It happens time and time again: An innovator comes up with an incredible new idea, takes it to a set of investors, sees their product hit the market, and walks away with…nothing.
Or consider the other end of the spectrum. An inventor sits down with venture capitalists who ask questions about whether the idea will really work. The inventor gets angry, walks out, and again, gets nothing.
Both of these scenarios, and many like them, boil down to a failure not in the original idea but in the process of negotiation.
Negotiation is a skill that’s “still outside the primary line of vision for most engineers,” says MIT professor Lawrence Susskind. That gap, he says, often leaves entrepreneurial engineers unable to protect or properly value their ideas, incapable of creating trusting business relationships, and unprepared to handle the uncertainly of the bargaining process. “They don’t realize that they could lose ownership of their ideas, or that their ideas will only come to fruition if they know how to build and maintain trusting relationships,” Susskind says.
Susskind-the author of 20 books on the subject of negotiations, including Good for You, Great for Me-is trying to turn that around. This month he launches MIT’s first online professional education course on the subject: “Entrepreneurial Negotiations: The MIT Way.” The inaugural session for the six-week course opens on 26 April. It will be repeated multiple times throughout the year.
Although the course is appropriate for anyone, Susskind says it should prove particularly valuable for start-ups or anyone who has a good idea that they plan on pitching to investors. He adds that most of the people he talks to in these types of situations don’t even realize that they’re going into negotiations. “They just think that if they have a good pitch that they money’s going to come in,” he says. Invariably, these negotiations fail because of things like ego, overconfidence, failure to build trust, and lack of preparation.
Know Your Audience’s Needs (and Your Own)
One of the most important things to realize going into a negotiation, Susskind says, is that the people on each side of the table have different goals. For example, inventors want to get their ideas out into the world, but investors want to minimize their risk and financial uncertainty.
Not understanding the other person’s needs-or worse, your own-can result in a failure to negotiate or even a bad deal for you. A funder trying to minimize risk can ask for too much ownership of an idea, leaving you out in the cold, or just walk way if you can’t convince them.
“You need to put your ideas forward in a way that meets the other person’s interest,” Susskind says. He recommends not going into a pitch with just your technical solution in mind. Instead, also think about what they’re looking for, or what criticisms or questions they might ask. That requires research ahead of time to find out whatever you can about the other person or their business.
You also need to prioritize your own needs. Susskind recommends people understand their intellectual property rights as well as the difference between a great deal, an okay one, and a bad one. That should help you know when it’s time to walk away from a potential deal.
Ultimately, Susskind says, negotiations hinge on the planning that you do. “No matter how smart you are, you can’t wing it,” he says. “You have to be prepared.”
Idea vs. Ego
Another way to prepare is to learn to manage your ego. Susskind says too many entrepreneurial engineers come to the negotiation table knowing their ideas backwards and forwards but lacking the ability to field questions or criticism. “It’s got a fancy name called reactive devaluation,” he says. “All that means is that when someone says something that’s critical, you decide they’re against you and don’t take what they’re saying seriously.”
Susskind says some of this is the difference between confidence and overconfidence. He suggests that confidence is great, but people should also try to be self-aware. That way, if something unexpected happens you won’t be surprised, and you’ll be able to adjust in the moment.
This self-awareness actually has a major role in any negotiation. “It’s an awareness of the fact that a negotiation is an effort to convince someone to do what I want, when I want,” Susskind says.
Building Trust
Another important goal of negotiation is developing a long-term relationship between parties. A major element of that is trust. No one, Susskind says, will do business with you if they don’t trust you. That starts with always being honest.
“Part of gaining and building trust is that you don’t make statements that aren’t true,” Susskind says. “Once the other side realizes you’ve done that, you’re done.”
Beyond truth, Susskind says trust is about saying what you mean and meaning what you say. “If you’ve got bad news, deliver it,” he says. “That’s not undermining trust and an awful lot of people don’t get that.”
Ultimately, trust matters not just at the negotiation table but in the long term. “Your ideas will only come to fruition if you know how to build and maintain relationships with a whole string of actors, both in the supply chain and also on the financial side,” Susskind says.
The MIT Way
The “MIT Way” in the course title refers to the format of the class. “The MIT Way is making sure you can learn from your own experience,” Susskind says. Students will pair off against each other-Susskind encourages people to sign up with buddies-to practice their negotiation skills throughout the course. Each week will focus on a different kind of negotiation.
In addition, a series of videos prepared for the course show some of Susskind’s advanced students at MIT going through the same processes. The negotiations may be under controlled situations, but they are also unscripted and honest. “We show someone get furious with someone else,” he says. “Somebody just says something and it triggers a reaction.” The videos continue with Susskind sitting down with the participants to explore what happened.
Susskind says this is an important part of the process, both in the videos and for the online students. “You can prepare and practice and then reflect on what you did.” Even if things don’t go the way you expect during the practice negotiation, that’s better than if it happened in the real world, and it gives you an opportunity to improve.
That’s Susskind’s final message. Negotiation may seem like a foreign concept to some people, but it’s an ability that any engineer can acquire. “It’s just another kind of problem-solving skill,” he says. And in a world of give and take, that’s an essential talent to have.
Platt provides great advice in this article. A must read!