People are frequently flustered at the prospect of negotiating a crucial business contract. Their concern stems from underestimating their leverage. Christine McKay, founder and CEO of Venn Negotiation, has negotiated deals with about half of the Fortune 500 companies on behalf of small to medium sized companies. The problem most people have with negotiations, she says, is they see it as a winner-take-all confrontation.
She sees negotiations entirely differently. McKay views negotiations as a conversation between two parties about their relationship. Even if your company is a tiny startup sitting across the table from a corporate giant, you have something they want. Successful negotiations are the result of the parties finding out what each offers the other, but in much finer detail than most people typically see.
McKay, a Harvard MBA with a long corporate career prior to founding Venn Negotiations in knows a lot about negotiating against tough odds. We asked McKay some questions about herself and her approach to negotiations, and learned a great deal from her answers.
Long before Harvard and your professional success you faced many challenges. What were your circumstances in early adulthood, when you were a struggling young mother?
A age 19, I was homeless, living in the back of my car. A month after my first child was born, I married a man, whom I thought was a nice guy, but turned out not to be. He needed to rescue someone, and I thought I needed to be rescued. By age 22, I had three children in diapers. I wasn’t “allowed” to work or go to school; he kept me tightly under his thumb. But, also, he did not make enough money to support us. We were surviving on welfare, getting our groceries from the local food bank. There were times we had no heat in the house (in Montana) and days when I had to raid cans and bottles from other people’s garbage cans to earn enough money to put gas in the car.
One day, my oldest, who was about three (3), was hungry for lunch. I had a single can of tomato soup in the cupboard, which she hated. She threw a tantrum. In desperation, I opened the cupboard, picked her up, and showed her that there was nothing else for me to feed her. She cried more. I was distraught and felt awful. That was the moment I decided I needed to do something to change our situation. Against my husband’s wishes, I registered for community college, and started the process of renegotiating my life.
I quickly built an amazing support system, earned a 4.0 GPA and received a full scholarship to Rensselaer Polytechnic Institute (“RPI”). One day, after a flustered time getting to school, I arrived on campus and realized my life would be easier as a single mom and a full-time student than to live with my husband’s constant confrontation, threats, and lack of support. So, I left him, and took my kids to RPI where I graduated cum laude with a BS in Management just two years later. I met my second husband and remarried shortly after graduating. We are still together 28 years later.
Did you have your bachelor degree when you made your goal an MBA from Harvard?
I received my Bachelor of Science degree from Rensselaer Polytechnic Institute, as stated above, but I set my sights on Harvard early in life. Shortly after moving from my car into an apartment around age 20, I met a woman named Roxanne Uken. She challenged me to take a piece of paper and draw a picture of God and write down four (4) things I wanted to pray for. The only one of the four I remember was that I wanted to go to Harvard. This is where I focused, as I slowly put my life together.
Why not just an MBA?
After graduating from RPI, I landed a job with Bell Atlantic (now Verizon) in the marketing department, which I did not enjoy. So, I found my way into Bell Atlantic International and started working in international mergers and acquisitions. My first project was in Indonesia and across Southeast Asia; then I started working on large privatization deals in Eastern and Western Europe. I advanced quickly at Verizon and believed I needed an MBA to continue that movement. Throughout my travels, regardless of where I was, Harvard University seemed to be revered. No other school had its reputation, credibility, or prestige. My kids were in second, third, and fourth grades, and executive MBAs were not seen as valuable at the time. I knew that if I was going to relocate my kids again, I would do it only for the most recognized school in the world: Harvard.
Harvard Business School (“HBS”) was the only school I applied to.
Your new book Why Not Ask? A conversation about getting more, “aims to strip away the theory, the bravado, and the gamesmanship” of negotiation. Isn’t that what negotiation is all about?
Effective negotiation is, really, not about any of those things. People were negotiating long before the theory around negotiation was developed.
