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In this latest episode of the Automotive Leaders podcast, host Jan Griffiths engages in a compelling conversation with Kate Vitasek, a renowned expert in the realm of collaborative, win-win business agreements. The episode explores the pressing issue of labor strikes within the automotive industry, with a particular focus on the ongoing dispute between the UAW and OEMs. Jan and Kate challenge the conventional power-based negotiation strategies prevalent in the industry and advocate for a transformative shift towards collaborative negotiation methods.

Kate shares her well-established approach to crafting vested agreements that cultivate trust, transparency, and the alignment of interests between negotiating parties. Through real-world examples and success stories, the conversation highlights the immense potential for positive change within the automotive sector. It calls on industry leaders to break away from adversarial relationships, urging them to embrace a culture of collaboration. This shift not only holds the promise of driving innovation and cost savings but also ensures a win-win outcome for all stakeholders. This episode serves as a compelling call to action for the automotive industry, inspiring leaders to revamp their negotiation practices and forge healthier, long-term relationships.

Themes discussed in this episode:

• Labor strikes in the automotive industry
• Conventional power-based negotiation
• The need for a transformative approach
• Collaborative negotiation principles
• The potential for positive change
• Sustainability and Responsibility

Featured Guest: Kate Visatek

What she does: An accomplished author and educator, Kate is a leading authority in strategic partnerships. She also heads research at the University of Tennessee and specializes in the Vested® business model. With experience at major corporations like P&G and Microsoft, Kate provides executive training and coaching, empowering organizations to excel in strategic collaborations and foster innovation.

On leadership: “Don't treat your suppliers or union employees as "us versus them", you're competing against other companies. So, beat the market with your suppliers, beat the market with your employees.”

Mentioned in this episode:

• MEMA (Motor & Equipment Manufacturers Association)
• Graduate and Executive Education Program
• John Nash, Nash Equilibrium
• Vested: How P&G, McDonald's, and Microsoft are redefining winning in business relationships.
• Island Health
• Harvard Business Review

Episode Highlights

[00:01:34] The costly impact of the UAW strike. The ongoing UAW strike and its significant impact on the automotive industry is estimated at over $4 billion. 

[00:06:07] Moving beyond power-based negotiations. The prevalence of power-based negotiation tactics in the industry and the need for a better approach.

[00:09:26] Kate’s Vision for collaborative agreements. Kate’s expertise in collaborative, win-win business agreements and her mission to change negotiation mindsets.

[00:13:53] Embracing a win-win negotiation mindset. Explore the importance of shifting from a win-lose mentality to a collaborative negotiation mindset and discover Kate's step-by-step approach to transforming negotiation dynamics, which focuses on establishing trust and transparency."

[00:21:10] Success of Collaborative Negotiation. The success stories and positive outcomes of organizations that have adopted collaborative negotiation methods.

[00:25:27] A Call to Action: Kate’s words of wisdom. The call to action for the automotive industry to embrace a culture of collaboration, leading to innovation and cost savings for all stakeholders.

Top Quotes:

[00:03:17] Kate: "You've got to change the world one deal at a time. And it changes with changing your mindset.”

[00:05:41] Kate: "I actually don't want Shawn to stand up, I want both of them to stand down. I want them to change their dialogue.”

[00:06:41] Kate: "When we use our power back and forth, we tend to just get on a slippery slope, it gets ugly, and it's a lose-lose for everyone.”

[00:25:32] Kate: “Don't treat your suppliers or union employees as "us versus them", you're competing against other companies. So, beat the market with your suppliers, beat the market with your employees.”

[00:26:12] Kate: “Change the way things are. But don't go with power. That's ugly. That cost is $4 billion. It costs us not to have employees to have dinner on the table.”

[00:27:04] Kate: “I challenge you to redefine winning, and it's not winning at the expense of your supplier. It's not winning at the expense of the labor unions.”

