Articles on IT Acquisition and Doing Better Deals
Tips & Tactics
- Negotiations: Principled Concessions
- Financial Analysis — a Refresher
- Presenting vs. Positioning
- Even Pros Make Mistakes
- The Power of No
- The Dip
- Caveat Venditor
- Champagne and Scarcity
- Urgency—Guard it at All Costs
- They Know That You Know
- Why a Checklist
- Beyone the Handshake
- The Challenge with Buying Technology
- The “Try It, You’ll Like It” Ploy
- The “We Don’t Need To Write That Down, You Can Trust Me” Ploy
- The “Low Ball” and “When I Hit Your Hot Button, I Gotcha” Ploys
- The “Price Protection Contract” Ploy
- The “Form Contract” Ploy
- The “Solutions” Ploy
- The “We Can’t Do It For You Because We Would Be Setting A Precedent” Ploy
- The “Unfortunately, I’ll Have To Get Any Changes Approved By Corporate” Ploy
- The “Price Protection Contract” Ploy
- The “Tie-In” Ploy
- The “Fait Accompli” Ploy
- The “Price Increase is Coming” Ploy
- Table of contents
- “We Don’t Need To Write It Down. You Can Trust Me” And Other Grim Fairytales
- The Negotiations Agenda Part 1
- One Bite at a Time
- The Negotiations Agenda Part 2
- Don’t Let Vendors Hold You Hostage
- The Right Attitude
- Finding Responsibility
- A Fair Audit Clause
- Looking Beyond “Needs”
- Before Saying “I Do,” Think About Divorce
- A ‘Top-Down’ Look In Challenging Times
- Don’t Allow Vendor Disappearing Acts
- Vendor Short-listing: The Long and Short
- If a Vendor Offers the ‘Lunch’ Ploy, Don’t Bite
- Make Sure Consultants Will Keep Your Secrets
- Two Essential Parts for Service Contracts
- Keep Consultants Far From the Enemy
- Be Wary of Annual Revenue Commitment
- Leasing’s Different When It’s Laptops
- Two Truths Behind Securing Better Deals
- Not in the Contract, Not Part of the Deal
- Feeling Safe With IT Security
- Avoid Surprises in Subleasing Deals
- Insist on Language to Cover Billing
- Manage the Contract
- Clear Ordering Procedures
- Winning with Leases
- A Ploy that Didn’t Fly
The Power of No by Steve Gutzman
It is important to be comfortable saying “no” in a negotiation. Not all terms need to be agreed with, not all best and final prices are best and final, and not all deals need to be done. Unfortunately, many inexperienced negotiators think they must hang on at all costs until a deal is done. For them, saying no to a deal is like saying no to a free lottery ticket … it just might be the winner, and they can’t afford to pass up the jackpot.
From the buying side, preparing for a negotiation requires an understanding of the best “no deal.” The value put on the best no-deal option sets a limit that any agreement must not exceed in order for the buyer to agree. It becomes the point that the buyer will not go above. From the selling side, the best no deal becomes the level that the seller will not go below.
William Ury, in his best-selling book Getting to Yes, calls this the BATNA, or best alternative to a negotiated agreement. According to Ury, “The BATNA is the only standard which can protect you from both accepting terms that are too unfavorable and from rejecting terms it would be in your interest to accept.” In its simplest form, this concept means that if the proposed agreement is better than the BATNA, accept it. If the agreement is not better than the BATNA, continue negotiating. If the agreement cannot be improved, consider withdrawing from the negotiations and pursuing an alternative proposal or walking away from the negotiations altogether.
Each side typically knows its own limits, which must continually be assessed and reassessed as new information unfolds. The problem is that many negotiators have only a hazy sense of their own no-deal options or how to value them. At a very basic level, buyers are taught that unless they hear no at least once, they are leaving money on the table. It’s part of the process and can be an important tactic. But let’s explore the use of no from a strategic standpoint as well.
Airlines such as Southwest and Easy Jet had to say no to lots of things: reserved seating, larger aircraft, and free hot meals and baggage transfer. They said no to all this in an effort to say yes to what they thought was the most important issue facing travelers – the price of a ticket. Warren Buffett, the world-famous investor, says that his key to success has been saying no to 1,000 deals so that he could say yes to the right one.
A well-thought-out set of contracting philosophies is another example of approaching no from the standpoint of strategy. Some examples that are taught in ICN classes include:
- Customer pays providers for services and products delivered and received.
- Each party is responsible for its own performance and nonperformance.
- Customer does not pay for its competitors’ R&D.
Any deviations from these core philosophies should result in a no.
Getting good at knowing when and how to say no matters because both the perception and reality of no-deal options play a key role in most negotiations. When others sense your willingness to walk away, your hand is strengthened.