Fans of Futurama might be aware of a character named Nibbler that does not really nibble. He eats massive quantities of pretty much anything and everything, discharging super dense pellets that serve as rocket fuel. It also turns out that while masquerading as a pet, he is a member of a super-intelligent intergalactic species. Of course – that is a cartoon. We are talking about real-life negotiations here.
What is a Nibbler?
The owner of an 8(a) firm had long sought contracts from a significant federal agency that had a regional headquarters in our city. I identified an opportunity, pursued it, and we were awarded a competitive 8(a) contract. The agency was definite in what they wanted, and I had gotten my “marching orders” from the boss on the limits of what he would accept. The agency was tough, but overall fair and I was able to negotiate an arrangement well within the boss’s limitations and at considerable additional benefit to the company. Not to mention, we now had a foot in the door with this agency.
I informed the boss that we had reached agreement within his parameters and they were sending the paperwork over for signature. He asked about the agency contracting officer and requested the contact information. I assumed that he wanted to make introductions and begin to find other opportunities with the agency. I was incorrect.
Taking a Bite
He said, “That’s a great deal you got. This gives me an opportunity to go negotiate for a better deal on this contract.” Turns out he was a negotiation nibbler. After everyone thinks the deal is settled, he goes back and asks for something a little extra. For example, you are told that the new car comes with three gallons of gas, and then at the point of delivery you say, “Now that includes a full tank of gas, right?” Some call it chiseling; some call it nibbling; some call it unethical negotiating.
Nibblers are Everywhere
You will, at points in your career as a professional negotiator, run into nibblers. After negotiations close, they might ask for something better, faster, or cheaper. You have invested a lot in reaching this agreement. You might have teammates or subcontractors to whom you have made commitments. This negotiation strongly informed your down-stream negotiations. Too often, in a feeling of fear of missing out (FOMO), you give in to the nibbler and agree to take a smaller return on what you thought was a settled deal.
This is a terrible negotiation strategy for several reasons. First, you have signaled that your “best deal” was not the best you could do since you are now agreeing to something less for yourself. You are also encouraging such bad behaviour from the other party. Having succeeded once, you can rest assured they will do it again – and expect to get away with it.
It's Only a Small Bite
A nibbler succeeds by never ask for something big or outrageous. They never get greedy. At least at first. As the nibbles continue, none of which are deal breakers standing alone (just deal minimizers), when you add them up you realize that you may have given away the farm.
Sometimes - They are just Bad at Negotiating
While some nibblers are intentional, many are simply uncoordinated and tend to have a poorly defined decision-making process. Layer upon layer of “higher approval” can reflect a great degree of distrust within that client’s organization. These can be very dangerous, and expensive, clients to have. They certainly should not be on your “A” list of clients. Look for delays in their responses, or key people who are “not available.” In any company, for important deals the right people are available.
In either situation, you need to minimize your exposure to nibblers.
Here are four ideas to incorporate into your negotiations and decision-making processes to prevent nibblers from eating into your profits.
1. Question Authority
Always verify the authority of your counterpart. Ideally, you want to negotiate only with the ultimate decision maker. This might not be possible, so verify the authority of your counterpart. This might be as simple as directly asking them. As soon as you get any hint that the person across the table cannot close the deal, stop the negotiations.
You should never make firm offers or significant concessions unconditionally. Later discussions may change the context of the current discussion. Agree to things tentatively until ALL aspects are fully negotiated. When you have worked through your list of negotiation objectives and have committed unconditionally to them, you will end up with a single final issue. It is often price. All single-issue negotiations are win-lose negotiations.
Never fall for this. It violates the principle of making the pie bigger and can utterly destroy all the work that has gone into a win-win strategy. It is far better to clarify authority before any aspect of the deal is settled. When you are the only party making firm commitments and the other party is in a “we’ll see” mode, you are sure to come out on the short end of a win-lose negotiation.
I represented a purchaser of large mainframe computers. We operated a large data center and new purchases were routine. We were on the verge of expanding our capacity and were interested in matching the mainframes to the others we had. It was a lot of money. We were negotiating with a three-letter company you would recognize. We verified authority with the young lawyer they sent to conduct the negotiations and were fully assured she had all the authority she needed. In our preparation we surmised that they viewed us as a “captive” customer since it would be prohibitively expensive and disruptive to swap out an entire data center with their competitors’ machines.
Misstep #1 (and 2!)
Shortly into the negotiations we sensed that they were not being entirely forthcoming, To the surprise of my own team, I jumped to a latter issue that was somewhat sticky. I firmly stated our position and said that if we did not get that to end up in our favor, we were going to another option. The shock on the other party’s face told me a great deal, and they quickly decided that they needed to call their home office. I immediately insisted that she either had the authority or she did not, and we were not going to be calling the home office all day. If that were the case, we wanted whoever she was calling to be there, not her. Harsh, perhaps, but we were talking a lot of money and we were not going to play games.
She got authority for that issue and I immediately addressed another one of similar impact. Once again she said she had to call the home office. At that point, to the astonishment of my team, I called an end to the negotiations and sent the other party home until they brought us someone with the right level of authority.
Don't Let FOMO Attack You
All that afternoon I was barraged by program managers and VPs asking me what I had done to "screw up” this deal. I essentially told them all to sit down and shut up. I could only imagine the conversations the other party was having over losing us as customer.
We got a call late that afternoon asking if they could return in the morning, and the person from the home office would be on conference call. We agreed.
