When people aren’t sure what’s wrong, they often refer to it as a “communications problem.” But this is seldom the real problem.
The next time someone lays a “communication” issue on you, try this:
“That sounds interesting. Help me out. Describe specifically what you see happening and why it’s a problem.”
This should get the discussion going and help drill down to the real issue. This is helpful both internally and when working externally with partners.
source: All Things Workplace
I’ve worked with business development managers that don’t believe in creating comprehensive term sheets when putting together a deal. What they end up with is a short summary and a disjointed string of e-mails with all of the details. They say it’s faster. I say it’s lazy, it ends up taking longer, and it causes problems further down the line.
From the Harvard Law School Program on Negotiation titled “Conflict Management From the Start“:
After reaching an agreement, professionals often rely on their lawyers to draw up the official contract. Unfortunately, miscommunication between negotiators and their lawyers often leads to costly mistakes. Contract terms may not accurately represent the negotiated agreement, key deal terms could be missing, or clauses might contradict one another.
The biggest miscommunications happen when the lawyers don’t have a term sheet to work from. If you just give them a summary, some e-mails, and perhaps the other party’s standard contract, they have no idea what to do with it. What follows are a long series of questions and back-and-forth on the contract terms. All of which could have been avoided if they’d had something more structured to work with from the beginning.
I’ve done it both ways. A term sheet is always the better, faster way to go. The legal process takes far less time, you end up with a contract that covers what you expected, and you don’t get blind-sided by anything 6 months into the deal.
You can equate not using a term sheet to trying to launch a new product without having detailed written requirements. That too doesn’t work so well. Take the time to write everything out and gain agreement on it. You will be glad you did.
Launched in 2004, Amazon Prime is a loyalty program for Amazon.com shoppers that gives them free 2-day delivery on most items and $3.99 next-day delivery. Amazon Prime costs $79 per year.
According to Businessweek, four million online shoppers have signed up for Amazon Prime. These members have increased their purchases 150% since joining the program helping Amazon to grab market share from both online and offline merchants. For consumers, they get their products faster and cheaper. The combination of an extremely wide product selection, 2-day delivery, no shipping charges, and no sales tax (in many instances) makes it hard for other e-commerce sites to compete with Amazon on price and overall customer experience. It’s also a very hard program for all but the largest, most sophisticated e-commerce players to replicate.
But this difficulty for smaller players creates a huge opportunity for a logistics company to step in to help these companies compete.
If I were a logistics company, I’d create a white-label version of Amazon Prime and shop it to second-tier e-commerce players. There is no other way for these players to compete with Amazon, so they’d almost be forced to jump aboard. Whichever logistics company does this will be in position to take market share from their competitors. Plus it reintroduces price competition into the e-commerce space which will benefit consumers. In this case everyone wins – the e-commerce sites, the logistics provider, and consumers – except for Amazon which all of sudden finds their hard-to-replicate loyalty program suddenly copied and put into large scale deployment.
Imagine a $100 price tag for the shipping program for the consumer. It’s split 50/50 between the logistics company and the e-commerce site that sells it. For the e-commerce site, it also comes with deep-discounted shipping fees in exchange for exclusivity for anything shipped under the program.
There could be three approaches:
1) White-Label – The program is only available through the particular e-commerce site that sold it. Much cleaner implementation, but less value if you don’t have enough products to justify someone essentially pre-purchasing shipping in bulk.
2) Consortium (similar to the idea in the article) – The program can be sold by multiple e-commerce sites and works with all participating sites. The revenue would probably be split differently, maybe 80/20 with the logistics company keeping the bigger chunk. In exchange, the e-commerce sites would get even steeper shipping discounts to offset the loss of upfront money for joining the program. The consumer would benefit from having more low-price, quick delivery options.
3) Hybrid – The program is available as either a white-label solution or a part of a consortium with the choice being up to the e-commerce site.
I was chatting with a co-worker about a Logic class she was taking. This brought back memories from my college days – I minored in Philosophy. It also led to the inevitable discussion about how one’s education applies to their profession. Many people assume that I acquired my Marketing expertise while earning my MBA. Likewise, people often assume that my undergrad and graduate studies in the Social Sciences and Philosophy do not apply to my profession, but they’re wrong. Here are 3 reasons why:
1) Empathy – Sociology
Empathy is the most important skill for Marketers.
