I once negotiated for two weeks on the word “capital.” Not
because people were being difficult. It’s because we were not explaining
ourselves well.
When trying to close a sale, it is important to remain open,
flexible, and maybe a little stupid (see, “How Stupid Can You Be?” http://dealwhisperers.blogspot.com/2014/03/how-stupid-can-you-be.html).
The stupid part can be especially useful because it allows
you to ask clarifying questions: Why is that important to you? What do you mean
when you say that? How does that affect your business? Asking open questions
such as those may lead you to what should not be a surprising conclusion: your
client doesn’t see the world the way you do.
People are complex animals: highly cognitive, reasoned,
self-interested and emotionally contoured. When trying to come to agreement
with another, it’s the contours of emotions that usually create the conflicts.
We all have been shaped differently, by nature, nurturing or experience, so we
all react or perceive what we see in the world differently. Words are black
boxes. Sometimes you don’t know what’s inside until you open up a dialogue.
In my case, I was negotiating with a large pharmaceutical
client over a termination clause. The client wanted the right to terminate our
multi-year services agreement for convenience. I said we would do that, subject
to a fee of several million dollars. When the head of procurement asked what
the fee covered, I said “our invested capital.” He said no.
We went back and forth, neither one giving in on the issue, until
he finally asked me the clarifying question: what buildings do you have that
you are investing in?
Buildings? I said, this is not about buildings. It’s about
money. The cash we invest in launching this deal and transitioning the services.
If you terminate before we recover that investment through our fees, we need to
be made whole for that capital.
He smiled and explained he had a different view of what “capital”
was. He had been pushing back on this provision for two weeks because he
thought our need to recover “capital” was related to infrastructure. Being a
pharmaceutical company, he said, we run factories that manufacture drugs and
the word “capital” is tied to hard, tangible assets.
Once we understood the source of the miscommunication, we
closed the issue. As a result, I now know when there is a challenging issue to
resolve, it’s time to open the black boxes.
