How CEOs negotiate – with a hug

Today’s Wall Street Journal had a thought-provoking article about “How Steve Ballmer Became a Rookie Basketball Mogul” in which we learn that even CEOs get nervous when they are preparing to meet NBA superstar players for dinner. (And they binge-watch to relieve stress just like the rest of us.)

More interesting is how he negotiated the purchase of the Los Angeles Clippers from Shelly Sterling after her odious estranged husband was forced to sell the team. Rather than have his people call her people, he arranged for mutual friend and former Walt Disney CEO Michael Eisner to call Ms. Sterling to vouch for him. During their meeting a couple of days later, Ballmer dropped his prepared pitch and instead focused on reassuring Sterling that he wouldn’t move the team to Seattle and that he was committed to seeing the Clippers win a championship. Ballmer knew that this negotiation was between two people, not two faceless corporations. He was competing against Oprah Winfrey, David Geffen and Larry Ellison, so clearly Shelly Sterling’s decision would come down to more than just money.

And the best part of the story is how he handled Ms. Sterling’s counterproposal to his $1.75 billion offer for the team. She raised the price to $2 billion, and asked for courtside seats, parking spaces and the title of “owner emeritus.” Mr. Ballmer agreed and threw in the title of “Clippers #1 Fan.” This man is brilliant. He understood what the other party wanted and valued, and he knew how important it was to respect, address and meet the other party’s underlying concerns. And when they signed the deal, Steve Ballmer and Shelly Sterling hugged.

You may not actually hug the person you’re negotiating with, but can you find where you can add a “Clippers #1 Fan” title?

How to be a better listener

listenToday’s Wall Street Journal has a great piece on how to be a better listener. While it’s useful in any conversational setting, it is particularly valuable when you are approaching a negotiation with a client.

Before a negotiation, for example, you should:

  • do a brain dump of pending work so you can pick it up later (so your mind is clear)
  • make a list of questions and topics you want to cover (This enables you to fully listen to the other person, rather than constantly thinking of what you want to say next.)
  • set an intention to talk 25% and listen 75% (yes, really!)
  • drop your assumptions of what the other person will say and just listen


Talking about prices with clients

Red Cash TagI am a big proponent of pricing by the project rather than by the hour; to me, it’s a no-brainer that both my client and I are better off if we focus on outcome rather than the amount of activity required. But what do you do if a prospective client insists on talking about your hourly rate at the beginning of a conversation?

Here’s where I pause and take a deeeeep breath. I never want to talk about the price of anything until I have already demonstrated in my conversation that my goal is to enable my client to accomplish his/her goal. If I lead with a money discussion, I will always be thought of in terms of expense rather than value.If, instead, I guide the conversation back to what my client’s ultimate goals are, then I am seen as an ally who is focused on outcome.

When I get a persistent prospect who wants to talk about prices right away, my response directs the conversation back to the client: “My rule is to never talk about a budget until I understand what your end goal is. Can you tell me a little more about this project?” And if I’m really pushed, I will fall back on “My projects range in price from $500 to $50,000; where do most of your similar projects fall in that spectrum?”

Note that it’s very difficult to have this kind of conversation in email and I recommend against it, even if that means waking up at 3am to call a client half way around the world so that you can talk live. You cannot have a conversation that demonstrates your commitment to your client’s outcome if (1) you can’t make yourself available at your client’s convenience or (2) your client is not willing to engage you in a conversation.

When your clients see you as their partner rather than just an invoice waiting to happen, you are able to explore how you can solve your clients’ problems even more fully, creatively and effectively.