[Transcript]

Welcome to the automotive leaders podcast, where we help you prepare for the future by sharing stories, insights and skills from leading voices in the automotive world with a mission to transform this industry together. I'm your host, Jan Griffiths, that passionate, rebellious farmer's daughter from Wales, with over 35 years of experience in our beloved auto industry, and a commitment to empowering fellow leaders to be their best authentic selves. Stay true to yourself, be you and lead with Gravitas, the hallmark of authentic leadership. Let's dive in.

And here we are, we're continuing our strike related content. And if you're anything like me, you've been thinking about the strike and the way that this is playing out between the UAW and the OEMs. And you're thinking surely, surely, there's a better way to do business than what we see playing out on the media, globally, on Facebook, on our TV screens, the antics that we see being played, the politics, the bullying, and so on and so forth. Surely, you would think we're grownups here, there's a better way. As I know, that's what I've been thinking. Well, let's talk about the impact, shall we? As of this recording, estimates say that the impact of this strike is over $4 billion. We're recording this episode in early October and MEMA just came out and said that they expect by mid October, 60% of their members will have layoffs. 60%, and we can see it happening. So what can we do? What can we do differently? Why are we still playing the games that we've been playing in this industry for decades? Surely, we've advanced. Well, apparently not. But I happen to know that there is a better way. And the guests that I have coming on the show today knows exactly what it takes to handle a negotiation in a way that is a win win for everybody. I am thrilled to welcome to the show today. Kate Vitasek. Kate is faculty of the Graduate and Executive Education program at the University of Tennessee College of Business. She is the founder of the Vested Movement for highly collaborative winwin business agreements. She is also the author of seven books on the subject. And a Forbes contributing author to say that she's a thought leader in this space would be a massive understatement. She knows her stuff, and she's got the data to prove it. Kate, welcome to the show.

Hello, and thanks for having me here. You know, we love as faculty at the University of Tennessee, we love to get outside of our box and into the real world and talk to folks because as I like to say, you've got to change the world one deal at a time. And it changes with changing your mindset of how you approach these negotiations. And I'm with you, I just don't like the mindset that I'm seeing played out here on this deal.

Yeah, you know, okay, as you know, I've been in supply chain in automotive for over 35 years. And these bullying tactics and threats are the way that we have handled ourselves for decades. It starts with the OEMs, the OEMs have a tremendous amount of power and leverage over the suppliers. And when you're a supplier into the OEM, you are dependent, a significant portion of your revenue is dependent on the OEMs. And you tend to, I hate to use the term rollover, but you tend to rollover and when you look at OEMs contracts, terms and conditions, they're very one sided. It's very much you know, do what I tell you to do when I tell you to do it, or else and oh, by the way, manage all your sub tears in the process as well. And so here we are with the UAW strike, and we've got Shawn Fain standing up to the OEMs. Now, first and foremost, I kinda like that, I got to admit, I kinda like the fact that he is standing up to them, but these bullying tactics of if you don't give me what I want, I'm gonna pull my people out and put your plants on strike and then another round of negotiations and it's then oh, oh, you didn't get it the first time here. You said most plants that are going on strike. Oh, you still didn't get it? Guess what? Here's some more plants that are going on strike. So Kate, from your experience in your perspective, why are we still playing these games? What possesses people to play these games and tell us please, what is a better way?

Well, it's our human nature that we like to win is what leads us down this path to play this game, this tit for tat back and forth. And so you can't really blame Shawn for standing up, you know, the, as I like to say, most of the time, the buyer, you know, who has the gold rules, they have the power, and we as suppliers, we're often and then that counts unions as well, we're often passive aggressive, so we've got aggressive and then passive aggressive, so we're not standing up and trying to have those difficult conversations. But I would actually argue, and I actually don't want Shawn to stand up, I want both of them to stand down. I want them to change their dialogue. Because the more that Shawn uses his power, the more that it just makes the OEMs mad.

And you're gonna see it and it's happening, you can see it right, it's like, okay, then we're gonna put a hold on that new battery plant.

