Who is Driving?

“Verdi, haven’t you been working on closing that same deal for months?” asked Tyler Gitou.

“Yes I have, Mr. Gitou,” said Verdi.

“Why has it been so slow to close?”

Verdi sighed. “I have been struggling to get buy-in from the client around the deal. I am meeting with the people who run the client’s logistics department and trying to explain how the new system will function. But they all have different requirements for what they want the system to do.”

“Really? I would have thought those requirements would have been decided when they chose the system.”

“That’s the problem,” Verdi said. “The logistics department didn’t choose the system. The client’s new ‘business optimization’ group picked it.”

“Interesting. So one group in the company has chosen how another group will operate and did not ask their opinion?”

“That’s right,” Verdi said. “The business optimization group was tasked by the CFO with finding a software product that would drive greater efficiency and save as much money as possible. We showed that our product would reduce manual and redundant functions and potentially save the client thirty percent in the first year. So they chose us.”

“I’m glad they recognize the great value of your product,” Tyler said. “So after three months the logistics department is just getting introduced to the product?”

“Yes. The logistics department is now starting to understand what the software does and how this system will change the way they do business.”

“Sounds like you’re still selling, but now to the actual users.”

Verdi sighed. “It feels that way. I don’t understand why it’s taking so long. It’s a great product.”

“The problem is a process issue, Verdi,” Tyler said. “You never ‘sold’ the product. Instead, someone in the company chose a product for another department to use, and now they are just getting familiar with it. To reduce this type of inefficiency, a Deal Whisperer always identifies the key executive in the buying process. Ask yourself: Who is driving?”

“What does that mean?”

“Someone on the client side has to care that the deal is going to go through and the program be successful. That has to be a senior executive high enough to influence what is happening at the negotiation table. Think of it this way: if the client gets up from the negotiations and walks away, do you know who you will call to get them back to the table?”

Verdi thought for a moment. “No. I don’t know who would have that authority.”

“That’s your problem. You have no deal driver on the client side. That’s why you have struggled to drive the deal to closure.”

“So how do I fix that?” Verdi asked.

“For this deal you may not be able to. You need to have some high-level relationships on the client side who will reach out and help.”

“We don’t have any. This is a new client.”

“Fair enough. So let’s talk about some strategies to move more efficiently given your situation. But next time you are scoping out your deal, make sure you think about who is buying and develop a strategy to turn that buyer into your deal driver. To make an engagement successful, both parties need to have a shared interest in that success. With that shared interest there must be a shared passion for getting the deal done. Find out who on the client side is the source of that passion for success and you have your deal driver.”

An Expensive Relationship

“The client asked us to start the work because they had a ‘burning platform’. So we started even though we did not have a signed agreement.” Verdi sighed. “I know that was a mistake.”

Tyler Gitou shrugged it off. “It’s easy to spot our mistakes in hindsight. The key is to learn and not make the same mistake twice. So what’s the problem?”

“Well, the client had budget cuts and had to cancel the project, so they never signed the deal,” Verdi said. “Meanwhile, we already completed phase one and had billed the client $500,000 for it. The client is now challenging the invoice because the project was canceled.”

“So how much has the client offered to pay?”

“Zero,” Verdi said. “They said the work we did has no value to them without the project going forward.”

“Regardless of the value, do they recognize that they asked you to start the work, incur the costs of paying your people all on the basis of trust?”

Verdi nodded. “Yes. They said we should treat this as an investment in the relationship. They have a lot of other projects in the pipeline that they said we will be able to bid on to make up the loss.”

“What do you want to do, Verdi?” Tyler asked.

“My management is saying we should focus on the relationship. This is a client we are trying to grow so they see this as an opportunity to develop that relationship.”

“I see.” Tyler said. He locked his eyes on Verdi and said in a stern voice, “Verdi, give me $20.”

Verdi looked surprised. “Give you… why?”

