Tuesday, March 5, 2013

What's the Problem?

Verdi was surprised to see Tyler Gitou in his office.
“Mr. Gitou! How nice to see you. You’ve been gone for a while.”
“Hello Verdi,” Tyler said. “I have been. Come in and visit with me for a bit. How have you been?”
Verdi sat down. “I’ve been great. Very busy with a bunch of new deals and I could really use your help. Where have you been?”
“I was away getting some sales and negotiation training,” Tyler said. “The best program I have ever had in my career.”
“Really?” Verdi said. “You go to sales training? But you’re the Deal Whisperer! What would anyone have to teach you? You’re the best in the business!”
Tyler laughed. “Thank you, Verdi. That’s very kind. But do you know why I am so good at sales and negotiation? Because I take training. Refresh myself. Learn new ideas and recall some I had forgotten. Practice.”
“You have to practice?”
“Absolutely,” Tyler said. “What do the best athletes do when they are not competing? What do football teams do in between Sundays or golfers do when they are not on tour? Train. Practice. Get better and be ready for bigger challenges.”
“That’s terrific. Did you learn anything you can share?”
“I learned a great deal, Verdi, and over the next few weeks I will share as much as I can with you. Why don’t you tell me about your deals?”
“OK,” Verdi said. “The biggest one I have is with a client that wants us to build a new software platform to run its retail operations.”
“Why do they want the new platform?” Tyler asked.
“The one they are using is old technology and getting expensive to maintain. The client has asked us to build something that is easier to upgrade in the future, so they want us to use all off-the-shelf software.”
Tyler nodded. “That sounds like an exciting program.”
“Well, it gets better. We figured out that if we build this we can actually turn it into an offering that we would sell to other clients. There are lots of retail operations out there that could benefit from this. This could develop into a billion dollar business for us. Our senior management is really excited.”
“It sounds like you have identified a problem that the client needs our help with and a solution for that problem. What’s the issue?” Tyler asked.
“It’s the revenue sharing.”
Tyler cocked his head to one side. “Revenue sharing? Where?”
“In the new business,” Verdi said. “We are trying to figure out how to share the revenue from the new offering. The client is asking for a large sum up front because, they say, they will have helped us build the business. We are proposing a revenue model that tracks to the growth of the business.”
“This is a very interesting discussion,” Tyler said.
“Interesting but a little contentious. The client’s leadership is starting to get involved and feels we are not moving enough to make the deal happen.”
“Which deal?” Tyler asked.
“The deal for the new business.”
“What business?” Tyler asked.
“The one that leverages the new software offering.”
“What software offering?” Tyler asked.
Verdi sighed. “Come on, Mr. Gitou! I just told you. The software offering we are going to build for the client.”
“Going to build?” Tyler asked. “So let me ask you this: how is it you are negotiating for what revenue the parties will share for a business that doesn’t exist that is to be built on a solution that has not been designed, developed or delivered?”
Verdi was silent for a moment. “You are suggesting we are putting the cart before the horse?”
“No,” Tyler said. “I am saying we don’t even have a cart OR a horse. We have an idea of what a cart and a horse might look like someday and we have described it to the client and gotten them all excited about something that could happen in the future. What about solving the client's problem?”
Verdi shrugged. “What problem?”
“The problem that the client asked us to help solve. Replace their legacy environment with a lower-cost and easy to upgrade system.”
“Yes,” Verdi said. “We’re still going to do that.”
“I know, but my point is you haven’t done it yet. And now the notion of creating a billion dollar business has everyone so excited that our team has lost sight of the underlying problem.”
“But Mr. Gitou, this is a really big deal.”
“No it’s not, Verdi. Right now it’s a thought. You have a deal on the table to help the client. Focus on the deal that the client needs, not the deal we want. Otherwise, your conversations about how to split non-existent revenue from a business that hasn’t been created will destroy the potential to really help our client.”
Verdi nodded. “I see what you mean. So what do I do next?”
“We need to change the conversation. Let’s strategize about who we need to speak with at the client and what we need to say. You are in a very precarious situation now having built expectations. We need to reset those expectations and re-frame the outcomes that we can achieve. As Deal Whisperers, our goal is always to focus on what we can legitimately achieve for our clients right now and bring them into a spirit of collaboration. As we develop the relationship, and we discover we can find more value in our work together, then we can decide how to optimize that value and the appropriate way to share it. But before we do that we have to demonstrate that we can both solve the critical problem that we all identified in the first place.”

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