Negotiation is simply a conversation, a conversation about a relationship. When theory and bravado and gamesmanship, or one upmanship, are brought into a conversation about a relationship, the stage is set for both parties to lose, rather than win.
Oodles of evidence shows that the one upmanship-approach to negotiation creates less optimal outcomes than if we simply enter a negotiation from a conversation perspective. In a conversation, we ask questions, we are curious, we listen with intent to the answers to our questions, we seek to become more effective in the questions that we ask, and we tend to seek common ground through that process of discovery. And, that, in my experience of nearly 30 years negotiating with more than half of the Fortune 500, is more valuable in the making of a successful negotiation.
The problem with bravado and gamesmanship is that people think that is what negotiation is, so they automatically go into their negotiations distrusting their counterparts. They believe that they are out to get their counterpart, or they are convinced that their counterpart is out to get them. In either case, that lack of trust leads people not to be transparent about what it is they actually want in that relationship. And when you’re not transparent about what you really want, it’s difficult to get it because your counterpart cannot read your mind.
For example, think of negotiation as an egg: you have one raw egg, and three people want it. When I asked this question in large group settings, the vast majority say that they’ll boil it and divide it in thirds, or scramble it, or make an omelet and divide it in thirds. That is how most people think about negotiation: “I have this thing in front of me. It’s what I know, so I build off of what I know. I know I can boil water, and I know I can scramble an egg.” But if you ask the three parties why they want the egg, you may find one only wants the yolk, another only wants the white, and another doesn’t want the insides at all, they want the shell for artwork. If you take a small pin and poke a hole in the top and the bottom of the egg and you blow gently, you can blow out the white from the yolk from the shell and keep the shell almost entirely intact. You can then separate the yolk from the white. It’s possible a little yolk may mix in with the white. It may get a little messy. But that’s fine. Negotiation, like relationships, are a little messy sometimes. But now we have three distinctive parts of the egg, each having more value as a separate part than it did when we boiled the egg and divided it into thirds. By being transparent about what we want, each person gets what they want. But without the conversation, the transparency of what we really want, all three would have had parts of the egg they didn’t need nor want.
Effective negotiation is about knowing which parts of the egg you value, and which parts your counterpart values. It’s that simple. If you go for the kill – or the game of winning – you might walk away with the whole egg, when you don’t even need it nor want it; or none of the egg; or, you walk away with a third of the egg, and which doesn’t serve your needs or anyone else’s . You’re all left unsatisfied. The conversation is about the relationship you want with your counterparts, as well as with the “object” at the heart of the negotiation.
You’ve described a negotiation as “nothing more than a conversation about a relationship.” Please elaborate on that.
Whether you’re buying a car, launching a business, selling or merging your business, getting married, or dissolving a relationship, the negotiation is about the relationship you want from this point forward, and it’s about the relationship with the object or objects on the table. I believe that negotiation is a hopeful act. The decisions we make today are informed by our past, with a mind and an eye toward a better future going forward. This is true even when we’re dissolving a relationship. We have our eye toward the future, and this current relationship isn’t working. We will both be fundamentally better off if we cease to have this relationship. That is the point at which we part ways. In either case, whether we are entering into a new relationship or dissolving a relationship, it’s a hopeful, act based on our current desire for a future state.
For example, I have been married to my amazing husband for 28 years. The deal we entered into when we got married 28 years ago is not entirely the same as we live our lives today, because we are fundamentally different human beings than when we started. We have grown, matured, changed, experienced life, and we have interpreted these experiences through our own unique perspectives. That makes the deal that we enter into different than when we started. To stay together for all these years and remain happily married, we have had to have continual conversations about our relationship—and that is what negotiation is: we enter into a deal, and if we are to be continuously effectively, then we are constantly in conversation about which parts of this relationship are working, what’s not working, and how we can fix it.
