Transcript

Nolan Martin : Hey everyone, Nolan here. I'm the co-founder of NEGOTIATEx.With me today is my good friend. Aram Donigian. Aram is also the co-founder NEGOTIATEx, but more importantly, we have Gary Ortiz from Sonos. Aram, I'll kick it over to you to introduce Gary.

Aram Donigian : Yeah. Thanks Nolan. So folks we're blessed to be joined today by, Mr. Gary Ortiz, global sourcing manager at Sonos, where he develops and manages supplier relationships, executes sourcing strategies and balances business needs with building strong alignments with various engineering teams.Prior to joining Sonos, he was the director of engineering for Hayward Industries, pool products division, which by the way, I believe I have both a pump and a heater from Hayward.There he served as the principal expert on engineering, technical and service matters. Business development needs supporting customers and day to day plant operations. He led a cross functional team of 25 people with an expense budget in excess of $19 million.By the way, those Hayward products continue to work very well.

Gary Ortiz : Good deal.

AD : Thanks, Gary. Gary has an MBA from Wake Forest University, a Bachelor of Science inElectronic Engineering Technology. And I'll add that he has generously given his time in many ways over the years from little league boards to Big Brothers, Big Sisters. And I would also add that he's mentored a group of my MBA students a couple years ago on a negotiation consulting project. They truly loved learning from you, Gary. And it's really exciting for me to say thank you and welcome to our program today.

GO : Thank you. Thanks for having me. And it's a great pleasure. I look forward to our discussion.

AD : So Gary, for our listeners who aren't familiar with Sonos, can you tell them a little bit about what your company does?

GO : Sonos is a high end audio company. What's special about Sonos is all of our speakers are wireless. So you have seamless wireless speakers throughout your home. You can enjoy room to room listening seamlessly. They are powered so you get high fidelity sound out of these amazing home theater and portable speakers now. So we've recently got into some portable speakers. You could take to the beach, put on your boat, waterproof weatherproof, all that. So really, really great company.

NM : Awesome. Thanks Gary. Now I just kind of wanted to kick off the conversation here by talking a little bit about how you got into negotiation both personally and professionally, and have there been any key milestones in your development as a negotiator?

A Negotiation Journey From Kindergarten Till Present [3:55]

GO : You know? Yes. I'll start off. I think where I sit today, you look back and I will tell you that I think we all start negotiating as children. If you think about it, children are some of the best negotiators in the world.When you're tired at the end of the day, they know every button to push[laughs]. So I was that kid right advance a little forward. I was also that kid who was negotiating various punishments for my brother and I, you know, it was like, and so my parents confused me with an attorney, said he doesn't need an attorney on me. So that was, that was me. I was the older brother and we were the thickest thieves at times. So that, that was, uh, my thing. So, but, uh, I will say professionally, I think just over the years, you know, little by little, I found that I enjoyed it.

I think again, starting personally, it was really car buying. A lot of people hate that. I love it.But meeting people, there's one person in particular that I would credit for my professional development or start of, I should say, John Barbier.He was a salesman with,Thermofill. And he was just an amazing guy. He had a lot of patience and he and I developed an amazing relationship and he was the one who taught me: relationship is key.Honesty, integrity, trust, and building that was so important. And it was amazing how well he did it. And I just, you know, we worked together for many years. He made me understand that our relationship was always above board and it was always beneficial to his organization and mine. And, he taught me so much and, and inspired me to learn so much more to the point where his company, brought us up at his retirement dinner. And we surprised him a couple of us that, uh, it, it was, it was a really. he is still a great guy. I talked to him every once in a while. He’sgreat, he's retired, but he's the one who's given me the most, that kind of kickstart early in my life.

AD : That's a great, great tribute, but also got a great point. Right. And I think it's get lost sometimes the importance of, uh, relationship in these sorts of negotiations. So you kind of, I guess maybe building off that relationship piece; in your current role as a global sourcing manager there at Sonos, how is it that you're using or utilizing negotiation skills daily dealing with both internal and external stakeholders?