“Because I asked you to. Verdi, you and I have been friends a long time and if you say ‘no’ to me, that is going to really impact our relationship. It’s just $20. Give it to me.”

Verdi sat back in his chair. “I have to admit, Mr., Gitou, I am confused.”

“What are you confused about?” Tyler asked. “I am asking you to ‘invest’ in our relationship. If you give me $20 it will be a better relationship.” Tyler let the silence overtake them both, and finally he smiled. “It’s awkward, isn’t it?”

Verdi sighed. “Yeah, really.”

“If you give me the $20 what type of relationship will we have? It will be a relationship where I ask you for money and you give it to me and get nothing in return. That’s not a ‘relationship’ that’s called being a sucker. And that’s an expensive way to try and develop a relationship.”

“So you’re saying we should never take anything less than the $500,000?”

“No, I am asking you to think about what you will get in return for the concession. For example, you said they have other projects. What if they awarded those projects to you?” Tyler asked.

“Well, they said we can bid on them.”

“Verdi, I can bid on them too. The janitor can bid on them. That is a valueless option. But if they awarded those projects to you, wouldn't that have value?”

“We’d save a lot of money in sales expense if we don't have to compete for the project,” Verdi said.

“Exactly. Maybe they don’t have $500,000 now to pay you because the budget was cut. But they have other things of value to offset your loss. Ask them to award that work to you and you can reduce the $500,000 to perhaps $200,000. A Deal Whisperer always gives to get. If we make concessions in negotiations for which we do not get value in return, we are training the client that we do not respect our own business and we will give money away because they say the magic word, ‘relationship’. A Deal Whisperer builds relationships on mutual respect and trust. Client’s don’t respect us if we give away money and they are wise to keep asking us to do it until we say ‘no’.”

“Thanks for the advice, Mr. Gitou,” Verdi said. “I am going to sit down with my team and put together some options to address their financial limitations and also make us whole on the sunk costs of the project.”

(See “How to Build a Trust Action Plan”   http://dealwhisperers.blogspot.com/2011/02/how-to-build-trust-action-plan.html.)

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.”

Who Cares?

 “Verdi, this is the second time you have delayed closing this deal for another quarter,” said Tyler Gitou. “What seems to be the problem?”

“I don’t know,” Verdi said. “The client shows all the indications that they are ready to buy. They need the software, like, yesterday, to replace their old system. The system is out of compliance and the regulators are getting antsy. I guess it’s just caught up in the purchasing bureaucracy.”

“The ‘bureaucracy’?” Tyler laughed. “If their building was on fire, how much bureaucracy would they wade through before they called the fire department?”

Verdi shrugged. “None. They’d make a call.”

“Yes, because if they had to save the business they would act. It sounds like they need to save the business here as well. So let me ask you a simple question. Who cares?”

Verdi furrowed his brow. “I don’t understand.”

“This is a question that is core to your ability to achieve a commitment and make a sale. Who in the client organization cares most about solving the problem that has been identified? If this software does not get installed, who gets fired?”

“That’s probably Jenna Connell, the CIO.”

“And who is your key contact at the client?” Tyler asked.

“I am working with Tim Luizza, the procurement lead.”

“How often have you met with Jenna Connell?”

Verdi thought for a moment. “Never.”

“So what I am hearing is you have spent the last six months talking to procurement and all you have to show for it are a bunch of ‘what-if’ scenarios and specifications and modifications, but you don’t have a deal.”

“That’s… accurate. But I don’t think it’s fair.”

“Why isn’t it fair?” Tyler asked.

“Because I have also built a good relationship with Tim in that time. And he tells me we are the leading contender for the business.”

Tyler nodded. “Building a strong trusted relationship is a positive outcome. But how much have you spent in your budget to get that relationship? And has Tim committed that your investment will pay off?”

“No, he can’t.”

“Why not?” Tyler asked.

