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The Tech Sector’s Achilles Heel

The author of Getting More, on why the U.S. technology companies are vulnerable due to insufficient focus on people.

Not long ago I asked managers of a major technology firm why I got five million Internet search hits in a tenth of a second after typing the words “Europe hates … ” followed by the company’s name.

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“Don’t you think this costs you money?” I said. “The fact that people won’t buy your superior products because they hate you? The fact that regulators waste your time and money because they mistrust you?” I suggested that the company needed to vastly improve its way of dealing with people or the costs would continue to mount, into the millions and billions of dollars.

Technology firms have traditionally focused on engineering and finance. Hardware and software engineers were king (and queen). Finance people were valued enablers. Litigators protected the whole thing. Increasingly, though, these skills are not enough. In a world with increasing perceived risk, more competition and more globalization, the ability to connect with others is a key success factor, internally and externally.

As a consultant and teacher for over 20 years, I’ve had the opportunity to work with many of the major technology companies, and to manage my own small firms. What I’ve seen is a shocking lack of skill at dealing effectively with people, especially those who are different. This has resulted in lost clients, lost revenues and the failure of mergers, one of the most famous of which was AOL-Time Warner.

The failures stem from the wrong-headed notion, fostered through socialization, that one can actually get a right answer to major issues with enough effort, that the facts are paramount and that logic is key in persuasion. In fact, studies show that the facts account for less than 10 % of the reason why people reach agreements. Who the people are–whether they like or trust each other–accounts for more than 50 percent. And the process, how people organize themselves to talk to each other, accounts for almost 40 percent.

In fact, when you make a human connection with someone, they are almost six times more likely to do what you want–90 % versus 16 percent. That means they will buy inferior products and services if they like you, and reject superior products if they don’t. More importantly, in a close call, buyers will go with the people who tapped into their psyche more.

They say that perceptions and emotions are much more important than power and logic in persuasion. In fact, finding and valuing the pictures in the head of the other party is more persuasive than any collection of facts or resources one can muster. It gives you a place to start the persuasion, and it tells you what kinds of things to focus on first. It is a process than can be used with every kind of situation, not just in business: shopping, travel, diplomacy and jobs, and getting 4-year olds to willingly brush their teeth and go to bed.

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And, overall, it produces four times as much value as doing it the conventional way. That’s because power, including walking out and threats, tends to produce resentment and retaliation. Focusing on their needs, meanwhile, produces more collaboration to solve problems together. The process was used to quickly resolve the 2008 Writers Guild strike in Hollywood after a year of conflict.

Here are the insights on approaching people from my book:

  1. People Are More Important Than Facts. Look at the negotiation as person-to-person, not company-to-company. Your attitude going in should be one of working with a collaborator, not competing for resources. You don’t have to be a patsy to do this, but you do have to view them as individuals. Focus on the people first, and later the issues at hand.
  2. Their Perceptions Are Key. To persuade them effectively, you first need a starting point. That is what they perceive. So the right answer to their statement, “I hate you,” is, “Tell me more.” They may hate you for the wrong reasons. Also good: “Tell me what you like most about our competitors and least about us.” The idea is to find out their hot buttons. Don’t assume that you both see the world the same way. In fact, if you are in different cultures (including departments in the same company), you probably don’t see things the same way.
  3. Emotions Destroy Negotiations. The more important the negotiation is, the more emotional the parties are. That means world peace, a billion dollar deal, or my kid wants an ice cream cone. The world is not rational, so solutions like “win-win” don’t fit the bill when the other party is emotional or upset about something, including what might have happened before. When people are emotional, they are not listening very well, so they are not persuadable. They need an emotional payment, which is an apology, a concession, empathy, or simply just hearing them out. Hints to reduce your own emotions: lower your expectations, take a break, or get someone else to negotiate who is less close to the matter.
  4. Trade Anything And Especially Non-Monetary Items (Intangibles). The more items you put into the deal, from whatever source, the more value you can add. Every person has a series of hot buttons, both inside and outside of the deal. The more of these hot buttons you find, the more things you have to trade. This is the key to collaboration and expanding the pie.
  5. Be Incremental. In a world fraught with increasing perceived risk, smaller steps are more persuasive. And they allow more time to build trust. The technology industry was formed on the principle of being incremental: a model was built, and it was then replicated after the builders got it right. Negotiation is no different. If the parties are having problems getting a deal, they should scale back and try something smaller. Do a trial, set parameters, test out not just the product, but the market and the relationship. Make adjustments. Then go to the next increment.
  6. Value Differences and Disagreements. As companies grow–from 3 to 6 people or 1,000 to 3,000–there is too often pressure to conform to a success formula. Studies show, however, that the more divergent the perceptions in a team or company, the better the quality of brainstorming and results. So in interactions both inside and between firms, disagreement should be met with a positive response that tries to pull value from the differing perceptions. The essence of innovation comes from the clash between the old and new, and it is the basis for the development of new technology. It should be applied as well to human interaction.
  7. Never Walk Out. This is one of the most common tactics worldwide and is little but trouble. Walking out sends a signal that you don’t even value them enough to give them the time of day. With the high multiples that successful technology deals generate, the expected value of walking out is almost always far less than staying in the room and slogging through the issues. Some leaders of successful technology companies are known for such tactics. One can say that their companies succeed despite their tactics, not because of them.
  8. Use Their Standards, Especially With Hard Bargainers. Even with a focus on people, there will be hard bargainers. The key is to find out the mission statement or business promise of the other party and invoke it if there is deviation from that. Internal departments that are empire building should be reminded of the company’s focus on teamwork. Difficult negotiators on the other side should be asked at the start if everyone should make a profit (or be civil); then, those promises should be invoked in the face of extreme demands.
  9. Be Transparent. In all interactions, your credibility is your most important asset. If you mislead them and they find out, they will never trust you again. Either they will turn to others, or demand costly, time-consuming commitments. That doesn’t mean you have to tell them whatever they ask. “I don’t feel comfortable answering that now, we don’t know each other well enough yet,” is okay. It’s also important to say what is going on, as in, “We’re not getting along; why do you think that’s so?” Great negotiators have a firm grasp of the obvious, and they say it. Other people do not expect you to necessarily agree with them. They do expect you to be straight with them.
  10. Every Situation Is Different. There is no one-size-fits-all. There is no specific company or professional type of negotiating. There are cultural averages, but you are not negotiating with an “average”; you are negotiating with a person. So, the personality and emotional state of the person sitting across from you is more important than any other factor. Don’t let outside factors distract you from strong focus on who they are and what it will take to persuade them.

Not every negotiation is solvable. The watchword is getting more, not getting everything. But using the tools outlined above will indeed provide greater success as soon as you start to use them.

Stuart Diamond is a Pulitzer Prize winner and author of Getting More: How to Negotiate to Achieve Your Goals in the Real World, which reached #5 on The New York Times advice best seller list, #1 on the business best seller list of the Wall Street Journal and USA Today. Contact Stuart at diamonds@wharton.upenn.edu or GettingMore.com.

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