If we are buying a car, the dealer might be thinking they want to keep us a repeat customer so that we buy all of our cars from them and we tell everyone else to buy cars from them, too. We, as the buyer, have this is our favor. Other factors to consider are their other relationships: their relationships to their competitors, to their sister dealerships, to their suppliers, to their managers, and the owners. Many relationships go into every negotiation. Understanding those relationships is what drives price, value. Understanding what’s important to them, what’s important to you, what they’re willing to give up to get it, and what you’re willing to give up to get what you want. What is the best outcome you can hope for? What is the worst? What is the most likely? It’s all negotiation and it’s all based on the relationship.
How does it apply when negotiating from a weaker position, such as a small company dependent on contracts with a much larger company?
Frankly, it applies the exact same way. Most of my clients are David and Goliath negotiations: small to midsize companies negotiating with much larger organizations. My clients perceive that they have very little power—but there is always power in negotiation. Just because there is disparity in power does not mean that one party holds all the power and the other is without power. What is most important here is to have clarity on what you want. You must know what is most important to you, and what you are willing to give to get it.
When you have that clarity, and you have an understanding of what your counterpart wants and needs, then you can begin thinking about the deal from your counterpart’s perspective. Then you begin to understand if what you want is doable for your counterpart. When you get curious, and you stay curious, asking effective questions, then you can create this totally different kind of relationship, because you are always looking for different and more exciting ways to build that relationship so both of you are gaining more value.
There is a research study that suggests that when we are negotiating for something, the value of it is actually 42% greater than what we see it as, because we are not curious enough in how we ask questions. We could approach the negotiation to actually explore that additional 42 percent. Instead, we focus on the 100% we see, and think, “Well, if you take 10%, that means that I only have 90% left. So, if you win, I lose.” The reality is, there is so much more value that hasn’t even been explored. But because we get lazy. It’s hard work to figure out the research to have a clearer understanding of what we want. It’s much harder even still to research what our counterpart wants, so we think, “Why do we even care about our counterpart and what they need?”
We’re too internally focused! And that’s the problem. That is the reason why negotiation is often such an unfruitful act. Just because you actually get both sides to sign the deal does not mean a deal is getting done, and it does not mean that it was a good deal.
In my experience, the concept of the exploration of negotiation as a conversation about a relationship is even more critical in a David-and-Goliath situation, because it’s that relationship aspect that’s going to drive the success of the overall negotiation. There is a reason why the larger company wants to do business with the smaller company. Find out the real reasons and you’ll have a better perspective of the perimeters of the negotiation.
7. What do you mean by “turning the non-negotiable into negotiable”? Can you give an example?
We’ve all heard, “… and this isn’t negotiable…,” when one counterpart slides the contract across the table and tries to bully the other counterpart into thinking they have no leverage. This happens often among David-and-Goliath negotiations. One party appears to have the stronger position. “Appear” being the key word. Everything is negotiable and contracts like this often are as well. Throughout my hundreds, if not thousands of David and Goliath negotiations, I came across a handful of things that might well be non-negotiable. But that is not the same as nothing being negotiable.
We cannot negotiate mountains, or oceans, or rivers, or waterfalls, but we can navigate them – figuratively and literally. If we approach the issue from a curious perspective, and we keep asking questions as we seek to understand, build, and discover the possibilities, then we can come up with all sorts of opportunities to make any deal more desirable. For me personally, in a negotiation, hearing the word “No,” is an invitation to ask another question. “No” means “no” to what? Which part of the question that I asked are you saying no to? Is it all of it or just one part? Are you interpreting something inaccurately? There are dozens of questions to ask to discover if each item really is non-negotiable and why.
Once in a while, as a negotiator, you might encounter something that it’s so far against a company’s policy that they can’t do it, or they’re unable to do it as you conceive it. Yet, I have a saying. “If you can conceive it, you can pay for it.” As long as it’s within the confines of the law, then it’s doable.
