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Saturday
Mar102012

Crossing the Finish Line

Crossing the Finish Line

Here’s a bit of reality for you: You can work your a$$ off preparing to launch your new software product, strategizing to develop a greenfield subdivision that will pass muster with city planners, or even parting with some of your hard earned cash to patent a new invention to sell on late night TV – but none of that will matter if you can’t make it to the finish line.

And for most of  us, whether we like it or not the trip to our finish line is going to include some negotiating. A bit of give and take, if you will.  Time spent haggling, poring over long and often confusing documents, sessions with attorney’s, landlord’s, and banker’s. Not to mention an assortment of other folks who often seem to have been put on the earth for the sole purpose of sucking the life out of us one dream at a time.

Too late we discover there is no escaping the world of contracts, agreements, and settlements regardless of how hard we try. Sometimes, I think most of us would rather volunteer for a root canal than to actually have to face another piece of paper, another “discussion”, or one more concession.  

That’s too bad. Because the world really does run on negotiation. Of course not all of these "events" come at us in the same way.  Parents quickly realize they aren’t nearly as skilled at negotiation as their children. Tourists usually are slow to understand that vendors expect to bargain with them. And the rest of us aren’t exactly sure where to draw the line between “negotiation” and “bargaining” and between “hard lining” and “compromise”.

It was once a badge of honor for someone to say "you drive a hard bargain" just before shaking your hand to close a deal.   I wonder when negotiation became such a dirty word? Or when so many decided it just wasn’t worth the effort? In fact, it’s become so distasteful to some that I don’t even like to use the word with ordinary people – what I sometimes call “civilians”.

Let’s say I’ve moved to a new city and need to find a new house. My significant other and I will engage in a process that could be thought of as negotiation, but we think of it as a process of “compromise.”  She wants a home with a large yard and I want a great kitchen.  I should disclose at this point that I do all the cooking in my family and since I will also have to do all the yard-work – or at least pay for it, I’m not all that keen on a large yard anymore. Anyway, I like a large master bedroom and bath and she wants more natural light (usually meaning more windows).  I like the country – outside of town – and she’ll want to be “near people”. 

Anyway, this is all normal.  Ask any Realtor. To survive in their profession, they must uncover each person's mental list of the things most important to them and how that list is prioritized.  There will be items their client's won’t budge on and others that they don’t care nearly as much about.  As I say, all normal and done thousands of time each day all over the world. No negotiating, you understand – just getting what everybody wants. Nothing wrong with that, right?

Compare that with your last experience in buying a car?  Or, better yet –  let's go back to buying a house. Now that my wife and I have more or less selected a house, we now have to begin the awful process of “negotiating” with the sellers.  We have a Realtor and they have one. We discuss things with our Realtor who then presents that “offer” in the form of a contract to their Realtor. Their Realtor then presents it to them.  Meanwhile, my wife is worrying whether or not we offered enough, will they make the required repairs, and can they move out in time to suit our deadline.  On the “other side of the fence”, they (the sellers) are wondering whether not they can “counter” back with a higher price, offer to make less repairs, or get a longer deadline.  This may all go back and forth until one party or the other becomes angry, finds another property, or becomes disillusioned with the whole process and walks away.  Or, to everyone's surprise, someone may have just bought themselves a house.

Welcome to negotiation.

I think part of the problem is in how we frame the process itself.  No one thinks of family discussions as negotiations – unless you have a teenager (or two?) in the house; and then “everything” is a negotiation.  But my point is that for most of us, the process of negotiating is something we do almost every day in one form or another and yet, we don’t think of it as such.

Perhaps we could separate it into two parts: the more formal one, “negotiation”, could be reserved for the world of business and in dealings with the public. The second, let’s call it “coming up with a plan that makes sense for everyone”, is the phrase we’ll use in less formal circumstances – say, with those civilians I mentioned earlier.

Sometimes it’s hard to tell who’s who.  I mean lawyers, realtors, and car dealers probably jump for joy whenever the term “negotiation” comes up.  For them, it’s just another word for business which translates to dollars in their pocket.

For everybody else – well, almost everyone else – you might be better off leading with a frame of agreement and that might very well be something like, “why don’t we all sit down and come up with a plan that makes sense?”  Because if you’re working with “civilians” who tend to run away at the first sign of a “negotiation”, you will be pleasantly surprised to find that those same people are all for “coming up with a plan”.  And as everyone knows, if you can gain agreement right from the start, you’re much more likely to have a successful outcome.

And speaking of outcomes, Ray Alcorn likes to say that “no one ever left the closing table without believing they were better off than they were before they sat down”.  That’s a great point.  Remember, no matter how much people like to complain, they still will act in their own best interest. At least, they think they do.  (correction: Ray's rule is actually "No party to a transaction sits down at a closing table unless they think they will be better off when they get up.")

Ed Seykota, a financial trader, once remarked that “everyone gets out of the market what they most desire”.  Ray must have been channeling Ed because these two statements are very much alike. Deep down, we all act in what we think to be our best interests.  And sometimes, that’s not the smartest thing we can do.

If you find the party on the other side of the table brought their own professional  - Realtor, Attorney, or Mediator – you need to stop the process until you can rustle up a professional of your own.  Even if you are supremely confidant of your own abilities, you will be well served by having another set of eyes and ears at every meeting.  Especially, if those eyes and ears are professionally trained and aren’t emotionally invested in the outcome. Often, it takes another person to see what it is you really want and to make sure you stay on course. Trust me on this one.

For the record, I’m not the only one who thinks so. Check out this post from Mark Suster, a VC, who writes “Both Sides of the Table” and warns us not to negotiate "piece meal".  Click here for the story. Great lessons for us all.

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