Exactly. So it's a classic game of tit for tat. And the academic research and economics and math have been studied for over 50-70 years actually dating back, you know, John Nash, the 1950s, you know, wins a Nobel Prize in 2000, in actually 1994, for his work on the Nash equilibrium. And this whole concept of game theory was spun out of that. And so the more I use my power, I have a choice, I can either not use my power, or I can use my power. And when we use our power back and forth, we tend to just get in the slippery slope, it gets ugly, and it's a lose lose for everyone, as you pointed out, Jan $4 billion of waste. What if I took that money, and I injected that back into the relationship, like that's just wasted money. And in economic terms called transaction cost economics, this back and forth creates friction, this untrust and the cost of untrust is quite high. And so what we're not realizing is that we need to both stand down, have a transparent discussion and try to optimize because don't the OEMs, they just really want to not raise their prices, they don't want to raise their cost. Well, you've got all these workers out there, who this is all they do for a living, what if they were on my team instead of against me, they were with me. And we challenged them to come up with cost savings ideas, or cost containment ideas or improvement ideas. That's how we changed the game is we put both parties on the same side with the same goal. And you've got a classic example here with this negotiation, and this terrible place that these guys are going that they are across the table from each other, trying to win, each party wants to win, instead of having a win, win, grow the pie, share the pie, and they don't know how to grow the pie, share the pie, there are little kindergarteners back in the day fighting over their marbles, and we need to teach them how to grow up. And instead they've gotten to be big, tough bullies. And kudos to Shawn for standing, because maybe that's what the OEMs needed. But now it's time for them both stand down. Now, they're not going to change the world during this deal. They're all pissed off, quite honestly. So they just need to get to a deal. But I want them to change the discussions after this deal for the next one. Because if they don't start to change, after they sign this contract, they're just going to be right back at it the next time.

Yeah, you saw, right. And when we're in this win-win mindset, then the ego kicks in. And I'm gonna say it, people are gonna hate me for saying this. But when you're dealing with the male ego on both sides, that is a very, very dangerous place to be. And neither one is going to want to show the world because this is playing out in a global stage now that they back down, or they somehow gave up too much or gave in to the other party. So the whole ego that's driving this, and this fear of failure and looking weak is really the the underpinnings that we see playing out right now. And that's terrifying, because when it's emotional like that, it's very difficult for two sides to come together. Right?

Yeah, it actually now it's about the ego of not losing. Yeah, you know. And so how do you save face and have a different discussion? And so we have seen this, by the way in union contracts. My favorite example, is the Canadian government and their doctors. Little health authority on the West Coast, Island health authority, and they were in the news. You know, you had headlines in the news tenure relationship, and every two years they're back at it, trying to renegotiate the contract. Act which is by the way, a fatal flaw because think about it your doctors are your doctors, your employee, these union folks, these are your on their team. Why do we have this contract, it should be this evergreen relationship that we're working together aligning interests to create value. But so Island health and their doctors same kind of story, same kind of headlines. I'll read you a couple of headlines from 2015, "Strategy to intimidate as a failure", says Victoria's doctors one year later, no sign of a deal for the greater Victoria hospitalist. "Doctor suspended for refusing patients", health authority says. You see it's the same thing. Just change the names, right. And so they're in this back and forth, tit for tat that lasted two years. And does that make anyone happy? No. And then we get so wrapped up that we have to win at this contract negotiation that we don't know how to save face and have a different discussion, or I'm so mad that I lost, then it manifests itself into the future. So at some point, it's probably not going to be this contract negotiation. But I hope for the next one that they take and say, let's look at a lesson learn. By the way, I invite them, I'll give them two free scholarships. Who do they want to pick? Actually, I'll give them four send them down to little us in the University of Tennessee. And I want to teach them how to think differently. And I would do it now by the way, our classes November 8th, 9th and 10th in Knoxville or send them on down, our collaborative contracting class starts Monday. So if they're listening out there, I know they won't get this podcast before then. But they need to learn that there is a better way. And until they want to do that. It's going to be a challenge. And it means getting off your egos and saying you know what, these people are important to us. They're not just a labor, you know, there's not this chasm between us and them.