Dealing With Internal And External Stakeholders [6:25]

GO : Yeah. So part of our job, as we try to find the strategic relationships, right, we're dealing a lot with very technical teams and being an engineer myself, I can appreciate that. When you have something and you have trust in it, a widget or some sort of Silicon part, they're rewarded for going quickly and efficiently, but, you know, making sure, obviously their designs are very robust. So they get comfortable with products, companies, et cetera. One of the things that I find myself doing is negotiating with them, that trying to get them to change their mind a bit or open their mind more than anything with regards to other products or services or value ads that some of our suppliers have. And, it's sometimes difficult, but that is step one, right. Earning their trust, earning their confidence is, is really key.

So, so you find yourself doing that. I think when I came to Sonos, one of the biggest challenges is we were just the source of purchasing people and, you know, we do everything, but that, right. Yeah. And so I would say that's, that's some of the main stuff internally and then externally we're constantly, and you can imagine, and I'm sure we'll get into that later, just the way in three years, three and a half years that I've been here, how the pandemic has really affected our negotiating and what we've had to do. So we're constantly negotiating and working both internally and externally to balance those things. AndI've learned a lot. I really have.It's amazing. And still have a lot to learn.

AD : Yeah. We'll get more into that. External, especially with the last couple years of the pandemic, just in just a moment, you know, that was a little bit of a setup question because I feel like so often people forget about the internal negotiations that have to occur. You started answering by talking about kind of the internal alignment that you do- is that, I mean, from where you sit, are those internal negotiations sometimes more difficult than the external or are they just different?

GO : They can be more difficult, right? Because you have a, a group of people who kind of set or have a strong foundation. I say I'm an engineer, but I am nowhere near the capabilities that some of these folks are, so you take that with a grain of respect. You have to earn, you know, their respect. You have to be able to understand how to influence them, right. Something that we've had to do, I've had to do is there, there will be pockets of things that you just can't they're immovable. And I think one of the things negotiations have taught me is, you know, helping to increase your areas of influence. So if I can't, let me see if I can get some further support and work the angles that way. And so when it's not just coming from me and it's coming from other groups or other functions, it seems to help. And so it can be harder, especially for newer, you know, when you're newer, it becomes, I think, a lot of work, but it, it, it's what we all say. Right. Your respect and trust is earned. And, you know, as long as you bringing evidence based positions. Yeah. I think that's, that's really key and critical.

NM : Yeah. I think that's awesome, Gary. And so I just wanna kind of dive into this just a little bit more, cuz a lot of the times, you know, a lot of our clients have difficulty understanding how to really build that trust and those relationships. And that's obviously very key to negotiations. So I was hoping to get a little bit more specific here on how, you're meeting a new supplier, a new distributor, anything like that. How do you really work to build that trust? I mean, are you able to do it in just one meeting? You know, what are some key takeaways that we can give to our audience on, on how to be successful in building those relationships?

Building Relationships With Transparency And Honesty [10:22]

GO : Transparency, honesty, or I, you know, if you had two words that I would give you, I would, I would say that one of the biggest successes to a trusting relationship is that transparency, that respect and honesty and you know, it's business. So what I tell everybody is, you know, I'm always gonna be honest with you. You may not like what I have to tell you, Hey, we didn't, you didn't win the business or we're cutting the program out. Right. You're not gonna get as much share, but you can always count on it being honest. Right. And, and being truthful. And that's all I expect back.And I think, you know, around or two of that and they see, your word is true. And a lot of great things come out of that in addition to you didn't win. Or, you know, you didn't get a socket or something like that.

Why?Be very clear with them, you know? And I think people appreciate that. And above all of it, treat everyone with respect. These are not transactional things. This is not a, “I win-you lose” conversation ever. These are definitely more distributive type discussions and conversations where we're, we're definitely, you know, it's a give or take. I tell people, I'm always weary of the toes I step on or crush because it could be needing that person here pretty soon. So yeah. Those are some of the things that I definitely focus on in, in relationships.

AD : Yeah. I think that's so helpful because I think sometimes people feel that if you work on the relationship and you're transparent, somehow you're giving something up.We will often talk to people about there's actually tangible value to be gained when you can operate in an environment of trust and transparency and honesty. And I'm guessing that's something you've experienced.

