by Paul V. Weinstein
Imagine you’ve been offered a way to purchase $1 lottery tickets for a penny each. How many would you buy? If you were operating based on rational self-interest one could argue that you would buy as many tickets as possible. How could you refuse an opportunity with so much upside and so little downside? Similarly, the role of the dealmaker is to find a way to drive the “cost” of the deal down to as close to zero as possible — so the decision maker can’t possibly refuse to buy that ticket.
It’s harder than it sounds. In order to make it happen, you need to understand the dynamics of the cost of the deal. In my experience, this is where people go wrong — they misinterpret the nature of the cost to the person sitting across the table. Getting to yes requires knowledge about the decision maker, but it’s not necessarily the knowledge you’d think.
In the first of now four pieces I’ve done for HBR, I outlined the stakeholder types you will encounter in the effort to close a big deal. Next, I went through a more detailed examination of the motivations of two of those stakeholders, thechampion and the blocker. Now, I’d like to close the loop and talk about thedecision maker, the final gatekeeper in the triumvirate. Based on many years as a business founder, executive, and advisor, I would argue that getting the deal closed requires an appreciation for one key principle about decision makers that many of us get wrong.
It’s as simple as this: Getting the green light on a deal is more about mitigating professional risk for the decision maker than it is about accentuating the business benefits of what you are offering. In other words, addressing the downside is more important than touting the upside.
Our understanding of how organizations think and act doesn’t always make this distinction between the interests of the enterprise and its managers. For example, The Wall Street Journal might typically report something like the following: “Exxon Corporation has announced that it is moving forward with development of oil fields in Kazakhstan in order to meet the world’s demand for oil.” Fair enough: Exxon does want to find and sell more oil. But the statement also seems to imply that Exxon is a “person” that makes such decisions purely rationally in its interests. News flash: There is no Exxon-level decision maker, there are only the people running Exxon and making the decisions based on their professional interests. Corporations don’t make decisions, people make decisions.
When you or I decide (or even a billionaire decides) to make a personal investment, the thought process is very focused on the desired return. Will I get good value for my money? In a corporate decision, however, the decision maker is playing with the house’s money, not his or her own, so the financial and/or opportunity cost is almost irrelevant. The risk that looms largest is not about losing money; it’s about losing your job or shedding prestige.
So how do you reduce professional risk for the decision maker and get your deal done? By understanding three different levels of deciders and what motivates each of them at a personal level.
CEO, President, COO (Top Dogs): These highest order decision makers are the big picture thinkers. They care about pleasing boards and shareholders. Public perception and legacy are what is important to them. In order to reduce a Top Dog’s risk profile, think about the individuals to whom they turn for advice and validation. These include:
Advisors—Top Dogs rarely know much about the details of the deal, so they rely on their lieutenants for counsel. Getting these individuals, who attend to the Top Dog, on your side is a crucial step one. Cooperate with them, show them respect, and give them the ammunition they need to look good to the big boss.
Shareholders—External credibility and public recognition is what helps Top Dogs shine around investors and customers. If a close competitor is doing a similar deal, for example, or others in the industry are aligned with the strategy or direction, it will help Top Dogs bring shareholders on board.
Board members—In the end, this is who Top Dogs really aim to please. If the deal goes south, the questions the board will always ask is: Did you do your due diligence? Two things: First, create a story or narrative that will help Top Dog’s position the deal and feel good about public perception. Second, create a strong case that will enable them and their lieutenants to say yes to the deal. (Remember it’s not about eliminating the risk of failure, it’s about providing a strong narrative for the Top Dog so that if something goes wrong, their decision can be defended.)
CSO, CFO, CIO, IT, Ops (Practice Leaders): Typically, these decision makers run cost centers as opposed to generating revenue. Practice Leaders care about avoiding mistakes, looking smart within their domain, and maintaining internal credibility. These are the people who have been hired to make sure things don’t go wrong. In general, they tend to be the most conservative and apt to say no to deals. How do you reduce downside risk for a group so attuned to potential loss? Provide them with voluminous documentation to make sure that they have a protective paper trail behind them. Your job is to think of everything that could go wrong and create solutions to address each of those scenarios. As with Top Dogs, Practice Leaders have lieutenants with deep domain expertise. These domain experts are where you should be cultivating your champions — get them on your side and not only will they advocate for you, but they will also help insulate the Practice Leader should the deal go wrong.
Sales, Marketing, GMs, Product (Business Leaders): These decision makers are directly involved in generating revenue and they are judged based on the numbers. One the one hand, meeting budget projections is make-or-break for Business Leaders because it impacts their compensation and upward mobility. On the other hand, they have the latitude to fly below the radar and experiment. Timing is what dealmakers need to think about when they sit across the table from Business Leaders. Most Business Leaders have P&L goals that were established in the prior year — and anything that puts those projections at risk is a tough sell. If things are going well for the business leader, then he/she may be inclined to take a risk. Sometimes Business Leaders need to do a deal in order to make their year look better, other times they are out scouting for a new venture to help them start their new fiscal year off right. As long as the decision is contained within their fiefdom, business leaders are the easiest group to convince. They are always looking for ways to break out from the pack and become the next Top Dog.
Whether you are dealing with a Top Dog, Practice Leader, or Business Leader, getting a decision maker to say yes is all about building a platform of credibility that minimizes their professional risk and allows them to feel good about the deal. It is not necessarily that the platform improves the deal’s potential for success (although that is certainly part of it), but it gives them something to point to in case things go south. Remember, for a person in a position of power, it is more about protecting them from what can go wrong than it is about what can go right.
