Just as you don’t want to take to the field with a football team of 11 quarterbacks (or 11 goalkeepers, if you’re playing the more globally known form of football), you would not want a negotiation team that only represents one discipline or perspective. Although Peyton Manning or Cristiano Ronaldo each has enviable skills, other specialists will be needed to secure victory for the team.
We once worked on an important licensing negotiation with a client team comprised of architects and engineers in product development. Their goal was to fill a technical gap in their product. They were willing to pay an amount for the license that was equal to the cost of developing the solution themselves. But with no one on the team from sales, marketing or finance, there was no way for them to gauge what filling this functional gap in the product was worth to their business.
Across the table from them was a licensor’s team that engaged not only technical folks, but sales, legal and business development resources. They understood the value of the technology in the marketplace. This could have created two different results:
- There could have been no deal, because the licensee undervalued the contribution of the technology to the product (in which case the product would have failed in the market).
- They could have made a deal where the licensee overpaid for the technology, resulting in a product that would barely break even or lose money.
The first thing we did when we got involved was to suggest bringing in a commercial specialist from marketing that would assist the technical leaders in making a deal that worked for both sides.
In this case, the all-technical team was inclined to focus strictly on product issues while neglecting critical financial and business perspectives that the licensor’s more balanced team had discussed before coming into the negotiation. The all-technical team may have felt good about their unified, though limited, perspective. But as the saying goes, if everyone on your team agrees, someone is probably wrong.
Preparing for negotiation success means assessing the outcomes from various perspectives within your organization (or engaging other experts to examine the deal). There should be challenges and rigorous debate, especially on your important deals. Internal debate is the trial where assumptions are put to the test. Potential problems can be anticipated. This pays off when your team comes to the table having already asked each other the hardest questions.
Procurement can point out pitfalls with TCO (total cost of ownership). A legal member can challenge scenarios that may look good on their face but create compliance exposure over time. Financial and sales teammates will bring a keen eye to profitability and overall financial value. Technical team members can leverage their deep product knowledge, which enables you to give authoritative answers when functionality or implementation impact the terms of the deal. Everyone has a role to play, and your negotiation success will be impacted by how well you recruit diverse voices to solve a particular deal’s value puzzle.
Naturally, you don’t want to over-recruit or spend so much time in deliberation that you succumb to “analysis paralysis.” But show us a team without cross-functional thinking, and we’ll show you a team about to make a lousy deal.