Empathy is simply putting yourself in someone else’s shoes – like a potential customer or partner. For example:
This is what Marketing, and in particular Product Management and Business Development, is all about – determining what someone values and figuring out how to provide that value or communicate that value to them. If you don’t get Empathy, you won’t be able to do this and you won’t be a successful Marketer.
Let me say it again: Empathy is the most important skill for Marketers. Where do you learn Empathy? Not in a Marketing class. Don’t believe me? Look up Marketing on Wikipedia. Then search that page for “empathy.” It’s not there. The closest concept you’ll find to Empathy is Marketing Research. Marketing Research is not Empathy. Marketing Research does not necessarily put you in someone else’s shoes. If you’re not already in their shoes, you won’t know what questions to ask.
So where can you learn about Empathy? In a Sociology class. Sociology is great for Marketers because it teaches you how to understand and apply Empathy. You also learn how to keep your own background or biases from getting in the way of seeing other perspectives. The trick is making the leap from using Empathy to understand societal issues to using it for business.
2) Opportunity Cost – Economics (yes, Economics is a Social Science)
If you hear things like “What do we have to lose by giving this a try?” to justify a new product or partnership, then you know that this person hasn’t considered the Opportunity Cost.
Opportunity Cost is about allocating resources between competing projects. It is the cost related to the next best alternative. If you can only do one thing, which one are you going to do and what are you forgoing to do it? For example, you have to decide between the following:
If you chose the partnership (perhaps because you wanted to get to market faster and thought it would be easier to implement), the Opportunity Cost is $2 million. It’s the difference between the new product which is valued at $10 million and the partnership which is valued at $8 million. As long as you understand the implications of this decision and have sound reasons for why you’re doing it (speed to market, easier to implement), then there’s nothing wrong it.
Once Marketers learn how to apply the concept of Opportunity Cost, they’ll make more informed arguments both for and against projects, develop stronger business cases, and make better decisions when choosing between competing projects.
3) Critical Thinking – Philosophy
Speaking of persuasive arguments, it is hard to be persuasive if you can’t think through both sides of an issue. Your brain gets a major work-out doing just that in every Philosophy course (particularly in the Logic class that started this whole discussion).
Philosophy is the study of the big ideas like why do we exist, how do you truly know something, and what is right or wrong. It is known for its critical, reasoned, and systematic examination of these ideas. These are extremely difficult concepts to grasp and every issue has multiple, nuanced sides. It’s enough to start yelling matches and to make your head hurt. Wars are fought over these very ideas. Just as in business, there isn’t always one right answer.
But there is a way to get to the best available answer. Philosophy teaches you Critical Thinking skills:
Armed with these skills, Marketers make better decisions regarding what types of customers to target, what types of products to launch, or what types or partnerships to pursue.
Final Thoughts
Understanding and applying Empathy, Opportunity Cost, and Critical Thinking are essential skills for Marketers. I learned these skills studying Sociology, Economics, and Philosophy. I use these skills more frequently as a Marketer than those I learned in business school. So the next time you see a BA instead of a BBA or an MA instead of an MBA on someone’s resume, don’t assume that the person with the business degree will add more value. Otherwise, you might be overlooking someone that could add a new perspective and significant value to your Marketing organization.
Anything to get the discussion focused on the big picture, rather than the details can be helpful when it comes to getting a deal done. This is never more true than during initial discussions. Fred Wilson suggests the following:
Make your offer in person and don’t do it via a term sheet. Tell the entrepreneur you want to be their business partner. Tell them how much you will invest and how much ownership you want. Leave it at that. Tell them that if they are interested, you will send them a term sheet. Leading with a term sheet focuses the discussion on the wrong things. The process should be all about personal fit and very high level deal terms. Once the decision is made to try to work together, you can get into the specifics of the deal.
While this quote is in reference to winning deals for Venture Capital firms, it’s equally applicable to winning partnerships. A Business Development Manager should adapt Fred’s advice as follows:
1) Schedule an in-person meeting or phone call
2) State your desire to work with the other company
3) Layout high-level terms, for example:
4) Follow-up with a term sheet if there’s mutual interest
I just finished reading Talk Less, Say More by Connie Dieken. It’s full of great tips on how to relate to your audience in order to connect with them and ultimately to compel them to act. This book is highly applicable for product management and business development. You’ll learn how to better pitch your concepts, your products, and your company to internal audiences, potential customers, and potential partners.