“Because… he’s not the one making the decision.” Verdi sighed. “OK, I get it now. I need to develop a strategy to speak with the decision-maker, and not the facilitator.”

“Exactly,” Tyler said. “One of the key elements in a healthy negotiation is a commitment. A Deal Whisperer knows how to tell the difference between learn, churn and earn. The parties first must go through a process to learn about each other and the issues. From there, one has to be careful to control the amount of churn as the client comes to a decision. If not managed, churn can burn your budget! But if done well, you’ll have just enough churn to earn the client’s trust and their commitment. The three have to be balanced so don’t rush one and don’t waste time on another. Balance your ‘learn and churn’ and you’ll have a much more efficient ‘earn’.”

He's So Wrong!

 “So was I right or was I right?”

Peter Pompel gestured to a chair for Tyler Gitou to sit down. “Isn’t Frances Forte the most emotional and challenging executive you’ve ever encountered?” Peter asked.

Tyler paused for a moment to gather his thoughts.

Tyler had met with Frances Forte, the COO of a large manufacturing company, at Peter’s request. Peter and his Tech Team colleagues had been hired by Frances to install a new finance and accounting system. Peter called Tyler for advice because Peter thought Frances was overly emotional, which made communication difficult. (See: “She’s So Emotional!”) http://dealwhisperers.blogspot.com/2012/07/shes-so-emotional.html

Tyler met with Frances and found her to be a calm and reasonable businesswoman. The problem was with Peter: he did not understand how his own communication strategy was actually frustrating Frances and causing her to seem “emotional”.  (See: “She’s So Logical!”)   http://dealwhisperers.blogspot.com/2012/08/shes-so-logical.html

Tyler now had the challenge of telling Peter that he needed to adjust his behavior, not Frances.

“Actually, Peter, Frances is a pretty direct and balanced businesswoman. From my conversation with her I think you are the victim of a misperception.”

Peter sat back in his chair. “Really?” he asked. “Are we talking about the same person? This is the woman who I told you gets upset when I tell her everything is going well. She accuses me of hiding information. Sometimes it borders on her questioning my ethics!”

Tyler raised a hand to calm him. “Peter let me ask you a question. Is everything going perfectly?”

Peter shrugged. “Well, no, of course not. There are always issues in these types of projects. But we get them resolved.”

“I understand. Do you convey those issues to Frances? Tell her where you are facing challenges and solving the problems?”

Peter laughed. “Oh goodness no! The last team we had in here struggled and Frances ordered them off the premises! That’s when they brought me in here. I’m not going to let her think that we aren’t doing our job well. She’ll get all riled up and get me fired.”

“So you are concerned that if she knew there were delivery problems, even though you solve them, she would perceive you as failing in the engagement?” Tyler asked.

“All I know is the last team got thrown out for poor performance. I am not going to let that happen to me.” Peter folded his arms across his chest.

“Did you know that Frances championed Tech Team in the bidding process because she thought you were the right company for the job and she basically put her career on the line for you?”

Peter relaxed. “Really? No I didn’t. Frankly I had wondered how we won a deal of this size.”

“So she has a vested interest in making sure you succeed,” Tyler said. “If she throws out your team, she’s finished. Your destiny and hers are tied together.”

“That explains why she is so focused on what we are doing,” Peter said.

“When you do run into problems, who on her team do you work with?” Tyler asked.

“Our direct contact is Michael, who reports into Frances.”

“So Michael knows there have been issues which are getting resolved?”

Peter nodded. “Absolutely.”

“Don’t you think Michael tells Frances about those issues? Or do you think he is telling her everything is going off without a hitch?” Tyler asked.

“No. He understands that we are ultimately going to succeed here, but I guess he probably keeps her up to speed on how we are progressing.”

“So put yourself in Frances’s shoes,” Tyler said. “You advocated for a company that failed on the first try. Your career is at stake. The new team keeps telling you everything is going well, but your own people are reporting issues every week, though they eventually get resolved. What would you think of a team that is not being open about the challenges on the program?”

