EFFECTIVE NEGOTIATION

Transcription

A Publication of theInvestment RecoveryAssociationVOL. 3, 2018www.invrecovery.orgEFFECTIVE NEGOTIATIONHow to Leave Less Money on the TableTheBusiness JournalJournalThe InvestmentInvestment RecoveryRecovery Business2019Investment RecoverySeminar & Trade ShowMarch 17-20San DiegoNegotiation is a fundamental skill every InvestmentRecovery Professional should master.Adapted from a presentation by Dennis Bain at the 2018 Investment Recovery Seminar and Trade ShowInvestment recovery professionals negotiate sales for all kinds of surplus day in and dayout. So, you would think their negotiating skills were pretty sharp—and you’d be right. Theycouldn’t have achieved success in their respective careers without the ability to move surplusfast and for a respectable ROI. But there’s always room for improvement. How many timeshave you asked yourself “Did I just leave money on the table? How much money did I leaveon the table? What could I have done differently for a higher profit?” Page 4The Center for Remanufacturing and Recovery:The New Profit Epicenter for Investment Recovery?Remanufacturing is like the Rodney Dangerfield of sustainability.It deserves more respect than it currently is getting. Page 7

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PRESIDENT’SMESSAGE“EVERYTHING OLD IS NEW AGAIN ”I was generationally out-of-tune growing up. My father was 60 when I was born, so I gained loads of “GreatestGeneration” wisdom from him, while my peers were being raised by “Baby Boomers”. Some of dad’s advice,I had to un-learn as I moved into the professional world (“always have the last word” is less productive than itonce was), but most was spot-on. When it came to the art of the deal, my father, a one-time hobo who rode therails as a teen but spent most of his career as a college professor, had a surprising depth of experience.In my dad’s day, investment recovery was the mindset. He used to tell me, “Everything has a value to someone.”And while he considered himself a shrewd negotiator, he also understood that success in negotiation also tookinvesting beyond the current deal. No one left a deal with my dad feeling like they lost, because he took thetime to get to know them, to understand what their wants and needs were, and to craft a deal that often madehim more than he was looking for while gaining a friend and ally in other negotiations.One of my biggest takeaways from the Karrass Group session during the 2018 Seminar & Trade Show was a newrespect for my father’s methods. Through the exercise, we saw how taking the time for small talk and knowingyour boundaries, but not being bound by them, can equal big wins at the negotiating table.Another great lesson from dad; why buy new when you can fix it? Despite his specialty being microbiology, mydad knew who to call to bring just about any old part to better-than new condition.As you’ll see in the articles that follow, these 1930’s concepts still hold true. In a recap of the Karrass Grouptraining, you’ll be invited to un-learn the unconscious negotiating skills we’ve all accumulated over the years.In the feature on remanufacturing getting new attention for its sustainability impacts, you’ll see how renewedfocus is bringing new analytics to an age-old field.A few notes: For those new to the field or preparing to sit for their Certified Manager of Investment Recovery(CMIR) Exam, I encourage you to join us for the upcoming education webinars to earn some extra credits,refresh on the core skills that every IR practitioner needs, or invite your leaders or other key stakeholders tojoin, so they can learn more about your role.Of course, some of the best education, mentorship and networking opportunities in the industry can be foundat the annual Investment Recovery Association Seminar & Trade Show, so be sure to get your budget requests inearly to join us March 17-20, 2019, in beautiful San Diego, California.Regardless of where you are in your IR career, may you get the highest-and-best value for all the assets youmonetize using the 7 R’s of Investment Recovery.Stay cool out there!Kristina Waters, CMIRCox Communications(623) 328-3274kristina.waters@cox.comASSET 2.0 2018 : V33