Yeah. But in fairness to Shawn Fain, he signaled very early on that things are different, these contract negotiations are not going to be done the same way as before. And you can argue about whether or not his tactics were right or wrong. But he did. He signaled early on this is different. And I don't think the OEMs got it, I think they just they were somewhat complacent, they thought that the game was going to be played out the way it's always played out. And that they were going to be able to negotiate a deal. And you know, maybe they'd be as short strike activity, but they would be able to move on. So he did signal early on that the game was going to be different, but I don't think they realized how serious he was.

Yeah, and and the game can be different, but with power. And I want the game to be different with collaboration and transparency, right. And so what if I was Shawn, I would said, I want to play a different game. I don't like the way this has played out. But I don't want to hit you head to head with power. I don't want to do that. Because if we do look, look what we will do and what we can do. I don't want to do that. I want to come together, where we are an extension of you, we're helping you create value and you're sharing that value, because isn't that what they're fighting about is the union's don't think they have a fair share. And so we just need to reframe that and help them approach it. It's a different approach, a collaborative negotiation approach is radically different than a power based negotiation approach. And they don't know how to play the collaborative game, right?

Because I've never had to do it before. That's not the way we've done it in this industry. So let's say, Kate, you have, let's say you have a representative from each one of the OEMs. And you have Shawn Fain in the room getting ready for the next contract negotiation. Right. So you have him in the room, and you're starting to talk to them about setting the stage for a collaborative deal, that collaborative negotiation, what are some of the things that you're going to be telling them?