An example would be big aerospace defense companies sliding a contract over and saying, “We won’t negotiate this, and this.” I take the contract and systematically go through the agreement, line by line, to see what is negotiable and what really is not. You know when their terms say, “Expedited delivery! And that’s non-negotiable.” Well, “What does expedited delivery mean? How fast? How big of an order? Under what conditions?” Then knowing that you, the supplier, can you charge more for this expedited service.
There are all sorts of things that you can ask to refine that question to get more detail. Turning the non-negotiable into the negotiable is simply turning that hard No, or what appears to be a hard No, into something different, because you ask effective questions to get more detail about the outcome that your counterpart desires most.
Tell us about the guests and topics on your new podcast, In the Venn Zone.
I’m so excited about the podcast. To date, we have recorded over 40 episodes. We have a broad range of guests on the show, like Scott O’Neill, the CEO of Harris Blitzer Sports Entertainment, owners of the New Jersey Devils, the Philadelphia 76ers, and other major sports brands. I talked with Scott about the how they look at their supplier base for their new block program. The episode offers fascinating insight.
We hosted a Hannah Zaplatel, currently the most listened to episode on the show. Hannah runs a horse ranch outside of Atlanta. It’s a working ranch and she offers riding lessons to kids and veterans suffering from PTSD. I talked with Hannah about the importance of knowing your value as you’re setting prices, having rock solid clarity on what your value is, so that you know what you bring to the table when you are negotiating.
We also hosted Blair Dunkley, Certified Master Trainer and behavioral researcher. We discussed effective vs ineffective negotiating and whether something is simply stuck in our own head. As he says, “One of the hardest parts of any negotiation is the conversation that happens between our ears.” He helps us think through how to evaluate things versus judging things in a way to get us to see more possibilities, and become curious.
We’ve also talked with Matthew Marini, president of Agile Resources, an IT sourcing business. He does a lot of business with larger organizations. We talked candidly about the David-and-Goliath situations.
We also hosted Idan Shpizear, the CEO of 911 Restoration. They have more than 100 franchisees throughout the United States and Canada. We talked about the critical factors of running a franchise and how he decides who to bring on as a new franchisee and how he knows who to decline. We talked about his journey from being an immigrant from Israel, to becoming one of Entrepreneur Magazine’s Best Franchise Businesses.
We have also hosted Bethany Sloggett who owns, Younique, a kitchen and bath company located outside of Toronto. We talked about the importance of what knowing when to stay at the table, how to fight your fight, how to stand in your power to fight for what you are trying to achieve, because sometimes leaving the room creates a vacuum that others will then fill. She has a really fascinating story about how to manage that situation.
We hosted Karla Silva, a real estate investment expert. She works with large projects in Southern California and has a unique way of thinking about the investor base. We talked about the invisible negotiator at the table, which for her is always the communities in which she works: what does the community want, and how that invisible negotiator is constantly at the table with her, informing her and what she does in her negotiation strategy.
And we hosted Jillian Michaels, the fitness guru. We had such an enlightening conversation, she invited me to be a guest on her podcast.
We have a lot of guests coming up, including the CEO of one of the largest banks in the world who is going to be on the show talking about how small businesses can become more effective in negotiating with larger financial institutions to become their suppliers.
Guests just keep coming. I am super excited.
Many people are struggling in this pandemic economy. What’s your advice for them based on what you have overcome and what you have achieved?
My biggest advice is be clear on what it is you want. Clarity on what you want gives you more power than you can imagine. When people are not clear on their goals and objectives, negotiation starts to fall apart. They start to agree to deals or take on business that they shouldn’t, because it’s not aligned with who they are and what they’re trying to do.
Having a very clear perspective on what it is that you want, and what’s most important to you out of that vision, creates a foundation for you to communicate effectively to others. You are not only finding your ideal customers and partners and suppliers and investors, you are actually attracting them; they are coming to you because that energy is out there. Then you can walk away from business that doesn’t meet your objective.