The book is very engaging and easy to read. But don’t let the simplicity fool you. It’s packed full of great ideas to make you a better communicator that gets results.
The premise of the book is that to be a successful communicator, you need to learn three habits:
You have to connect with your audience, so you can convey your message and convince them to act.
Recurring themes throughout the book are that “less is more,” you have to be “likeable,” and three is “the world’s most powerful number.” These simple ideas will take you a long way when applied properly. This book will show you how to do that and more.
Synopsis and Comments
Habit 1: Connecting – give your audience what they want and value up front so they’ll tune in. There are 3 strategies, each with multiple tactics provided to help you connect.
A large part of this section deals with how to reach and work with difficult people. It’s full of tips that will prove very useful in product management as you try to sell your ideas internally and to get your projects implemented.
There are also great tips on how to read your audience and adjust your presentation accordingly which is very useful in business development.
My favorite tip – you have to know your recipient’s preferred method of communication (PMOC). Use their PMOC, instead of yours, and you’ll increase your chances of getting a response. If you don’t know their PMOC, just ask. Then put it in their contact file and always use this method as your default means of communicating with them. This is especially useful in business development.
Habit 2: Conveying – manage information by using portion control to get your point across with clarity. The chapter starts off with 10 signs you might be a weak conveyor and tips on how to address the problem. Next up are the 3 strategies, each with multiple tactics provided to help you convey.
A great visual example of strategy 1 is the contrast used in before and after pictures by weight-loss companies. Here’s an example from the book:
Strategy 2 is another of my favorite tips – the concept of triplets. The brain is wired to think in 3s. Examples include:
Things just flow better in 3s. Try it.
One of the tactics for using triplets is to “preload three choices.” Start with the most important item first, the second most important item last, and the third most important item in the middle.
Alliteration is also recommended when telling stories – think Dr. Seuss.
Telling stories is the hardest thing for me to do. But the author gives some nice tips. If you can tell a story about how your product can solve a problem, show some visual examples, rattle off the benefits in triplets, and use some alliteration, then you should have a very powerful and memorable value proposition.
Habit 3: Convincing – use to create commitment and influence decisions, actions, and results. The chapter starts off with 10 signs you might be a weak convincer and tips on how to address the problem. It then follows with the 3 strategies, along with their tactics for helping you to convince your audience:
Product Managers and Business Development Managers need to be able to convince their audience in order to sell their products and get the deal done. This chapter helps you to put it all together to do just that.
Strategy 1 – You have to sound decisive. “If you sound like a wimp, you’ll be treated like one.” The author provides 9 signs that you might have a problem.
Here are some things not to say:
For those of you that sit on your hands and bite your lips in meetings, “it’s crucial to contribute to meetings if you want to convince others to see your viewpoints and act on them.”
Bottom Line: If you ramble, waffle, or never speak up, no one is going to take you seriously.
Strategy 2 is a biggie – transferring ownership.
Transferring ownership means shifting your ideas and decisions to others so they will embrace them and act on them.
It’s the difference between others feeling actively involved in their destiny and, therefore, committed to it versus feeling forced to comply. Buy-in leads people to change behaviors, decisions, and actions…
People should feel as if they’re volunteering, not surrendering.
The lesson here is that you shouldn’t shove your ideas down everyone’s throats. Ask for opinions. Find a way to use some of those opinions. Share credit.
Strategy 3 is the hardest one for me to get a handle on. It focuses on your voice, your face, and your body language. Most people don’t pay enough attention to how these things influence people’s opinion of you.
This section is full of great tips. Here are my favorites:
Remember: connect, convey, convice.
I’ve only scratched the surface of all the great stuff that’s in this book. I highly recommend it to anyone in product management or business development looking for an edge to better sell your ideas, your products, or your proposals.
I just finished reading So What?: How to Communicate What Really Matters to Your Audience by Mark Magnacca. This book really opened my eyes. I found it highly applicable for both product management and business development.
The premise of the book is that your message should focus on what your product can do for your customer. There’s nothing new or revolutionary about this idea. In fact, most of it boils down to understanding the difference between features and benefits (it’s benefits that matter), figuring out which benefit matters the most to your customer, and then making sure that they hear it. It’s a good reminder that many marketers need to hear from time to time. But where this book excels is in helping you apply this idea in ways that you might not have thought of. This book is a nice evolution in how you can market yourself, your product, or business.
