"We can't afford to let them go" - welcome to Procurement Zen and our focus week on expensive sentences. This time we cover this poisonous statement.
Hi and welcome to Procurement Zen, I am your host, Phil Kowalski. This is the 4 th episode of the expensive sentences focus week and this time, we'll cover a scarcity topic. The sentence of today is "we can't afford to let them go".
As always, head over to my procurementzen.com/008 or you go to procurementzen.com/expensivesenctences. There you will find details and interesting tips for this expensive sentence. You also can listen to all the other episodes of the expensive sentences focus week.
What's it all about?
Today's topic also comes in different variations and some of them are
- Nobody else can do what they do
- We'll be sunk without them
- I'm afraid to break up with them
- No one else has their technology (or knowledge)
Let's have a look, where these statements are coming from.
From my experience, this is one of the most used expensive sentences in procurement and is usually only topped by we need it yesterday. And it is one, that suppliers love to implant in our organizations.
The topic here is "perceived scarcity" and the focus in this term lays on perceived, because it is - in most cases - artificial. Created by suppliers to make them "unique".
We as negotiators try to solve this problem, but I'd like to share one idea with you. Warning: this is a little bit more aggressive but may at least help in internal discussions. If a supplier needs to use this technique against us, what has he got to hide?
I mean, for me this seems to cover some other weaknesses. If they do not have a unique position out of other product or service features, then why do they use this?
But let's dive deeper into the topic of perceived scarcity. The impact of this approach can decrease through early involvement. If a supplier has enough time to repeat this over and over, it becomes "true" (although it's not most of the times).
Early involvement (once again)...
Yet, if you're involved late , this may have been already confirmed already times and times again. And here you have it, by the way, another argument for procurement early involvement.
Let us now have a look at the problems of the "we can't afford to let them go" sentence.
I see three major disadvantages:
- it is nearly always a threat to quality
- This threatens continuity, especially our own
- increased cost through wrong fit
So let's look at them one by one:
Threat to quality
In most cases, a perceived and artificial scarcity is a threat to our quality. But how can that be? Isn't high quality the exact reason, why we can't afford to let them go?
There's a problem with the perceived scarcity and it relates to extraordinary talent most of the times. But this quality is also perceived. We do not control it anymore.
Peter is the only who knows that, so how can we measure Peter?
We see a success and think of what high quality it must be. In the end, it comes from the only resource who knows that, a diamond in the rough so to say. To me this always seems like a self fulfilling prophecy.
Threat to continuity
We will cover this in more detail, when we come to the wise questions. But let me phrase it this way: Do we want to make business dependent on such limited resources and is it wise to do that? Wouldn't it be better, if we had more options? Isn't that high risk?
Increase cost through wrong fit
The problem with this one is, that our suppliers foster this and - of course - they tell their resources, that they are scarce. That they have sold them this way. This in itself often times results in a not fitting behavior of the resource. Especially when you're dealing with services.
I know of a case where a supplier demanded way above the standard treatment because he was so "scarce".
More laptops, also better ones, than our own employees got and better infrastructure and more freedom and his own office and much more. Plus shouting and screaming and insulting on us and others in meetings.
All because he felt so safe and all because and we couldn't afford to let him go.
What signals do you send in your own organization if you accept this behavior from a supplier?
Besides a direct cost impact - oh sorry, we're so special, we can't reduce prices - what other damage is done? We also increase fluctuation, decrease motivation and so much more and that's very expensive.
Solutions to this expensive sentence
Now what mindset can you apply to overcome the "we can't afford to let him go" sentence?
Actually both relate to options (as very often with expensive sentences):
- Try to find more options
- Do not fear other options
When I am confronted with perceived scarcity, I try to check with my colleagues, what options we have.
I like the classical brainstorming here, because one of the main rules is "every idea allowed".
If you want to follow this approach, it is often wise to have a neutral moderator. This moderator jumps in, when censorship takes place.
This also includes the second part of the idea. No fear with new options. Let us discuss open if an option is viable or not. No emotional "nahhh... this will never work". Facts, please!
Wise questions to ask
Some of the wise questions from the book are:
- Have we fully accounted for the cost?
And a close relative to that is the following question:
- Have we evaluated real cost for change?
It goes on with
- What if he or she wins the lottery?
- How does the special know how relate to our business results?
The last one is very interesting and this is also a question we could ask our supplier. If they start to blah blah around - a clear indicator for a very artificial scarcity plus then you could even label it this way in the discussion.
So this concludes our 4th session on expensive sentences and please make sure you get the book by Jack Quarles.
Make sure you subscribe to our VIP club for our well filled resource library. Go to procurementzen.com/expensivesentences. You find all episodes there and more interesting stuff for procurement pros.
Focus Week Finish
Tomorrow I have something special as a final to the focus week. I will publish an interesting interview I did with Jack and we talk about expensive sentences. Where he is coming from and how he discovered them. Which are the challenges in procurement? What works these days in procurement and what doesn't? And a lot more.
Make sure you tune in tomorrow, by signing up to the VIP club or by subscribing on iTunes, Stitcher and GooglePlay.
As mentioned in the beginning, you can also download the specials for this episode at procurementzen.com/008.
That's it for today, folks, always successful negotiations.
I'm you host, Phil Kowalski, signing off.
Thanks so much for listening to this episode of Procurement Zen with Phil Kowalski. For more great content and to stay up to date, visit ProcurementZen.com. If you enjoyed today's episode, please review and subscribe, and we'll catch you next time on Procurement Zen.
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