In a previous article I wrote that to unlock really high value from collaboration, negotiators needs to step away from their rational, trained techniques, and forge a genuine emotional connection, with Purpose, Passion and Personality. This article explains the importance of shared Purpose.
There are three types of collaboration: win-win, exploratory and breakthrough. Each type suits a different purpose, and each needs a different level of emotional investment to succeed.
Win-win is any deal that creates value for both parties. Examples might include: moving payment terms in favour of the party with the weakest credit rating; or a retailer negotiating common components on behalf of a supplier base. The deal makes money and includes a mechanism to share it. The process might require some openness and trust, but the deal is purely rational. The Purpose is financial gain, and the collaboration will last only as long as there’s a contract in place and a financial reason to stick to it, not a moment longer.
Exploratory is where one party wants a low-risk way to test an idea. The Purpose is usually expansion: into new services, categories or geographies. Examples might be: retailers trading space to test new categories; brands stretching into new industries (e.g. Tesco via Nat West); or manufacturers using resellers to test new markets. For the “explorer”, the deal is a purely rational transaction: if it succeeds and proves a market opportunity, they will buy or build their own capability and go it alone. If the “guide” doesn’t recognise the explorer’s purpose in collaborating, they will overinvest and be left high and dry.
Breakthrough collaborations occur when businesses with unique capabilities want to create something totally new. The Purpose is the new product, category or service - there should be financial benefits along the way, but that’s by no means assured. Both parties make the emotional and resource commitment because they believe in the opportunity. As long as the purpose is compelling; the parties continue to build their capabilities; and wins start to emerge; the collaboration will continue thrive for as long as their Passion and Personalities allow.
BOTTOM LINE: When the primary goal of collaboration is financial, in reality it is either about low-risk exploration or getting a transactional win-win. Collaborators get hurt when they aim for a more strategic prize without fully understanding their counterpart’s true purpose.