Key Take-Aways:
1) Your potential customer or partner is thinking “so what?” All your thoughts and efforts as a marketer should be focused on finding the “So What Benefit” for your customer or partner. They don’t care about you, your product, or your company until they know how it benefits them.
Having taken hundreds of phone calls from other companies wanting to partner with my company, I can tell you that this is the only thing I cared about when taking these calls. If the caller couldn’t quickly articulate what was in it for me, then it was over.
2) Think through the “So What Matrix” when giving a presentation:
I’ve always been been stunned by how many product and partnership proposals I’ve seen that didn’t get these points across.
3) The goal is to get your customer to say:
4) If you can’t think of a “So What Benefit,” just ask your customer or partner. The author suggests saying the following: “One of the the things that I have found that is really helpful in prioritizing what’s most important is to ask you to complete the following sentence regarding this product/service.”
“All I really care about is ______________ .”
This is the recommendation that I really like. It’s so simple, why not just ask what someone wants? The problem is that people don’t always want to tell you what they want or can’t articulate it. The author gives good tips on how to get past this.
5) The author suggests creating a “personal biography” – a little about you, your background, what makes you different, and how you can benefit your customer. This helps your customer or partner better relate to you. The book goes into detail on how to do this and provides good examples.
This really changed my thinking in regards to the “about me” section on my blog, as well as my resume, my cover letter, and my personal business cards.
6) Next the author suggests creating a “So What Positioning Statement.” This helps you to answer the question “What do you do?” in such a way that people will easily understand how you can benefit them or other people they know. Most people waste the opportunity every time they are asked this question. The book goes into detail on this.
Answering this question properly isn’t easy to do. The author completely changed my thinking on how to do it.
7) And, finally, the author suggests that once you’ve identified your “So What Benefit,” you have to make sure that your product or service is always visible and consistent, and that your “So What Benefit” is constantly repeated. He calls this the “So What Reminder” – visibility, consistency, and repetition. Don’t assume people will remember your message. Make sure they remember it.
Niccolò Machiavelli (1469 – 1527) was an Italian philosopher and writer. He is best known for his work The Prince. Most people think of this work as a political science or philosophical treatise. It’s also used in management training.
But I’ve always thought that Machiavelli had a lot to say that’s relevant to start-ups, product management, new product development, and partnership/business development. Here are some of my favorite quotes:
Dana Oshiro has another great post on negotiating on ReadWrite Start. This time the topic is deal timing.
As Dana puts it – “deals can go up in smoke if given too much time.” Do not drag out a deal.
I’ve seen many deals blow up from both sides because one side or the other took too much time. Sometimes one party changes direction and decides that they no longer want the deal. Other times, someone decides that the deal was too generous/not generous enough and wants to renegotiate terms. Why it happens doesn’t really matter. The point is that if you screw around and don’t get the deal done in a timely matter, you may end up with no deal at all. You have to stay focused and keep things moving. This isn’t always easy to do.
This wouldn’t have been a good post without some concrete suggestions on how to avoid blowing a deal. The suggestions provided by Dana come from Mark Suster. My favorites are:
Don’t Grind Every Detail: Know the important points that you want to negotiate and stick to them. [Suster] writes that you shouldn’t get caught up in inconsequential details as they’ll potentially add weeks to the legal process and you’ll risk creating ill will with your newfound partners.
Get People In Person: Put yourself, your negotiating partner, both sides of lawyers and the other party in a room to hash out the details. Suster stresses that it’s important to create goals for what you want to accomplish and take breaks to gain consent from any higher authorities.
Getting together in person is a particularly good technique to grind through a deal that has bogged down. I was once working on a deal with a major search provider that got bogged down. We had come to terms really quickly but spent almost 9 months trying to get through a contract. Everyone was frustrated and on the verge of giving up. I hopped on a plane with my boss, our president, and 2 attorneys to visit our would-be partner. Two days later we had a deal.
These are great tips that work. Good luck in your future negotiations.
15-year Internet Marketing Veteran & MBA with Extensive Experience Taking Products and Partnerships from Idea to Marketplace
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