Peter thought for a moment. “I suppose I would not trust that team because it feels like they are hiding something.”

“And as the deadline for completion draws near?”

“I probably would get frustrated every time I heard that ‘all was well’ because I knew it was not,” Peter said.

“Exactly,” Tyler said. “Your perception of Frances as an emotional executive came from her frustration with your behavior. While trying to protect your company by trying to make her think you were not encountering any problems, you actually created an environment of distrust with her because she thought you were hiding something. Couple that with her stress because of her personal interest in the success of the program, which you did not know about, it’s no wonder you had a misconception about her.”

Peter shook his head. “That’s great insight, Tyler. Thanks. So what do I do now?”

“Open up to her about the program. Have a meeting with her and Michael every Tuesday and Thursday and provide her updates, warts and all, and what the plans are to resolve the warts. She knows there will be problems. What you need to do is demonstrate to her you are anticipating and remedying those problems to limit the risks to the program’s success. You will find her demeanor will change. A Deal Whisperer tries to be open and transparent with the other party so that both sides will share challenges and collaborate to solve them. That builds trust and lasting relationships.”   

She's So Logical!

“So tell me about your experience with Tech Team,” said Tyler Gitou. “What do they do well and what can they improve?”

Tyler picked up the coffee cup that Frances Forte had placed in front of him on the conference table.

Tyler had asked Frances, the Chief Operating Officer of a large manufacturing company, to meet with him to discuss issues around the installation of a new finance and accounting system.

Tech Team, the service provider, had made some errors early in the project and Peter Pompel, the project executive for Tech Team, claimed Frances was difficult to work with because she was always “so emotional.” Peter called Tyler Gitou, the Deal Whisperer, to see if he could bring some “calm” to the relationship.

Tyler told Peter that he might be the victim of “persistent perception”; wrongly believing women in business are more emotional than men.  http://dealwhisperers.blogspot.com/2012/07/shes-so-emotional.html

Frances sat down in a chair next to Tyler and sighed.

“Honestly, Mr. Gitou? Tech Team has provided an excellent group to work on this. But they frustrate the heck out of me,” she said.

“Really? How so?”

“Well, Tech Team came on site five months ago to replace our in-house finance and accounting software with a commercial product,” said Frances. “We don’t usually work with companies as small as these guys, but I got good references on them so I threw my weight behind them winning the bid.”

“So to some extent your reputation is tied to the success of that decision?” Tyler asked.

“No,” Frances laughed. “Not ‘to some extent.’ It is completely tied into that decision! If this is not successful, I am out of a job. Once the original Tech Team staff showed they couldn't get the job done, a more senior group, with Peter Pompel, was sent in.”

“Are you concerned that Peter and this new senior group from Tech Team may not be successful?” Tyler asked.

“I’m not sure,” Frances said. “And that’s what frustrates me. When I talk to Peter and ask how are things going, he says ‘All is well.’ But I know that’s not true because my team tells me things that are going wrong.”

“Do you think Peter is lying to you?” Tyler asked.

“I just don’t think he’s giving me the full story. Whenever he says to me ‘all is well’ I get annoyed because it feels like he is trying to keep something from me. So I start asking questions and digging deeper into the progress of the schedule. Then he tells me more and I get irritated that I have to work so hard to get the information I need.”

“So these are problems that are lingering and not getting solved?”

Frances sipped from her coffee. “That’s what makes this such a challenge. They are solving the problems, but they are not telling me that. So basically I have a situation where Peter and his team want me to think everything is going perfectly. And I understand why they would want to do that after the first team messed up. But I know a project like this has mistakes and issues. I’d rather hear about the issues and how our teams are working through them together rather than have to interrogate Peter to get the real story on the project’s progress.”

“Especially because the success of the project has such important personal implications for you,” Tyler said.