We met the next morning and before noon we had a deal everyone could sign. And we got ALL of our key objectives with no nibbling, and almost all of our stretch objectives. It was a very favorable deal for us. Some of the people who had lambasted me on the prior day called to thank me for “holding firm.” I was, sadly but realistically, able to tell a lot about certain members of my own team. Verifying authority and not allowing for gamesmanship will stop the nibblers.
#2. Get it in Writing - The Importance of Clear Communication
Try very hard to reduce the agreement to writing. If you cannot get an entire contract put together that quickly, at least have a terms sheet that commits both parties to the basics of the deal. Never settle for an offer just to see if they can get it approved. If they need approval, they do not have the right level of authority. Make it clear that this is the deal, and no “nibbles” will be entertained. Make it clear that any attempt to renegotiate from the agreed-to terms will kill the deal.
During a car purchase I spent a lot of time dealing with the salesman who had to keep going to “talk to his manager.” I was not allowed to talk to the manager directly, and I made my disappointment very clear. I was in a constant state of “walking away” or at least I let them believe that.
We finally reached a deal and I told the salesman in very explicit terms that this was the bottom line deal, and if the finance office varied that by so much as a penny, the deal was off and he would lose the sale.
Mistep by Others
During the meeting in the finance office, I was presented an agreement that was $3.16 more than the original. I asked if he was aware of what I had told the salesman. He said it was “essentially” the same. I informed him that it was NOT, and I got up and walked out.
The salesman saw me walking across the parking lot and ran up to me to ask what happened. I told him. He tried to stop me, but I got in my car intending to leave.
The next thing I know, the salesman, the sales manger, the finance guy, and the dealership manager all walked up to my car asking what it would take to get me back into their office. I told them to make me a better offer because of their unethical conduct. I got the car for $250 less than the original deal – to the penny.
3. Inadequate Scope Definition
One reason that nibblers get away with their little tricks is because the detailed scope of the deal are not fully locked down. Every deal requires a Work Breakdown Structure (WBS). It might be simple and straightforward for smaller deals, and might not even be structured as a formal WBS. Every detail of what will, and what will not be provided, should be articulated. If any nibbling starts, simply pull out the WBS and say, “Yes, we can do that. Schedule cost, and quality are all defined here, so if you want it quicker or for less money, lets talk about what else must change.”
Stop the Problem Immediately
This demonstrates that nibbles will not be entertained without consequences. If they are willing to pay more for a shorter schedule, or pay more for increased requirements, the WBS makes the current arrangement crystal clear, shows how the requested change fits within the overall scope of the project, and how the change could impact other parts of the work. This ripple effect is where nibbles cause the greatest disruption.
Contract Changes Too
The same is true for any changes that occur during performance. Without a clear WBS to start, it can become difficult to quantify increased costs and program disruption. Good conduct of contract operations should require the creation of a WBS document. It will serve you well from the negotiation stage all the way through closeout.
Constantly Assess Risk
Often a requested change will also change the risk profile. Showing the other side the level of risk they are introducing to the deal might cause them to stop nibbling. It will certainly demonstrate that you are a person of honor – you will respect the deal you signed. If they want later changes, you will agree only when clarity can be reestablished and both sides are treated fairly.
4. The Deal, the Process, and the Relationship
Clarity on what is being negotiated carries many long-term benefits. I always teach that in any negotiation you are actually negotiating three things – the deal itself, the negotiation process, and the relationship. All three should be the same or stronger at the end of the negotiation. None of them should be weaker or, worse, damaged beyond repair.
In one negotiation the other party had a table banger. He would make demands and pound on the table for emphasis. He knew he was intimidating my team. After one of his more theatric poundings, I stood up, leaned across the table, and began pounding on it as he had while forcefully expressing my team’s position. The look of shock on his face (and some of my own team!) was worth it.
I immediately backed off and said, “Oh, I’m sorry. I thought that was how you wanted this process to go where both pound on the table and maybe reach an agreement. If not, let’s find a more civil way to reach a win-win agreement.” He broke into a smile and said “I like you, boy” (another attempt at intimidation) and we ultimately reached a deal favorable to both parties.
Relationships require respect. His “boy” comment was inappropriate. He had also made some comments that were very sexist toward a member of my team. At the next break I pulled him into an adjoining room and informed him that his table pounding and rude comments were to cease immediately or the negotiations were over.
I told him that he would respect me, my team, and every aspect about them personally. It was a discussion his parents (or boss) should have had with him years previously. I knew that it risked ruining the deal, but I was not going to sacrifice the relationship over his rude conduct. He would respect my team and me or there was no deal.
He resisted by saying “it’s just business” and not to be so sensitive. I told him his view was antiquated and would not work in our environment. He settled down and the rest of the negotiation went well.
That evening he invited me to join him for dinner and we had a very cordial evening. Despite his insistence, we each paid for our own meal. You must earn respect. When someone is rude, or nibbles, they do not respect you. Process and relationship are always on the table from beginning to end of the negotiation process.
Keep These 4 Things in Mind
Authority=> clear communication=> well-defined scope=> deal, relationship, process.
Your discipline in the negotiation process should make it clear that you are not going to play games, and you expect the same respect in return. Your discipline will strengthen the relationship. Your integrity in the deal and the process should be obvious to the other party.
Another thing I always teach in negotiation classes is that you must enter every negotiation with your character intact. Similarly, you must exit every negotiation with your integrity intact, even if that means you have walked away from a deal. Never normalize aberrant behavior. There might be short-term losses, but the long-term benefit is significant. Your integrity is worth that, isn't it?