Well, first of all, by the way, there's a process. So this just isn't just this magic thing. It is a process. And so both parties would have to understand that they're going to enter into a collaborative negotiation process. We're going to learn new tactics, we're going to learn the process. And so step one, and we call it "getting to we process". And if you go forward and actually craft the win-win relationship, the contract, we would call that a "vested agreement". We call that vested, because a win for you is a win for me. Right? So I am invested in your success. You're invested in my success. I want you if I think about this, Jan, if you get lower cost savings, or cost containment, I get a share of that. If safety goes up, if we improve safety, I get incentives for that. And so we're creating the economics of the relationship that we really are vested in each other's success. And so step one of that is to put the elephant in the room and talk about the partnership itself, or in their case, the lack of partnership, and that's what we did with Island Health. And the doctors because remember, they were in law that you know, they were polar opposite sitting across the table headlines like you are. And we said, You know what, just come to a three day workshop just come, both parties send folks, they send about 40 people. So critical mass, just a couple, but they sent, you know, representatives from both and said, Okay, we're gonna sit here and we're gonna learn maybe just maybe there's another way. And they started out like this, you know, there's no way, we hate you. You're evil, right. And so one of the tricks that we do, and it's quite humorous, but very impactful is we haven't put the trust elephant in the room. And we do this little survey. It's called compatibility and trust assessment. It's really brilliant. So it's anonymous survey. And at the very end of the survey, not only has all this data, but the very end of the survey, we ask them to have a list three adjectives to describe the relationship, three adjectives, and then we put them into a word cloud, and then we show it to them. And they had words like toxic, opaque, distrustful and adversarial, evil, right? And it's like, huh, is that the way you want to be? You know, do you like these words? And of course, no one likes those words. And we said, well, what words would you like? Collaborative, trusting, you know, win-win. And I was like, so the people in this room, got and created the words toxic, distressful, adversarial, you same people in this room can get to collaborative win-win, you know, transparent. And so we challenge them to change the underlying foundation. So why, why is it toxic? Well, when they did this, you know, it made me feel like this, and then I did X. So you start to unwind the tit for tat? Well, you did this. And then I did that, well, then you did this. And I did that. And you did. And you can't even remember how far back and when it started. And so you've got people now who are so amped up, but it started many years ago, way back. So they've learned this tit for tat, every time they do a contract negotiation, we're like, Alright, so we're gonna have a different way, right? So we challenge them to say in this room, just pretend that in this room, we're not doing the negotiation, right now. We're going to be respectful. We're going to, you know, do all these words that you say are good. So with that in mind, and we say just for these three days, when you leave, you can go back to your contract negotiations. But now we're going to talk about trust, transparency, and compatibility. What's preventing you from, you know, not being transparent? Well, when I share I don't you know, okay, well, what if you shared what would that look like? What if we're just going to pretend, right? So we put them in that mindset that maybe just maybe there's a different place? And then in step two, we challenged them to create a shared vision? What does the future look like? And I call that your Mount Everest moment. And so we said, you know, what, if you didn't have just today, in these three days that we're here together, you could create the future of the automotive industry and how you work together? What would that look like? What's your Mount Everest? So they create that, and now they're starting to go, wow, I kind of like what this looks like. But I don't act that way. So then in step three, we have them adopt guiding principles. So if you're gonna go to this, Mount Everest and create this utopia world and how you worked, you probably should have some guiding principles, because sometimes it snows on Mount Everest. So things happen, you have to react. So what would be your guiding principles or social norms that if something bad happened, how would you react? So there's six guiding principles, they write down these guiding principles, they anguish over the words, what would that mean? So one of them, by the way, is honesty. One of them is equity, what would equity look like? What does honesty look like? What does loyalty look like? As I read these words, so the combination of their shared vision and their guiding principles are what we call statement of intent. So now they have this statement of intent and said, Well, this is what it should look like, right? You've just said, this is what you want it to be. But this is where you are. Now you have a choice. And what's really fascinating is over three days, you have lunch together. So by the way, we haven't have lunch together. And you know, we have to do exercises together and they start to realize that the other person isn't evil. They're only evil because they've been put in an environment and been trained that they have to be evil, they have to use their power, it's the only way they're going to win. And so they're taught and train them and we're like, you know what, but don't you you know, are there things you could do to get here? What if these amazing employees actually had time to work on initiatives to drive innovation, you can drive your cost savings down tremendously, you can solve your you know, your main problem, which is the medical assistance and dying which is a huge, you know, thing that was coming on to the the Canadian government. So now that they've accepted that or they haven't, but I've never seen it anyone not, by the way, so once they get through the first three steps, they realized that the other folks, it's behaviors that got them there and behaviors can get them out. So we're like, can we just have a pact on the statement of intent that now we're going to go back to our negotiation, and we're going to read, we're going to open that up. And we're going to follow our statement of intent as we get through all of these contract clauses, honesty, loyalty, equity, integrity, we agree we're not going to use these tactics that are bullying tactics, or even sometimes they're not even bullying tactics, right? Just not being transparent. I'm withholding information, right. So you look at these tactics that were that people use. And I asked them, I asked people to say, are those trust building tactics or trust busting tactics, and almost always, I guarantee you, if I was a fly on the wall and looked at these negotiations, almost every tactic they probably are using trust busting tactics, and then they expect the other party to be okay with that, no, you just create an environment that is going to mandate a tit for tat. So that's how we get there. But that's how you get on out of it.

And how much success have you had with this approach?

You know, it is amazing, actually, well, there's I'm gonna answer that in two ways. It's hard to get companies to do it, right? Because think about it, is the UAW and the OEM is going to do this for this negotiation. They're already down the path. Yeah, you know, and so I want to challenge them for the next one. Now, I want to say if they wanted to, they could stop right now and get out of it. But they're so far down, they have what I call deal fatigue, they just want this thing to be done, right. And so I want them to lay the foundation, but now they have deal fatigue, and they go, and then they forget about it till the next contract, and then they go, they just go back in their own way. So the hard part is getting people to start the process. And so I've been at this for 10 years first book vested outsourcing. And it was outsourcing focused, buyer supplier, big outsourcing deals, that came out in 2010. And, you know, Dell was one of the very first companies and then Intel, so you start with one, and then you go to two, and then you go to four, and then you go to eight, and then you go to 16. And then you go to 32. And now we have over 100 organizations who have adopted the methodologies for some of their most strategic deals. But the hard part is getting them to adopt it. Now, once they they say I'm going to change the way both parties, the success is amazing. I mean, this is what makes me excited is to see organizations like Island health, being in such toxic environments with their doctors, and everybody's just exhausted. They do this every two to three years when the contract ends. And now I read headlines in 2020. They sent me a headline, right, so they went through a 2015. That's where they were 2016 they decided to go down a different path. And in 2020, I get a headline, look, we're in the news, as pandemic persists. BC rolls out hospitalist home program, look at how we're innovating. Oh, the you know, this new policy on you know, medical assistance and dying. Look how we're innovating in this better than anyone else in Canada. Oh, by the way, their budget, the doctors beat the government budget, the chief financial officers blown away. Wait, you came in under budget, because they're scheduling themselves. They're optimizing how they work. They're driving innovation. And so you really can get to these win win. And you know, I look at that, and now and by the way we measure the health of this relationship. Remember, we started measuring the health toxic, and you know, adversarial distrusting. Now it's words like innovative, collaborative, win-win, you know, engaging, isn't that what we want our employees to be as in that culture and think about the cost savings that we have just from having people want to come to work and are excited to come to work and excited to bring their A game instead of dredging to come to work and plotting when they are there how to be evil.

