Wednesday, November 4, 2015

Negotiation Skills
for Software Developers

Strong negotiation skills are critical to the success of all businesses - including software development companies. Even if you have no plan today to purchase or sell a company or to create a strategic partnership with another firm, you have to be able to deal with suppliers, vendors, colleagues, and other stakeholders. Negotiation skills are important.

Not all of these negotiating partners share your goals. By learning basic negotiation skills, you'll be more effective in the day-to-day activities such as inviting industry experts to post on your blog, exchanging website links with other microISVs, and strengthening your relationships with industry vendors.

In his excellent book "Negotiate This!" Herb Cohen delivers a ten-step formula for negotiating successfully. Translated into the software development industry, here are Cohen's recommendations:

1. Set objectives

Divide your objectives into must-have items, nice-to-have items, and things that you're prepared to trade. In addition to setting these goals, you need a strategy. Your strategy is your plan for achieving the goals that you've defined.

2. Choose concessions

Create a list of your "how" (versus your "what") concessions. Cohen suggests that we not back down from our goals. But we need to be prepared to give in on issues of how we proceed. Stick to your principles, but be willing to negotiate the tactics that you'll use to get what you want.

3. Start with commonality

Start negotiating by talking about the things that you agree about. Secure agreement on one or two of the easy issues to start the negotiations on the right foot.

Save the toughest issue for last. Cohen urges us to remember that "no" does not mean "never". Try to break down the hottest issues into their component parts, and see if you can agree on individual components.

4. Opponents' demands and needs

Don't assume that your opponent's initial demand is what she really wants. And don't immediately make a counteroffer. For example, if you believe that a reasonable price is "5", and your opponent starts with "10", don't counter with "1" and expect to haggle your way to the right answer.

Instead, ask why "10" is the right number. Try to understand the other side's reasoning. As Joe Girard said in his book How to Close Every Sale, "A good business deal is only a good deal when both parties feel it is."

5. Don't expect rationality

Cohen says that we shouldn't expect our opponent to be rational in the pursuit of his goal. There's a fascinating story in Phil Dusenberry's book "Then We Set His Hair on Fire." It's about the negotiation that took place between Pepsi and Michael Jackson regarding Jackson's participation in a Pepsi ad for TV.

After the contract was signed, Pepsi learned that Jackson declined to have his face appear in the ad. The Pepsi folks had assumed that the five million dollar payment would compensate Jackson for appearing prominently in the TV spot. They compromised. They included flashes of Jackson's face in the ad - enough to make him recognizable, but not enough to get Jackson upset with the video. The lesson, of course, is that we shouldn't be surprised if the person we're negotiating with has different ideas of what's reasonable.

The other big surprise for Pepsi was the music for the ad. As expected, Jackson didn't like the music that Pepsi created. He said, "Why don't you use 'Billie Jean'?" The Pepsi people had never dreamed that Jackson would agree to use his two-time Grammy Award-winning song in the ad. But to Jackson, using the song was no big deal.

Again, don't assume that you know what the other guy will consider to be reasonable.

6. Know your opponent

Cohen urges us to learn as much as we can about the other people in the negotiation. What's important to their team may not be important to you. The more you learn, the more you can offer that is valuable to them, and not so valuable to you. So if you're negotiating a link swap or a trade of guest blog postings, do your research. Find out what kind of swaps they've done in the past, and what kind of postings they normally use on their blogs.

7. Win some, lose some

Don't expect to win every argument, or to be successful in every negotiation. To quote Sergio Zyman, the man responsible for the introduction of New Coke, "You don't have to win every round to win the fight."

8. Make the other guy work

Cohen wants us to make our opponents work for every concession that we make. Don't let them think that they can win every argument without a lot of effort. They won't value their win unless they have to work for it. If the negotiators don't trust each other, Cohen tells us, then it's even more important to make them work hard for their gains.

9. Strange things happen

Unexpected things happen during negotiations. Be prepared. And keep your cool. If you get out of line, apologize.

10. Close the deal

Make your concessions progressively smaller, thereby signaling that you're running out of room to negotiate. Make your opponent feel that they had a major part in shaping the final agreement.

The Bottom Line -

Many business people feel that they only need to strengthen their negotiation skills if they're planning on selling their business, buying another firm, or entering into a strategic partnership. Truth is, basic negotiation skills are critical to the day-to-day activities that are needed for your software development company to succeed.

Knowing basic negotiating concepts will help you with link swaps. You'll be more effective when you try to coax colleagues to comment on your blog postings, cross-sell each others' software, and work together to promote your software. Strengthen your negotiating skills, and you'll increase your software sales.

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