“Exactly,” Frances said. “If this is all going to be a big failure I’d rather be a part of it, not a bystander. Peter seems to think keeping me out of the loop will bring me peace of mind. He knows how important this is to me and that I am behind him. But he needs to be more transparent. Frankly, he needs to trust me more.”

“That is a very valuable message for him. Your point of view on this is completely logical and your frustration regarding his lack of communication is perfectly understandable. I would also be frustrated if someone was handling something for me of such great importance and not providing me data on how it was going.”

“What would you recommend I do?” Frances asked.

“I would suggest a set communication plan where Peter provides an issue list and the action plan to resolve those issues. What would your schedule allow for?”

“I could do something every Tuesday and Thursday morning early. Let’s say 30 minutes.

“That’s a good idea,” Tyler said. “If he knows that you expect issues to arise and are prepared to discuss the remediation plan twice a week, he will likely be more forthcoming on the data.”

“That would be great,” Frances said. “I am sorry, I have to prepare for a meeting with the board of directors now. It was a pleasure to meet with you.”

“Thank you, Ms. Forte. I will share with Peter your well-reasoned approach.”

Next: See "He's So Wrong!"
 http://dealwhisperers.blogspot.com/2012/10/hes-so-wrong_21.html

She's So Emotional!

Peter Pompel stood up and extended a hand to Tyler Gitou.

“Mr. Gitou,” Peter said. “Thanks for coming to visit with us. I hear you are the Deal Whisperer. I hope you can whisper some calm to this deal.”

Tyler shook Peter’s hand and sat down. “It’s my pleasure, Peter. I understand you are having a dispute with the client’s Chief Operating Officer.”

Peter sighed and shook his head. “Every day,” he said. “We have been trying to get this new finance and accounting system up and running and frankly it’s been a struggle.”

“This is something your company does all the time,” Tyler said. “What’s the problem here?”

Peter shrugged. “It’s really our fault. We put the wrong team on the ground and they did not manage the project well. The client had a lot of tasks and our team was not forthcoming enough to keep the client on schedule. Plus, we overestimated the efficiencies of some of our tools in this environment so we had to add more people. That slowed things down as they had to come up to speed on the project.”

“Have you explained all that to the client?”

Peter waived his hand. “All water under the bridge. We explained it, the client understood and we have a new schedule. The client wasn’t happy, but she understood. Mistakes happen. I was brought in to lead a whole new team and we’re laser focused on making this successful.”

“Well it sounds like everything was worked out. What’s the problem?” Tyler asked.

“The client's COO, Frances Forte, has gotten to be very difficult to work with.”

“How so?”

Peter sighed. “She’s so… emotional. Every time we meet to discuss the project schedule, she seems to get upset with us. I go in to tell her what I think is good news and she gets angry.”

“Why do you think she’s angry?”

Peter gave a half smile. “Maybe it’s personality?”

“Ah, I see,” Tyler said. “You mean maybe it’s because she’s a woman?”

Peter quickly backtracked. “I don’t know. That’s probably an overstatement but… you know.”

“Don’t be embarrassed, Peter. Your perception is one that women in business have struggled with for a long time. In my experience, though, I have yet to find a successful woman executive whose business judgment was overshadowed by what men like to view as irrational thinking driven by emotion.”

“Really? Have you dealt with a lot of women executives?” Peter chuckled. “Because I’ve been in this business for 20 years and…”

“And,” Tyler interrupted, “I would suggest you have been a victim of persistent perception for those 20 years. At some point some male manager or executive put it into your head that women in business were more emotional than men. As a result, you project that perception onto every woman executive you meet. You are blinded to their business reasoning because you keep waiting for the emotional reaction to validate your projected perception.”

Peter thought for a moment. “I can see what you’re saying and maybe my perception needs some adjustment. But in this case, trust me. She’s just too emotional.”

