Basic Principle of Dealmaking

The most important external variable to the success of your business is whether or not you had great parents. But you can’t do anything about that. The next most important? Having the right deals in place, at the right times. No one has the team, the resources and the reach to succeed by themselves. Well-constructed partnerships, carefully structured joint ventures, and timely endorsements help a start-up build its brand, credibility, momentum and customer base.

Business success is based on the kind of deal and agreements you reach while doing these businesses. Multi-million Dollars business has been known to fail based on small errors in negotiations. When you make a deal, the deal should favour you and the other party or else one of you might pull out of the deal when they meet better options from other parties.

The best possible outcome in any deal making or negotiation is when both parties feel that they have gained more than they have given away, and more than if they had not entered into a negotiation in the first place. Conflict arises after agreements whenever people leave a meeting feeling quite unsatisfied with the outcomes. This means you have to create a bigger pie than the one that is being discussed. You are a dry cleaner; to build your business you need to create personal touch beyond cleaning peoples clothe. Several dry cleaners have clothes mending departments that help replaces lost buttons, small tears and other challenges to the cloth. Many do home pick ups and deliveries. I even know a mobile car wash firm that visits your house to clean your car. They are adding values to their products and the customers are exposed to better services.

Either you are looking for a job, selling a product or trying to win a contract; people tends to concentrate only on the benefit at hand and never looked beyond these to create newer benefits that could enhance current situations. In every situation where we need to influence the other party the ball is always in our court to make the meeting so valuable that the other party will always remember our offer because it goes beyond his plan before sitting with us. Let them leave the meeting with newer and more productive suggestions and your name will always be on the lips of the other party.

In job interviews, the stated qualifications are there, but the interviewer is looking for something unique, that extra thing that will stand the final candidate out amongst the crowd of applicants. Being prepared through understanding of the other party needs is important. Study widely and reflect on the undeclared needs of the other party before any meeting.

Understand the real needs of the client and fit your pitch towards what will satisfy that need

When Bill Gates was trying to establish Internet Explorer as the dominant browser against strong competition from Netscape, the industry-standard browser – based on what was, at the time, superior software. AOL was looking for a technically outstanding browser and Netscape was the obvious partner, with Microsoft’s prospects for winning over AOL in favour of Explorer looking bleak.

However, when studying the needs and desires of AOL, it became apparent to Gates that AOL’s ultimate goal was to increase market share, and he was able to use this knowledge to reframe the negotiation. Instead of ‘who has the best browser?’ the negotiation became about ‘who can best help AOL achieve its ultimate goal of increasing market share and profits?’

Microsoft then made two big offers. It offered to provide an improved Explorer to AOL free of charge and, also, to bundle AOL’s client software with the next version of its Windows operating system; the AOL logo would sit next to the MSN logo for Microsoft’s own online service. No longer would AOL have to spend $40 to $80 per customer by sending millions of promotional disks through the post. Gates effectively changed the set-up for the negotiation.

Bill Gates Goals:

  • Establish Internet Explorer as the most dominant browser in the world.
  • Upstage Netscape the already established browser in the industry

AOL Goals:

  • Technical out standing browser for its expansion project

Bill Gates offer avoided discussing the issues about the best browser in the market, but offered AOL something they really wanted; a bigger market share at no cost to AOL to win the deal.

INTRODUCE NEWER VALUES

Always look for other areas to add value to your interviewer or the other party, don’t get stuck on the main issues at play. Look at other values that could improve the relationship. In 2016 when my company was negotiating for the contract with Civil Defence to train over one million private security guards in Nigeria. There were over 10 international training companies competing for this consultancy, Mine was the least qualified based on the fact that our company was barely six months old and we were bidding against well grounded and tested firms from England and US.

Our presentation was basic and based on the paper experiences of the directors and no   reference, the only thing that got us the job was the fact that we introduce a free 3 days training for the Civil Defence itself as part of our presentation. We refused to discuss our competence, as we know that we have no clear advantage here, but come and see what we can do and pronto the job was for us.

While negotiating with the government of an African country to run for them a customised version of the Oxford Programme on Negotiation. Oxford University Executive Programme (Said Business School) offered the cabinet secretary a free place on the programme so that he could determine its suitability. The value to him of this offer was five days of executive education worth £7,500, free of charge except for his airfare and accommodation. The cost to the School of having one extra person in the class was zero, as it makes no material difference to Oxford whether they are teaching 35 or 36 people. Rarely will the difference be this pronounced, but value can be created whenever two parties perceive different values and costs for the same item.

Deal With Emotions.

Most decision making are illogical and emotionally based. Jim Camp attest to the fact that decision making is mostly based on emotions of the parties involved. Being logical might not be the solution to getting the best deals. We have to always acknowledge and never fail to address the “big elephant” in the room. A June 2014 work on Emotion and Decision Making” submitted to the Journals on Annual Review of Psychology by Jennifer S. Lerner, Harvard University; Ye Li,  University of California, Riverside; Piercarlo Valdesolo, Claremont McKenna College; and Karim Kassam, Carnegie Mellon University, concluded that “emotion and decision making go hand in hand”.    Understanding and managing parties emotions will surely enhance easy discussions and understanding, thereby making agreements easier.

 

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