuck Frey's INNOVATIONweek (http://www.innovationtools.com/News/subscribe.asp). It's the only e-newsletter that keeps you up-to-date on all of the latest innovation news, research, trends, case histories of leading companies and more. And it's the perfect complement to Report 103!

Happy thinking!

Jeffrey Baumgartner

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Report 103 is a complimentary weekly electronic newsletter from Bwiti bvba of Belgium (a jpb.com company: http://www.jpb.com). Archives and subscription information can be found at http://www.jpb.com/report103/

Report 103 is edited by Jeffrey Baumgartner and is published on the first and third Tuesday of every month.

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