Tyler looked at his watch. “Well, I am meeting with Frances now in her office, so why don’t I hear what she has to say.” Tyler stood up. “There are three sides to every story, Peter: your version, her version and the truth. Let’s get together for dinner afterwards and I’ll tell you what I’ve learned and we’ll see if we can get closer to the truth.”

NEXT: See "She's So Logical!"
 http://dealwhisperers.blogspot.com/2012/08/shes-so-logical.html

Send Paper Send People

The Deal Whisperer posted its 50th article in September, all based on my ongoing experiences leading sales teams in pursuit of outsourcing, BPO, SI and consulting engagements. My goal is to help business people drive greater value and stronger relationships in their deal-making. For the next 10 weeks I am offering a retrospective, posting the 10 "Most Widely Read" pieces from the last several years. Here is "Send Paper Send People". As always, your questions and comments are welcome and appreciated.

Verdi ended his phone call and slipped his cell phone into his pocket. He walked into the coffee shop, saw Tyler Gitou, and sighed.

“What is it Verdi?” Tyler asked.

“My client is so difficult.” Verdi sat down. “We have been negotiating this contract for three weeks now and some of the things they are asking for are outrageous.”

“Really? What kinds of things?” asked Tyler.

“Oh it’s too much to explain. Milestones, liquidated damages, guarantees. It’s like they don’t understand the nature of the deal.”

“Maybe they don’t,” Tyler said. “When was the last time you had a conversation about the substance of the deal?”

“Just now. I called to tell them our lawyer had sent our markup of the agreement back to them. This is the fourth version we’ve sent to them. I don’t know how we get this done.”

“So you have exchanged a draft contract four times now. How many times have you sat down in a room to discuss it?” Tyler asked.

“We met when the process started and our lawyer has been talking to their lawyer so we’ve been talking a lot,” Verdi said.

“Have you been understanding?”

“What’s that supposed to mean?” Verdi asked.

“You may be talking but it doesn’t mean you’re hearing each other. It sounds like your deal may be suffering from a business disease called documentum negotiatis.”

Verdi cocked an eyebrow. “You’re kidding right?”

“Yes, I made up that name,” Tyler laughed. “But the actual ailment is real and commonly occurs when parties choose to negotiate by document rather than by discussion. It starts when one party sends a contract to the other party and the other party marks it up and sends it back. What’s missing is a step in the middle where the parties get together and discuss the substance of the contract, ask questions and seek to understand the intent and outcomes the contract is trying to produce.”

“I hear what you’re saying but this is the way we always do it.”

“And what usually happens?”

Verdi paused. “Documentum negotiatis.”

“Exactly. So if you want achieve a better outcome?”

“I need to change the process,” Verdi said.

“Here is my suggestion. Schedule a meeting with both legal teams and all the business stakeholders and walk through the contract changes. Seek to understand what the other side is trying to achieve. Often people mark up an agreement with perceptions or assumptions about the language that completely miss the actual intent. Get everyone re-focused on the goal of the deal and work toward the mutual goal.”

“That’s a good suggestion, thanks.”

“And from now on remember this: Send Paper Send People. A Deal Whisperer never responds to a document with a document. He responds with a meeting request to seek to understand the intent of the document. Only after he understands does he respond, at which point there is another meeting to explain and understand those proposed changes. Meeting like this builds collaboration, allows for transparency and gradually builds trust as two parties who are trying to accomplish something together build a lasting business relationship.”

What is the Client Buying?

“So Verdi, at our last lunch you told me you were struggling with a request from your client for a price cut,” said Tyler Gitou.

“That’s correct, Mr. Gitou,” said Verdi. “We designed a new procurement system for a large manufacturing client. We focused on quality because that was what the client said he wanted. When we were ready to sign, however, the procurement lead suddenly told us we were ten percent too high and had to cut the price.”

“So now the question is how to respond, correct?”

“Yes,” Verdi said. “I am concerned that if we don’t reduce the price the client may offer the deal to our competition. So what do I do?”

