What an FBI Negotiator Can Teach You About Software Negotiations!

December 15, 2010

I read an interesting negotiations book and thought I would share a few takeaways for any company seeking growth capital or a venture capital investment.

Background: The book by Gary Noesner came out in September 2010 and is called Stalling for Time: My Life as an FBI Hostage Negotiator. It has all of the things you would expect to find in a book written by the retired head of the FBI’s Crisis Negotiations Unit (here is a podcast on the book from NPR): stories about estranged husbands locking up their wives, the Branch Davidian shootout in Waco, the DC sniper incident, etc. But what is really interesting and also useful are the pearls of wisdom from the author regarding how to deal with irrational people or those individuals facing a lot of stress. So here are a few things you can use during your next software or SAAS negotiations.

1) Behavioral Change Stairway. I never heard of this concept before, but it can be useful.

This is how it works:

  • you show interest
  • you respond emphatically (which leads to rapport), and
  • only then do you attempt to influence.

This makes a lot of sense. During any negotiations with customers, you need to show interest and listen to them (actively listen), and then show them you understand their concerns and issues (you don’t have to agree to them). Only then can you attempt to influence them.

2) Key to Successful Negotiations.  Mr. Noesner suggested it is important to figure out a person’s motivation, goals and emotional needs, and then to make use of this strategically. This is relevant too, for having a deep understanding of your customer’s (and the person with whom you are working) motivation, goals and emotional needs can really help to close the deal.

For example, maybe the company was burned by a previous vendor for not appropriately supporting the product. Even if you are the best negotiator, you may not be able to get past this issue because the customer feels burned and abused by the vendor, and they don’t want it to happen again. You may have to carry this burden (in some way at least) and address it in your contract.3) Paradox of Power. Another interesting point is that the harder you push the more resistance you will probably get. I agree with this, and you should remember this in your negotiations. Negotiations are very much about education, and not simply about imposing your will on the other party.
4) People Want to Work with People They Like. You probably already knew this, but the person negotiating the purchase of your technology has a lot more discretion than you probably realize, and if they like you and want to work with you, your deal is much more likely to close.

5) Active Listening. If you don’t know what this is, basically it is repeating back to the speaker what they said or acknowledging their statements/concerns (in an empathetic way of course). Try this…it takes practice, but it really works. Here is Gary Noesner’s view on it.

While software negotiations are not as emotionally charged as crisis negotiations, it would be good to try out some of these skills if you are dealing with a difficult or irrational person on the other side of the table/phone (even if they are unarmed!). This takes some work so practice it prior to your engagements. I plan to use these skills with my kids when they take my TV remote control hostage, as that becomes a crisis around my house really fast!

I hope you found this information useful. This will give you an idea of the types of topics I discuss with the OpenView portfolio of expansion stage companies as part of my strategic consulting services.

Legal Disclaimer: This is for informational and educational purposes only, and does not constitute legal advice. Contact your attorney for legal advice, which should be provided after review of the facts and applicable law.

President and Shareholder

<strong>Jeremy Aber</strong> consults OpenView portfolio companies on legal and contract matters. Jeremy runs his own IT focused law firm, the <a href="http://www.aberlawfirm.com/">Aber Law Firm</a>, and has over 18 years experience in technology and corporate law.