COVERSTORYEffective Sales Negotiation:How to Leave Less Money on the TableFor the attendees at the 2018 Seminar & Trade Show inOrlando, those questions were more than answered.The session, “Effective Sales Negotiation” was presented by Dennis Bain from the Karrass Group - one of thecountry’s most recognized authorities in that area today. Even the most seasoned IR pros walked away withproven bargaining tactics they could add to their skillset and start using immediately.what’s happening play-by-play ofwhat the other party is attempting – in terms of strategy, tactic,technique, method, mode and source of power. Andbest of all, understand how to utilize them to youradvantage.Let the Game Begin!Me An UnconsciousNegotiator?Mr. Bain explained that it isn’talways the lack of experience orresources (such as time) that prevents us from being the best-ofthe-best negotiators, it’s becausemost of us are sunderstandingthe pressuresof the otherparty.Consider babies. They flex theirnegotiation skills immediately.If they cry one way someone isgoing to feed them. Or if they cryanother way someone is goingto pick them up. Sometimes theywork and sometimes they don’t and we don’t consciously know the difference. That makes us unconscious negotiators, bargaining from a trial and errormindset through a narrow focus of our own needs.Even worse in a negotiation process, you don’t recognize what the other party may be doing to you. Andthe hallmark of the Karrass program is to turn peopleinto fully conscious negotiators. It makes the wholeprocess go into slow motion. You see and understand4ASSET 2.0 2018 : V3And then the fun started with thegroup exercise. Mr. Bain prefaced thevalue of the game was to learn moreeffective negotiating skills that couldpossibly add two more R’s to the existing Seven R’s of investment recovery– ROI and more consistent Results.Who wouldn’t love that?With anticipation mounting in theroom, Mr. Bain paired up the attendees in twos, one person playing theseller and the other – the buyer. Themerchandise? A mint condition, lowmileage truck hauler plus trailer. Eachwas given a sheet with their individual needs for either buying or selling the truck. Boththe buyer and seller had pressures in the fictionalrole-playing scenario that they may or may not haverevealed to the other. The teams had eight minutes toprepare and twelve minutes to negotiate. If an agreement could not be reached in the time allowed, thedeal would be declared a deadlock.During the negotiation segment, the room buzzedwith some serious bargaining! Considering that vir-

tually all the attendees were sellers in the real-world,the competitive spirit was both aggressive and fun! (Anoutside observer would say that IR professionals havemade the “poker face” an art form.)guy is just a time-wasting tire-kicker.At the end of the exercise, scores from all two-personteams were tallied and analyzed. And the results werejaw-dropping. You would expect a small variance onthe final agreed-upon price from the attendees being experienced sellers. But here’s where it got veryinteresting. There was a 26.5% variance or a 14,000final price spread. That’s significant, because everyonenegotiated the exact same thing with the exact samepressures to buy or sell in the exact amount of time toprepare and bargain.What!?! That’s 5,000 over your set 90K lowest acceptable offer. That’s a big win or is it?Hmmmm what’s going on here?Here’s where it gets interesting.“For Sale – Used Humongatron 6000,Excellent Condition 100,000”The buyer left 5K on the table. If he had asked somecasual conversation starters to uncover the pressuresthe seller was under to dispose of it – they buyer couldhave negotiated and got the 90K drop dead price.Let’s say you have a 10-year-old Humongatron 6000 forsale at a fair market price of 100K. However, you alsoknow the current fickleness of the economy and arewilling to take 90K. After posting your Humongatron6000 for sale, lo and behold an interested buyer walksthrough the door.The prospective buyer looks over the Humongatronand lists the features he doesn’t like, most notably thehigh price. You’re already thinking to yourself that thisAnd then, the buyer states that his company won’t paya penny over 95,000.Now taking a closer look, this 5,000 means what toyour company? Additional profit! Not shabby.So, you and the buyer are happy with the 95K price.But for the buyer, he saved 5,000 from the originalasking price of 100K. Although there are differenttakes on what value means to the buyer and seller, theyboth walk away happy with the deal.And YOU the seller left as much as 15K on the table. Ifyou had asked a few information-gathering conversation starters prior to the real negotiation, this is whatyou would have learned. The buyer had been lookingfor a Humongatron 6000 for some time, and in facttheir whole operation runs on these machines. What’smore, they had budgeted 110K for another Humongatron 6000 because they were growing. If you work themath, the seller accidentally left as much as 15K on theNext pageASSET 2.0 2018 : V35