You're right. It comes back to culture. And the automotive industry, as everybody knows, is going through a massive transformation right now. But this transformation tends to be focused more on product. We talk ICE to BEV, ICE to BEV. It's all about transition to EV, we're not talking enough about the culture. And it's not just about the product, it's about the way that we do business, the old way of negotiation, the bullying tactics, the power plays that you just talked about. They will not cut it any more. If this industry is going to transform for the future, we have to adopt a different way. And the UAW negotiation that's playing out in front of us right now is is a perfect example to focus our attention on this issue. And the numbers, 4 billion already. Kate Vitasek has just outlined a better way. There is a better way. But as you say Kate, companies have to want it. They have to recognize the need for the change, and they have to want it. And with that, Kate, what parting words of wisdom would you have for the automotive industry? Not just the UAW and the OEMs, preparing for the next contract, but more broadly, looking at the automotive industry, the way that we negotiate with the backdrop of the EV transition behind us, what words of wisdom would you have for leaders in our industry right now?

Yeah, so don't treat your suppliers, or union employees as us versus them. You're competing against other, you know, other companies. So beat the market with your suppliers, beat the market with your employees. And when you win, when you tackle the EV problems, when you tackle the cost savings when you're innovating better than your competitors, then share the pie, grow the pie, share the pie. And so it really is a mindset shift. And so my first challenge is, you know, Shawn, when this is over, I say, You know what, I want to change the way things are, but I don't want to go with power. That's ugly. That costs us $4 billion. It cost us not to have employees have dinner on the table because they didn't have they didn't go to work. Let's change and get to wheat. The better way is right here, the vested way. And so that's a free download ebook, go read it. I'll put it in the resource for you guys. For folks to read. Just start I invite you to be curious and just ask is there a better way because our research we've been researching since 2003. And we continue to research almost 20 years of research on this over 100 companies have followed the process. The before and afters are amazing. Harvard Business Review is written about it seven books, one of our books best at how P&G, McDonald's and Microsoft are redefining winning in business relationships. I challenge you to redefine winning, and it's not winning at the expense of your supplier. It's not winning at the expense of the labor unions. And it's not compromising. When you compromise your value exchanged. It really is changing the way you look and creating that culture have a vested way.

Thank you. So in summary, yes, there is a better way to negotiations than the way we are seeing playing out in front of us right now with the UAW and the OEMs. As Kate said, Be curious, start to take a look at some of the materials involved in this process. There is a proven process. It's out there, it's working. You don't have to reinvent the wheel. But you do have to recognize the need for change, and you have to want it. And with that, Kate Vitasek. Thank you very much for joining us today.

Thanks for having me.

Thank you for listening to the automotive leaders podcast. Click the Listen link in the show notes to subscribe for free on your platform of choice. And don't forget to download the 21 traits of authentic leadership PDF by clicking on the link below. And remember, stay true to yourself, be you and lead with Gravitas, the hallmark of authentic leadership.