My friend, Mike, called me several months ago for some advice.
He was working on a potential $200 million outsourcing deal with a large
manufacturing company. (Yes, I know, the word “potential” is a spoiler!) The
company wanted to reduce operational costs by outsourcing a critical business
function to Mike’s company. This was a sole-source deal, which means there was
no competition for the work. The deal was Mike’s for the taking!
The work Mike’s company was going to do involved gathering
test data and reporting it to a regulatory agency. In the course of the discussions,
Mike’s company realized that all companies in this industry had
to gather this test data and report it to the same agency.
One of the senior executives in Mike’s company got what he
thought was a great idea: let’s use this first client to create an “industry utility,” meaning a
service open to other companies in the industry so they could drive down their
costs. The conversations with the client quickly escalated to forming a joint venture.
Mike wanted some advice on how to structure the joint
venture.
I said, “Mike, no two words will waste more of your time
than ‘joint venture.’ In my career I have never seen a joint venture result in
the benefits the parties sought, assuming they ever got it formed in the first
place.”
Mike said, “No, no, we’re both aligned with this. It’s going
to be a billion dollar business!”
“Mike,” I said, “The client asked your company to help them
reduce costs. Here’s my advice: Don’t sell the client the deal you want.
Sell the client the deal they need. Because even if you’re successful selling
them the deal you want, the client will quickly try to find a way to scuttle
the deal because they never wanted it in the first place!”
Mike insisted I didn’t understand and hung up.
Needless to say, the deal never came to fruition. The
parties got into such a tussle about whose executives would run the joint
venture and what the ownership percentages would be that they lost sight of the
original deal. In the end, the client’s leadership found another path to cut
costs and Mike lost a $200 million deal.
When I was a kid and complained my stomach hurt because I
ate too much, my grandmother used to chastise me: “Your eyes are bigger than
your stomach.” Sometimes in sales this is true as well. A client asks us for
help and, before we know it, we are proposing a program we think will solve all
their problems! Our eyes get bigger than what the client can stomach.
The moment we start proposing work that the client didn’t ask
for, we have shifted from close advisor to self-interested sales person. And
that tinge of self-interest destroys all the trust we worked so long to build.
Focus on the deal that helps the client, not the one that helps you. That is
how you will build lasting, trusted relationships.