“I asked you some questions about why you bought your car,” Tyler said.

http://dealwhisperers.blogspot.com/2012/03/why-did-you-buy-that-car.html

“Yes, and it confused the heck out of me. What was that all about?”

“Let’s go back to that question,” Tyler said. “You said you bought a Dodge Charger and I asked ‘Why did you buy that car?’”

“Because I needed a new car. I have to drive something to get to work.”

“But you didn’t need a Dodge Charger,” Tyler said. “You could have bought a Smart car. Smaller, cheaper and less expensive to maintain.”

“That’s true. But my girlfriend would not be impressed with a Smart car.”

“Aha!” said Tyler. “So your decision was not just about transportation. You also had an interest in the type of car because of the image it bestows on you.”

Verdi looked slightly uncomfortable. “You make it sound silly.”

“I don’t mean to, Verdi. My point is this. Every word of that question highlights a different interest you had in completing that transaction. I asked why you bought the car. Someone else could have bought it for you, right?”

“I guess,” Verdi said. “But I don’t want to have to ask someone to buy a car for me.”

“Fair enough. I also asked why you bought it instead of renting a car or leasing one.”

“Buying was the cheapest route.”

“Good,” Tyler said. “Then I asked why that car and you said you liked the Charger because of its image. Then I asked why you bought that car, as opposed to riding a bike or taking the bus.”

“My job requires a lot of travel. The bus can’t get me where I have to go,” Verdi said.

“I understand. But do you see how many different interests the purchase of this car had to meet for you to close the deal? When our clients engage for a potential transaction they also have interests. Maybe a client wants a flexible system; a more reliable system; a more robust system or a cheaper system. Some of those interests may be mutually exclusive. For example, a client shouldn’t expect to get the most reliable, state-of-the-art procurement system from you and also get the lowest price.”

“That’s fair.”

“Just like when you bought your car,” Tyler said. “Could you get a Cadillac at the price you paid for the Charger?”

“No, but the issue is he is now saying he wants a Cadillac system for the Dodge Charger price.”

“Are you sure? Or is he just testing you. Let me ask you this: how have you done business in the past? When you present a price for a project, what does this client do?” Tyler asked.

“They ask for a discount,” Verdi said.

“And what do you do?”

“We see if there is room to move and we cut what we can.”

Tyler nodded. “So you have trained this client that this is how you do business! ‘I give you a price, you push my buttons, and money comes out of the slot.’”

“You make us sound like we’re being… stupid,” Verdi said.

“I don’t want you to feel that way, Verdi. But if you do that’s a good thing because it is a stupid negotiation strategy! How will you ever build trust with this client if every time you say ‘This is my best price’ you’re not telling the truth and you prove that by reducing the price!”

“I see what you mean. So how would you respond to the request for a price cut?” Verdi asked.

“Go back to the interests. You said the client was focused on a quality system. That dictates a higher price. Give him the option to buy a lower quality system at a lower price, or a high quality system at the price you quoted. His reaction will tell you how important quality is.”

“I know it’s important. That’s all they’ve talked about,” Verdi said.

“Good. Just like I asked you the question, ‘Why did you buy that car?’ you should be asking your client, ‘Why do you want this system?’ Focus on what the client is buying. If he's buying quality, focus on how quality can get hurt. Does the client want ‘this system’ as opposed to a different system that might still be sufficient for its business needs? If he is asking you for the price cut just to make sure he has not left money on the table, he will quickly understand that this is your best price and you can’t reduce the price without changing something else in the offering. If he is asking because of new budget constraints, you can offer to discuss options that might retain the key elements of quality but you can reduce costs in other areas that are not as important to him and provide a lower price. That, Verdi, is what a Deal Whisperer does to take the first step in building trust in your client that you really are providing the best price when you say it’s your best price.”

Why Did You Buy That Car?

