FOUR KEY NEGOTIATION INSIGHTS FROM AUSTRALIA'S VACCINE SUPPLY NEGOTIATIONS.
On 11. July, the ABC broke the story that former Prime Minister Kevin Rudd had personally lobbied the global Chairman of Pfizer to push for an acceleration in the delivery schedule to Australia.
Leaving aside the political debate about whether Mr Rudd’s actions had any impact on the delivery schedule, I was much more interested in what sparked the call for Mr Rudd’s intervention. If reports on the interactions between Health Department bureaucrats and Pfizer are to be believed, the government has a lot to learn about fundamental negotiation principles.
In my experience as a professional negotiator, you are much more likely to achieve your objectives if you:
1) Do not deliberately antagonise the other side.
This is a classic error of ‘hard edged’ procurement teams as well as negotiators who confuse aggression with skill.
In my experience, suppliers are much more likely to give you what you want if they are respected and can secure value in return. Australia’s negotiators were reportedly perceived by Pfizer executives as prosecuting a "rude, dismissive and penny pinching" approach to negotiations. If the reports are true and the Australian Pfizer team felt sufficiently antagonised to raise the issue with their US counterparts, then Australia’s ability to secure priority supply would likely be diminished.
2) Understand the critical value drivers for the negotiation.
Procurement teams often perceive their core objective as generating cost savings. The availability of supply is typically taken for granted. In times of crisis, maximising cost savings must be a secondary objective to ensuring a timely supply of critical goods and services.
In all negotiations, negotiators must critically evaluate the relative importance of the four key value drivers: Price, Specification, Risk and Time. If Australia’s negotiators indeed prioritised price and specification over risk and time, it is no surprise that we found ourselves at the end of the vaccine queue amidst a global pandemic.
In contrast, Israel is said to have paid top dollar to Pfizer to ensure security of supply, and has enjoyed substantial economic and humanitarian benefits as a result.
3) Negotiate with the key decision-makers wherever possible.
None of the global supply of the Pfizer vaccine is manufactured in Australia. Whilst Pfizer Australia may be in a position to negotiate a price, vaccine allocation is clearly controlled by the global business. A basic stakeholder analysis would have flagged the importance of negotiating with the key decision makers in Pfizer’s head office to secure a sufficient supply of vaccine for Australia.
To that end, the heads of state of other countries personally engaged with Pfizer head office to secure a supply of vaccine for their countries. Prime Minister Scott Morrison confirmed that Australia chose to limit its conversations to the local branch office. In so doing, Australia relinquished the opportunity to engage directly with the key decision makers to secure some of the limited supply of vaccines available globally.
4) Send your A-team.
It was also reported that negotiations with Pfizer were left in the hands of relatively junior bureaucrats. Whether that impacted negotiations is unclear, but it is undisputed that negotiations for Australia’s vaccine supply have not gone well.
Poor negotiation skill and lack of clarity on desired outcomes invariably lead to poor results and deadlock. When that happens, senior executives are required to step in to try and salvage an outcome. This is neither efficient, nor desirable, and with both sides wary and suspicious of each other, the final results is often mediocre.
For any serious negotiation, and especially when the health and well-being of the nation is at stake, it would be wise to send your A-team: a senior team of experienced negotiators who have a clear brief and have been professionally coached in the array of skills required to deliver superior outcomes.
The four negotiation insights above are fundamental to conducting any professional negotiation. The recent vaccine negotiations with Pfizer have served to throw those lessons into sharp relief.
by Dr Matt Lohmeyer, Managing Partner - Negotiation Partners