GO : Absolutely. You know, and until a point where some people will tell you something that they were told not to tell you. And my rule here is, look, I will never reveal a source. I will never reveal. But if, and back to that internal piece, if I look at my boss and I say, look, it's not gonna happen. Can't tell you why, but I'm gonna tell you it's not gonna happen. They know now not to ask. Right? And they know it's not my opinion. I have something that is worthy. It came up recently, there was a failed start of front end process for some, Silicon. Right. And there was a mistake, somebody forgot, or didn't do their job to get it started. Well that's a lengthy process. It doesn't start on time. Right. Doesn't come through.

Well, they didn't want to admit to their mistake at the higher level.Our guy said “it didn't happen and you didn't hear from me, but it didn't happen.” And of course I will never say anything. But what it's, what's so critical is when I'm sitting in front of the executive team and they're looking for me to give them the confidence that we are either going to get something or we're not gonna get apart; look, I can tell them with certainty: we're not gonna get it. And so we're not gonna play this game and go back and forth and we're gonna keep our relationship above board. We're gonna keep it on, but I don't have to tell them all the other details, how I found out or whatever. Yeah. And, you know, then we move on. Right. Cuz that's business and, and yeah. Otherwise, you know, he's stringing me along and, and it's just that slippery slope into terribleness andthat’s not a relationship.

NM : And I think something that you said there was really important cuz you know, for our listeners, what Gary just talked about was managing internal stakeholders. And so being able to paint that picture to your bosses so that they have trust with you so that you can get that authority that you need to move forward in the negotiation. So thanks for bringing that up, Gary, I appreciate it.

AD : You know, Gary, a few moments ago, you alluded to just the challenges of the past several years, the pandemic, a lot of different stressors occurring right now on supply chain. What are some of the biggest changes, challenges, even opportunities with negotiations that you're a part of.Both, I guess- two part question here; in terms of how they're conducted, maybe the process of the negotiation and also kind of the“what they're about” maybe more around substance in terms

GO : Yeah. How they're conducted zoom, email chats, that kind of stuff. So it's taken a lot of the, that personal touch. You know, we do a lot of communicating with our bodies and you can always tell by posture, by certain, you know, how painful some of these things are or are not. But at the same time, I think, and I'm gonna jump to the second part of the question here- is we're negotiating for different things right now where before you're number one priority was, dollar per widget or cost, cost, cost, and immediate cost. But now we're really focusing on, linearity of supply or, you know, supply continuity is trumping the cost. And I think it's not that cost isn't part of the conversation it's just cost is, Hey, in time we're gonna get the cost out. So you know, we're looking a year or two years out, right?

Whatever comes first. And again, not holdingthemto an absolute number, but you know, getting ranges. And while again, I don't mean to come across or sound as if we're not being fiscally responsible. I mean, of course cost is important. But I will tell you, I have heard it from various suppliers that our style of negotiating during this pandemic where there were second order and third order events happening to the supply chain, our style was much more preferred. No yelling and screaming and just, I want every penny because you know what, a good partner is gonna come back to you with that when the time is right. But you know, right now I can lean in, our products have high demand. People love our product. And so therefore, Hey, let's give me good supply and we'll get to the cost again. We'll revisit that shortly.

AD : Thank You.

NM : You, Gary. Something. That's pretty important. Something that Aram and I definitely harp on and has been basically been a trend throughout, you know, our military profession and then as we transition to helping other clients and negotiations, and that is: how important preparation is, how important preparing for a negotiation is, and for you specifically, how important preparing your team for any of the probably ten or twenty negotiations that probably happen in a week underneath you at different levels, first different specific things. So kind of two part question here is: how do you personally deal with negotiations? I imagine it's at a bigger level or prepare for negotiations. And then how do you prepare your team or, you know, that relationship with you as the manager, in the negotiations preparation process.

Gary Ortiz: Critical Preparations [17:30]

GO : Yeah. You know, it's interesting that that is an area that we definitely are striving to improve. And I think what I learned during my MBA and going through formal negotiation classes is that preparation is very critical.Preparation of who's in the room, the role that those people are playing the style, the format, it all was critical. Right? What reminded me of this was when I was mentoring, one of Aram's classes and they brought me back to, you know, the BATNA and the formal process. And it's really a great process. So I tell you this, because in the professional space, oftentimes in this segment, people think they're the greatest negotiators. You know, I’m included in them, but we're always better when we throw these ideas at each other before the negotiation, angling or findingthe different ideas.

