When I was a little boy in India, a goat was one of my more precious possessions. My mother would send me to the market with a small coin and ask me to bring back as many leaves as possible to feed the goat. I remember I always managed to eke out a pretty good deal.

I joke that this is how I learned the art of negotiating.

But – seriously – every entrepreneur must learn how to negotiate skillfully. Negotiation is not about winning the deal at any cost; it is about both sides successfully getting to yes.

What, then, are the basic rules of negotiation?

First and foremost, remember that negotiation is the art of exploring the possible. Create choices while negotiating, and don’t assume rigid positions. For example, when I’m negotiating with a client, if we cannot agree on the base license fee, I may choose to modify the maintenance fee, improve the payment terms, or perhaps create a recurring revenue model that is more attractive to them.

Second, regardless of how hard you negotiate, don’t take the last penny off the table – because nobody likes to be pushed to the brink.

Third, make sure to protect your relationships. If you are operating in the same market, there will likely be many more interactions with your customer or vendor. Make sure there is no lingering bitter aftertaste.

A good round of negotiations can be quite similar to a good game of bridge. Now, most bridge players I know focus exclusively on their challenge at hand. As Declarer, they pick the line of play that maximizes their probability of making the contract, but they seldom consider the challenges their opponents face.

I approach the game a bit differently. I don’t assume that my opponents will defend the hand perfectly, particularly if they have to make a difficult choice early in the play of the hand. Instead of picking the “purest” line of play, I prefer to involve them. Given a chance, the opponents often choose a line of defense that makes it much easier for me to fulfill the contract.

The lesson to take away from this is that when you negotiate always ask yourself, what’s in it for the other side? What are their challenges? What do they want the most? When bidding on a RAN Services project on a wireless spectrum bidding auction, what is most important to the client is the quality and the timeliness of the delivery, which means you can charge a bit of a premium for such a service. When bidding on a re-farming job for a wireless carrier, price is often much more important, and it is best to offer a remote delivery option where you can get to a cheaper price point. Sometimes, for a Telecom Cost Assurance Customer, we waive the implementation fee in return for a 5-year deal and an annual escalation clause.

As a buyer, sometime, I am able to get a really attractive price by offering to pay up-front for a 3-year commitment. This works well if the supplier is tight on cash-flow or values a multi-year commitment. Once, we agreed to be an early adopter of a new technology. We got a great price, were first to market with a break-through technology, and our technology partner ended with an evangelist who was willing to promote their product based on first-hand experience. That became a win-win situation for everybody!

The game of bridge has taught me a lot. It helped me understand the American culture, made me realize that I need to better understand the drivers of the other side, and perhaps occasionally, learn to behave in an unpredictable manner.

 

With special thanks to Srinivas Bhogle for his support and contribution to this project.
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