Monthly Archives: December 2007

Software Licensing Handbook 2d Ed coming in 2008

I can’t believe it’s been over a year from the release of the first edition of the Software Licensing Handbook.  Many of you have purchased copies and for that, I am eternally grateful!  I simply can’t believe the success of the book – and I appreciate everyone’s encouragement and advice.

But that doesn’t mean that I’m resting.  In fact, I’ve been busily working over the last year on the Second Edition – adding almost 100 pages, and counting!  New sections on negotiation, open source and risk are the biggest areas to see changes.

Now it’s your turn.  If you have read the first edition and have comments, suggestions, ideas, stories, examples, typos from the first edition or anything else (perhaps a topic that I don’t fully explore) – now is the time to act!  Just send an e-mail to feedback at!

It’s that simple.  I have to admit that between work and school, I don’t know exactly when the second edition will go to press, but I WILL offer an incentive for good feedback, since the next version is going to cost a little more than the first.  I’m not exactly sure how I’m going to do this, but I want to give 10 free copies to the 10 best feedback items I get.  Yes, yes, I know… “best” isn’t too quantifiable.  But look at it like this:  if you send me an e-mail with a dozen typos and the only other messages I get have single typos in them, you’d be at the top.  But if I get a great story to include, the dozen typos might only be second on the list.  Make sense?

Oh, and there’s going to be a super-secret (ok, not that super secret, but cool nevertheless) new section within the risk area, called the Contract Risk Review Model.  Have you ever been asked by your business folks to quantify the risk for a particular deal?  Did you struggle to determine the real risk factors and how to compare them against the other portions of the contract?  Did you have to send off the financials to a financial analyst and wait for a nebulous response at best?  Do you want to have a better way of doing the review (or better yet, a simple way for your business owner to do the review)?  Well – the Contract Risk Review Model is coming.  Already working as a standalone application, I’m trying to find a way to convert it to a web-based tool to make it even easier to use.  [Side note:  If you know of a good web-app developer who knows PHP/MySQL, point them in my direction, please.]  But the second edition will contain at least a sneak preview of the Contract Risk Review Model just for owners of the book.

On an unrelated note, I hope that all of you have a very happy holiday season and a healthy 2008!  Thank you for your time in 2007!  I look forward to bringing you more software licensing and contract negotiation tips next year!

Left on the table

Victoria Pynchon is tracing the negotiation path for her purchase of a new television via the Five Fundamental Skills for Effective Negotiation. While reading through her most recent post using Strategic Thinking, she detailed the pricing strategy she prepared to use. It got me thinking a lot about what is left on the table during a negotiation. But most importantly, it reminded me that the mere fact that you leave money/items on the table doesn’t make for a bad deal.

Let’s first define what I mean by “leaving something on the table.” Assume that you’re Victoria in her endeavor. You want three items (including tax) and your bottom line price is $3,000. But note that she says that she really ended up $150 short of that price ($3,150). Did you get a bad deal?

No. Leaving money on the table, as a sole determination of the quality of your negotiation ability (or the deal itself) is NOT an indicator of poor quality. I’m sure Victoria, as she states, will elaborate on what factors played into the decision to pay more for the same items. But there’s a real simple test to figure out whether you got a good deal.

Are you happy with the deal?

Yep, that’s it. An emotional determination. I’m sure that sounds a bit funny coming from me, especially if you’ve been following my writing for the last year. But that’s really what negotiation is all about – making a deal that you’re comfortable with. And sometimes, that means paying a bit more – trading off in price, for example – for something you know you might have been able to obtain at less cost.

So if you left money on the table, don’t despair – and don’t “post-mortem” the deal (perform an autopsy to figure out how you could’ve squeezed just a bit more out of your opponent). Rather, just be happy with the deal you accepted. [Note: If you’re not happy with the deal at the time of the negotiation, WALK AWAY.]

EXCEPTION TO THE RULE 1: That said – if you really are feeling like you got the short end of the stick, don’t fret too hard. You may have been outplayed. It happens to all of us, even professionals. But I still don’t recommend the post-mortem. Instead, learn to develop a sense of how you’re doing while the negotiation is happening. That way, if you think something is turning south, you can correct your course while it still matters. But asking yourself “what ifs” for days/weeks/months after the negotiation isn’t going to get you anywhere.