And I will tell you, it's an area that we are improving on as a group. It's bouncing these things off each other before going in, ensuring that we give our leaders their roles in the negotiation because let's face it, we're in the trenches. We're there working. We understand the ins and outs of the various markets, the segments, the geopolitical risks or things that we've been able to glean our contacts, right? Because we've been working this with our sales channels and then making sure that our, our leaders are prepared to, to ask certain questions, prepare for a different-, so we're getting better at it, but I will tell you, it's an area that I think most companies don't do.When I interview folks and I ask people, you know, what was your approach on this?

And they go, well, I just, you know, I did my research, I did this, my did this, you know, and, and they went into the negotiation. They said, well, did you try run it with anybody? Did you, did you try that? And no, you know, everybody's so busy every, but I will tell you, you might be busy, but it's worth that dry run. And so I will tell you, we're improving on that. And it's something that prior to my MBA, and then even after working with your team Aram, it's not something that was natural, but it really is beneficial. And it's an area that I think we're getting better at doing more of, I think the other challenge that you have sometimes is teams nowadays are all over the world. I mean, a lot of our team was in Asia. So think of cultural differences too. I mean that's been another challenge that, you get into some of these larger negotiations and culturally, they just go at it differently. And, and in those cases, the distance and the pandemic of not being in the same room really had, you know, some challenges. So I think that was a long winded answer, but it's definitely critical to prepare. It is absolutely critical to be prepared. And your teammates great place to prepare.

NM : I think that is pretty funny that you said that Gary coz Aram has always said that what we typically find is people generally prep from the movement of this meeting to the next. And so in New York City, as you're going down your building to the next building- that may just be, you know, a block and a half worth of prep time before you actually get to that next meeting. Or if you're lucky, maybe it's a long flight to Tokyo. So [laughs], that's usually the amount of time that anyone devotes towards that negotiation prep and

AD : Nolan stole my line. I was gonna say the same thing

NM : YES! Finally!

AD : And was gonna say, I'm so proud of my students. I gotta have to go back to that group and say good on them. I also, yeah. You know, Gary, I think that's, I mean, to what Nolan is saying, it's humble of you to say that because I think all of us, if we're honest, we all could do more preparation. Obviously you could prepare and never stop preparing. That's not gonna be productive either. But what you're saying is, Hey, that's a place where we all can get a little better and it's really beneficial because, because there is a tendency for us to think I've done this a thousand times! I can walk in and, and just with me in the room, I'm good enough. And that's not always true, especially as you're talking about kind of these cross-cultural negotiations. And how there's some, you know, significant nuanced differences that we need to be aware of.

GO : For sure,

AD : Yeah. Appreciate that very much. All right. So wanna dig into interest you've, you've talked quite a bit about interest, how interest have shifted because of the pandemic a little bit where priority of interest may be certainly the interest of relationship.We often hear from tech clients that their interest in negotiation range from a number of things: being able to achieve different metrics around margins-you've talked about that- increasing market share, expanding into other product lines, different product or tool development, quality meeting, important specs, supplier, customer responsiveness, and satisfaction, flexibility from a supplier to adapt or respond quickly to different technology advances. Sometimes that requires, you know, reconfigurations and redesigns with their setup. And then obviously, and you've talked about this, you know, the importance of continual supply, managing risk exposure, cash flow, predictability, those things, what other interests are important to the negotiations you're part of? And then I think maybe more importantly, as you look at maybe those external negotiations with suppliers, what things are different or similar, where is there alignment maybe between interest that you and your suppliers have?

GO : Yeah. So I think, one of the ones that you listed is very important. So the flexibility to adapt and respond to new technology advances. So you could appreciate that taking a piece of Silicon, a radio or CPU, right. And putting it in your product. It is not as simple as, you know, taking it out of a tray or pulling it off a reel and soldering it down on a board and plugging it in. And it works. There's an amazing amount of integration that has to occur development of software drivers, firmware, right. Some of that has to come from your supply base. So, so the relationship that you're developing, when you pick something like that, you're gonna be locked in for a while. So one of the things that's really important is what does their roadmap look like? What, what does their future product look like?