COVERSTORYContinued from Page 6table. Ouch!Conscious Negotiating - More ProfitableDeals More ConsistentlyMr. Bain emphasized that one of the most importantsession takeaways was this: Conscious negotiating involves understanding the pressures of the other party.Whenever you go into a negotiation you start by listingyour own pressures, but then start asking, “Why arethey here?” “What are their pressures?” It’s human nature to hyper-focus on our own stressors which meansmost of us are negotiating from our weakest position.And we don’t even know it. We interpret informationthrough the filter of our own pressures.As we learned in the truck exercise, expectations goinginto any negotiation have a major impact on the outcome – aim high get high, aim low get low. That isn’texactly news to investment recovery professionals, but6ASSET 2.0 2018 : V3different pressures on both parties going into the negotiation process shape their respective expectationson the final price tag.Nine Rs of Investment RecoveryAs an IR professional, your sales negotiation skills areput to the test every day. But there are times when youknow money was left on the table. By practicing conscious negotiating, you could add two more “Rs” to theSeven Rs of Investment Recovery; “Results” and “ROI”.And leave less money on the table. nDennis Bain has a multi-faceted, creative businessbackground making him an in-demand speakerfor The Karrass Group and other seminars, including his powerful “Million Morning”. Audiencesfrom Fortune 500s to top executives have allbenefitted from Mr. Bain’s expertise and interactivepresentation style.

FEATURESTORYThe Center forRemanufacturingand Recovery:The New Profit Epicenter forInvestment Recovery?Let’s say you Googled “sustainability” and you gotslammed with over 115 million hits. But Google theterm “remanufacturing” and maybe you’d get halfthat much. Remanufacturing, arguably the definitionof sustainability, receives relatively little market ormedia attention. Now, that’s a real head-scratcherconsidering that the remanufacturing industry reached 43 billion in revenue and employs over 180,000workers in the United States. Most people are unawareof this dynamic industry that fuels the circular economyby closing the loop of material flow, reducing energyuse and waste disposal.And most IR professionals may have heard aboutremanufacturing, but their scope of asset dispositionmay not include it.Not yet.But that’s changing thanks to the R&D advances beingmade at the Center for Remanufacturing and Recoveryin Rochester, New York.But first – what is and is notremanufacturing?A big misconception, especially among consumers,is that remanufacturing is the same as “recycling” or“refurbishing” it is not.Remanufacturing is a comprehensive and rigorousindustrial process. It rebuilds a product to specificationsof the original manufactured product using acombination of reused, repaired, and new parts. So,the remanned product is guaranteed “like new” or“better than new” with high performance and qualityspecifications – and at a fraction of the cost of a newlymanufactured product.Some of the most commonly remanufactured productcategories are: Aircraft components Automotive parts Electrical and electronic equipment Engines and components Medical equipment Office furniture Printing equipment Restaurant and food-service equipmentNext pageASSET 2.0 2018 : V37