“Thanks for meeting me for lunch, Mr. Gitou,” said Verdi. “I have been working on this bid for a new procurement system for one of my clients for six months. Yesterday the director of procurement said his company values the quality of the solution we have offered, but our price is ten percent too high. He said we have to ‘sharpen our pencils.’ I don’t have ten percent; I could move some things around and give him five percent.”

“So tell him ‘No,’” Tyler said.

“I can’t do that,” Verdi said. “He’ll walk away and give the deal to my competition!”

“So tell him ‘Yes,’” Tyler said.

“I can’t do that either. If I cut the price by ten percent I have to reduce a whole bunch of operational costs that we built in to ensure the success of the implementation. We have a whole change management program that’s required to train everyone on the new system. If they’re not trained they won’t use it and the client doesn’t realize the savings.”

“So give him five percent,” Tyler said.

“Really?” Verdi said. “Just like that? I can’t believe you, the Deal Whisperer, would make such a concession so easily!”

“Why not?” Tyler said waving away Verdi’s concerns. “That’s what the client wants, right? So give them what they want.” Tyler paused, a smile creeping onto his face. “What will happen next?”

“If I offer him the five percent? Well I hope he takes it and we sign the deal.”

“OK,” Tyler said. “What if he takes it and then says, ‘Thanks, now give me the OTHER five percent or I am going to walk away and go to your competition?’”

“I guess I’d have to say no,” Verdi said. “I can’t do ten percent.”

“So let me ask you this: if you are ready to say ‘no’ to ten percent and see if he will exercise his BATNA to go to the competition, why would you say ‘yes’ to five percent and ‘no’ later? In other words, why not say ‘no’ now? Isn’t the outcome potentially the same?”

Verdi thought for a moment. “I am getting the feeling that you’re trying to show me that the answer is not ‘yes’ or ‘no’ because neither one produces the ideal outcome for both parties.”

Tyler clapped his hands. “Exactly! The answer to a demand for a price reduction is rarely ‘yes’ or ‘no.’ The challenge for a Deal Whisperer is to figure out what the right answer is.”

“So how do we find the right answer?”

“We ask questions,” Tyler said. “First, why is the procurement director asking for a price cut?”

“He said our price is higher than the competition’s price.”

“Are you ever selected because you have the lowest price?” Tyler asked.

“Not often,” Verdi said. “We really focus on quality. We are typically selected because when looking at the risks of these projects, the scope of the work, and the time to get the system running we provide the greatest value on overall price.”

“So we are struggling because we are trying to answer a demand for a low-cost solution which we cannot provide.”

“Yes,” Verdi said. “So I guess that’s the end of the deal. I can’t be the low-cost provider.”

“Hang on, Verdi,” Tyler said. “Don’t give up so easily. A potential solution is right in front of you!”

“It is?” Verdi asked. “Where?”

“The problem is you don’t have an answer to the question being posed, correct?”

“Yes.”

“But you do have an answer to another question which has not yet been posed, correct?” Tyler asked.

“I guess.”

“So if two parties are trying to reach agreement on a shared goal, namely, getting the best, most reliable solution in place, and one party doesn’t have the right answer to a question, maybe the parties need to change the question to get to the right answer.”

“I feel like I am following you… but not really.”

Tyler laughed. “It’s all about how you sell, Verdi. What kind of car do you drive?”

“I just bought a new Dodge Charger. Have you seen it, by the way? It’s awesome…”

“WHY did you buy that car?” Tyler asked.

“Why? Because I need a car to get to work…”

“Why did YOU buy that car?” Tyler asked.

“Me? Who else would drive it?"

“Why did you BUY that car?” Tyler asked.

“I am getting really confused.”

“Why did you buy THAT car?” Tyler asked.

“Now you’re starting to scare me.”

“Why did you buy that CAR?” Tyler asked.

“What am I supposed to do, ride a bike?”

Tyler looked at his watch. “When you have the answer to all of those questions, you’ll have the answer to your problem. Let’s get together for breakfast tomorrow and see what you come up with.”