And that's got two purposes. One we like to stay sometimes on the bleeding edge of technology. Sometimes we're on the cutting edge of technology. And then most importantly, we want reuse out of that effort. So oftentimes, you know, we put this effort into this CPU. We put this effort into this radio implementation. You have a deep relationship, all of a sudden the wifi standard changes or the Bluetooth standard changes or some other standard changes. And you know, all of us, we we're techies, right? We, I want the latest and greatest. You can't come out with the next speaker and all of a sudden it'd be the old radio standard. So what does their journey look like? What are they keeping an eye on? When are they switching over, uh, how much of the product that I'm in now and the, the, the software firmware that I'm doing now is portable to the next one, because that's how you sell the engineers.

Right? The engineers are like, well, great. I can, I can reuse this whole chunk of software in the new one. And now I'm just talking about a couple drivers or a couple small pieces. Great. You know, they get excited. So, so you're selling not only, you know, internally that the value that they're about to put in and the effort that they're about to do, and we're talking thousands and thousands of hours of people's time to get this thing up and running. Right. Security, all these things that most of us don't think about. They want that assurance that, oh, I could, I could do this once. And I get two shot, you know, I get two benefits from it. Right. So that's really important. And then for me, it's okay, well, you start looking at the cost curves. You start looking at all. Well, if this is coming out, then times they're gonna start to push you and you start taking advantage of, okay, well, where's that inflection point?

Or where are those things? So that's on the business side. You start looking at some of those aspects. I think it's two pronged, but equally as important, right? The, the tech team, the engineers, they want to know that what they're putting in is gonna have a life and how much of that life can be continue to reuse. And then for us, where would we see potential breaks or changes in costs that we can count on? And so I think those are our biggest area of, of course you always do the, you know, how risky is the supplier? Where is their Foundry? Who are they gonna be putting this technology with? I mean, those, those are things that I think we've put maybe additional, they've always been there, but I think we've put, I think a higher level of scrutiny to them, or, you know, as, as we do a parade of what, what are we looking? We, we wanna look at what is critical that does come up now more often than it did before,

AD : As you think I was gonna the alignment of external and in your, your Sonos interest that you were laying out, and then the external interests of your suppliers, is there places where you get, you know, is there way you find overlap? And you're like either, you know, there's differences, but they're not opposed, or actually there's tremendous alignment, um, between the interests. Um, and I was thinking about the, you know, the repurpose or the reuse of, of things. Yeah. Yeah. So anyways,

GO : That's a joke, cause there is a lot of overlap. You think about it because just like, you know, I, our technical teams are looking to get reuse this, the, the supplier, right. Is, is looking to, you know, continuous, strong line of, of supporting different Sonos products. Right. So they can say they have their name or their brand and this product and this upcoming one. And, you know, I think it's beneficial to them as well to, to know that. And, and, uh, so there are other areas, I think that it's, it's competing interest because just as we pay, put thousands of hours in with certain product types, they're doing the same, right? I mean, yeah, they, they ultimately own the, the, the circuitry and the, and the software firmware that's running inside their, their chip. There's always bugs. There's always things, we're finding things. We're trying to challenge it. And it is so beneficial to them and us to keep our teams very close and linked and right, as their products evolve, we evolve as we, you know, and, and it's a definitely two way street. It, uh, we have, so they want to be in there as, as much as we kind of want them there because it, it makes things more fluid, easier to transition through. Um, and again, not for all product categories, but you talk about CPUs and radios. Those, those implementations are a heavy haul for everybody. Yeah.

NM : Hey, everyone, Nolan here. I need to jump in and stop this great discussion. Join us next week as we wrap up this discussion with Gary on NEGOTIATEx podcast. Thanks for listening. If you could please like and subscribe to the podcast, we greatly appreciate it. Leave any reviews. Any feedback is greatly appreciated. Thanks and see you on the next episode.