FEATURESTORYAs the remanufacturingindustry continues to grow andthe demand for componentsexpands, IR departments couldfind a new market in their surplusinventory for materials used in theremanufacturing process.The Future ofRemanufacturing Lives inUpstate New York - TodayRemanufacturing’svalue propositionwill becomeeven moreimportant as rawmaterials becomeincreasingly scarceand expensive.The Center for Remanufacturingand Resource Recovery (C3R ) at theRochester Institute of Technology,is at the frontier of research and development forthe remanufacturing sector. Globally recognizedfor its cutting-edge work, the Center bringstogether top thought leaders and technicians fromindustry, academia and the government to advanceremanufacturing within the evolving circulareconomy. Since 1991, C3R has worked to develop,test and implement efficient and cost-effectiveremanufacturing processes. The Center also helpsdesign products that have minimal negative impact onthe environment.Golisanso Institute forSustainability and RITexperiential learning.And right smack dab in themiddle of all this learning,research and innovation sits TheCenter for Remanufacturing andRecovery – or C3R . It conductsindependent research onremanufacturing technologies,design for remanufacturing,logistics, policy, and businessoperations. The Center workswith the RemanufacturingIndustries Council and functionsas its research and developmentarm, both nationally andinternationally. In fact, it is the only organization of itskind focused exclusively on remanufacturing.An Interview with Dr. Nabil NasrASSET 2.0 had the privilege to interview Dr. NabilNasr, Associate Provost and Director of the GolisanoInstitute for Sustainability and founder for the Centerof Remanufacturing and Resource Recovery in 1999. Dr.Nasr stated that C3R is first and foremost a technologyorganization i.e., they develop technologies orequipment that facilitates the re-utilization ofcomponents. Over the years, they have worked witha variety of industry and government sectors.If you were to visit C3R , you would realize that it’s partof something much bigger - the Golisano Institute forSustainability (GIS). And if you visited GIS, you wouldrealize that it’s part of something much, much bigger,the Rochester Institute of Technology (RIT).For over 25 years, the Golisano Institute forSustainability (GIS) has been dedicated to theeconomics of sustainability and the globalcompetitiveness of the manufacturing sector. GIS is aleader in industrial sustainability research, education,development and technology deployment.GIS is located on the campus of Rochester Instituteof Technology (RIT) a world-class university withnine colleges emphasizing career education andContinued on Page 108ASSET 2.0 2018 : V3

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FEATURESTORYContinuedHe shared an early success story when The Centerwas working with the US Navy involving an oldship destined for the scrap yard. The challenge wasto transform the aged vessel into a new one – at amuch lower cost. By comparison, a new ship builtfrom scratch would cost more than 80M dollars, butthrough the research and technological innovation atThe Center, they were able to utilize many of the keyelements to make the old tub – new. And not just inlooks, but also upgraded to the strict performance andquality specifications of the Navy. And the price tag?4.5M dollars. As Dr. Nasr stated, “This was a perfectexample that saved a lot of money and took advantageof existing assets to convert it into somethingdifferent. And remanufacturing got it back to like newcondition.”The Center has also worked with companies to helpthem design products for remanufacturing. Oneexample several years ago was for Kodak and theirsingle-use camera. Although initially designed as adisposable product, The Center assisted Kodak with adesign that included reusable camera components. Dr.Nasr also added that this same kind of ‘designed forremanufacturing’ model was utilized for the printingindustry, most notably for large and small printers andtoner cartridges.Tour ‘The Center’A few years ago, MSNBC’s Morning Joe did avideo segment that went inside The Center forRemanufacturing and Recovery for a look-see.{Click below to v bIn our interview with Dr. Nasr, we asked him what wewould see if we toured the labs today. He respondedthat they have two facilities; the larger one housinga jet that is undergoing testing for a major airline. Infact, The Center has in-depth experience with aviationremanufacturing. They will take an older aircraft thatis still in service and study the top aging componentsneeded for remanufacturing and modernization. The10ASSET 2.0 2018 : V3goal is to extend the life-cycle of the aircraft until thereplacements are ready and then further prolong itsservice via ‘remanned’ parts.You would also see vehicles or just their transmissionshooked up to machines that mimic actual roadconditions. The machine records valuable data fortesting a variety of fuels, the impact of emissions andthe life cycle of the engine.Wall-to Wall ResearchEngineers here have decades of research experiencefrom virtually every aspect of modern remanufacturing— including analysis of raw materials throughsustainable production design and evaluation ofend-of-life products. Deep industry experienceand technical capabilities enable C3R to deliverconsistently on-target solutions to reman customersworldwide with capabilities including: Condition Assessment Materials Aging and Restoration Product Life-Cycle Engineering Integrated Health Monitoring Sustainable Design MethodologiesState and National AwardsThe Center for Remanufacturing and Re

One of my biggest takeaways from the Karrass Group session during the 2018 Seminar & Trade Show was a new respect for my father’s methods. Through the exercise, we saw how taking the time for smal