EXCEPTION TO THE RULE 2: OK, so if you REALLY were screwed – the other side lied to you during the negotiation, for example, then you have a choice. You can attempt to renegotiate, bringing everyone back to the table. This takes a lot of power, and the moxie to confront someone and accuse them of deception. But it’s not an exception to the rule if you just feel like you were screwed. Again, it is solely within your power as to whether you accepted the deal to begin with. So if it doesn’t work for you, go back to my note above and walk away.

Five Fundamental Skills for Effective Negotiation: Communication

Well, over the last four weeks, we’ve been building up to this moment, the fifth fundamental skill. And, like the others, it’s a no-brainer: Communication. You MUST be able to effectively communicate with both your team and your opponent. Sounds easy, of course – they all do. What’s so special about communication?

Remember that communication consists of three separate actions. First is message formulation. You have to be able to create what you want to communicate in your head. This means you need all of the prior four fundamental skills working together to help you develop your idea of what you want to say/do. Having completed Information Gathering and Strategic Thinking, you should have at least a basic concept of what you want out of the negotiation. Preferably, you should not only have a basic idea, but also know what you want four, five and six mental steps ahead.

Second is message transmission. You have to move beyond what is only in your head and convert that into words or actions. The “message” can be spoken words, an e-mail/letter (or other hard copy), or can be an action (getting a signature, obtaining information, etc). Pay attention to things that can get in the way of successful transmission. Language barriers are common.  Time and Power are also components of transmission – for example, when you delay providing information to your opponent, you’re using time pressure to increase your power.

In the technical age, even a missed e-mail – or misunderstanding of humor/sarcasm/etc via e-mail, are painful reminders that different forms of communication may be better suited for the task at hand. Have you ever had someone come to your office/cube to talk with you personally? How did that help resolve an issue you were having that just didn’t seem to make sense while only being discussed in e-mails?

Last is message reception. Inasmuch as you had to formulate the message and transmit it without difficulty, the recipient needs to “decode” that message and understand what you were trying to communicate. If you’ve ever used the phrase “that’s not what I was trying to say,” you probably have a good idea of what I’m talking about. Even with the best of intentions, a message can get garbled anywhere in the communication continuum between idea and reception. So look for clues that your message isn’t being received as you intended.

Silence can be one indicator of failed reception, as humans tend to NOT indicate that they don’t understand something (they don’t want to be seen as less than perfect, especially with regards to intelligence). So ask the person you’re communicating with to communicate their understanding BACK to you. Or ask them questions to determine whether they understand what you’re trying to say.  This means that the communication process has to happen twice, but it ensures that communication was actually successful!

Of all Five Fundamental Skills, communication is probably the easiest skill on which to find training. There are literally thousands of courses, classes, workshops, and training events on communication techniques, skills and styles. Take advantage of these opportunities! But if you can’t, simply try talking/communicating more with your friends, family and co-workers. Tell them that you’d like to discuss a complex, technical idea. You’re going to educate them on this first – then ask them to talk with you about it. This means you’ll have to convert technical concepts into layperson language (assuming that your conversation partner isn’t educated about your topic). Then you’ll have to see if they understand what you’re trying to teach them by asking them questions (and seeing if they ask YOU appropriate questions – or whether they’re constantly trying to clarify what you’re saying). The lesson for you is to determine whether you’re able to move information from your head to theirs – all the way to comprehension.

Another strategy is simply watching how people already in your functional area respond to your communication behavior. Do they constantly ask you to restate what you’re trying to say, or do they seem to “get it” almost immediately? This isn’t a function of intelligence, though, in that just because you’re smart (or not) does not mean you can (or can’t) communicate what you know. Many of the best teachers are not necessarily seen as the traditionally smartest people – but they do know how to transfer information.  This makes them great communicators and excellent teachers. On the flip side, how many times have you met a really smart person who lost your attention because they didn’t grasp the fact that you did not ever understand what they were talking about.

OK, so now you have the Five Fundamental Skills for Effective Negotiation: Information Gathering, Strategic Thinking, Time Management, Power and Communication. If you can master all five, you can learn any negotiation tip, trick or hint and apply it to your situation. But remember these five – for without them, all the tactics in the world won’t help you be successful. If you leave even one of these skills “on the table” (ie: don’t master it), you will find yourself out matched when working with someone who does have these skills down pat.

For more information on these skills, including specific exercises and teaching tips on improving your skill in these areas, you can purchase the Five Fundamental Skills for Effective Negotiation workbook in either a hardcopy or downloadable format. Included are longer descriptions of the skills themselves, added training ideas, as well as a negotiation exercise designed to help use all Five Fundamental Skills in practice.  Additionally, and much to my surprise, one of my favorite blogs about negotiation, Settle It Now is using the Five Fundamental Skills to illustrate a real-world negotiation.

Five Fundamental Skills for Effective Negotiation: Perception of Power

You’ve done your research (Information Gathering), plotted your moves (Strategic Thinking), recognized your constraints (Time Management) and you’re ready to negotiate. Unfortunately, the other side really doesn’t need to talk to you. And guess what? They don’t have to – you’re the buyer today and the vendor is Microsoft. Ugh. OK. So what do you do now? How do you get a player as big as Microsoft to be willing to talk with you and make concessions?

Well, this is all about the Perception of Power – and it’s the fourth of the five fundamental skills for effective negotiation. You need to be able to recognize the power equation and learn how to balance it. This isn’t as tricky as it might first appear and can really be summed up in one single thought. Ready?

“Everyone who sits down at the negotiation table has power.”

It’s that easy. If they’re talking with you at all, you have power. Microsoft, even as large as they are, wants more customers – and yes, contrary to popular belief, they want happy customers. So if you have the potential to be a good reference (a happy, visible customer), they’ll talk with you. This means that as an individual, you’re kinda’ out of luck. But as a representative of an organization, you have more power than you might imagine.

Starting with the basics, make sure you don’t forget or abuse that power. Your goal is to merely balance the equation so that you’re not at a disadvantage, and not seeking, as the old parody Apple ad once proclaimed, “The Power to Crush the Other Kids.” You want what is best for your organization, nothing less and nothing more.

Thus, this sometimes means that you’re going to have to make mention of power and state the obvious – if they want your business, they’re going to need to give you some of what you need. You don’t have to be rude or nasty, just a simple comment that you really want to do business with them, but that you have some requirements that need to be met in order to close the deal. This indicates your willingness to talk and your desire for success. But it also shows that you’re not simply going to cave in to all of their demands or use their templates merely as a result of their size.

Next, you will need to monitor the power balance along the way. Folks like to see this as a teeter-totter – with each side moving up and down, but only one point in the middle where the balance truly exists. I’m not sure that the analogy really gets at the feelings behind the balancing act, so I tend to think of it as you balancing on two legs of your own chair. You lean back, possibly holding onto a table in front of you. You try to steady yourself first – finding the balance point before you let go.

For the first few fractions of a second, you feel totally balanced. Then reality kicks in and you find yourself making small back-and-forth motions to try to keep yourself steady. As time quickly passes, you increase the motions in terms of speed and intensity – which actually only throws you off balance more quickly. In the end, you either plop back onto all four legs… or you find yourself on your back.

The same is true for balancing power. It seems to always start small – posturing to make sure the other side knows that “you’re in charge”… but then gets bigger in a hurry… usually to disastrous results from a negotiation perspective. Thus, keep it small, keep it light and keep it balanced.

After the initial set-up (and the subsequent course corrections), you will also (or may have already) discover that people have a tendency to want to protect their position even within the negotiation itself. As “the negotiator” in many of these situations, my business owners tend to believe it’s my responsibility to take command. But the truth is that I’m no more in command of the negotiation than the bat is during a baseball game. I’m an instrument of the individual/organization in charge. Which means that I don’t make the “decision” but rather I help the business owner determine how to use me best… and then respond to their swing. You may talk with me, but you’re really talking to the business owner.

But this also plays out as folks wanting to make sure they’re heard when they do not understand their role – or believe their role is something more than it really is. Salespeople, for example, seem to fall into one of two camps – either they want to do all of the talking (they’re in command), or they do none of the talking (the contract is up to the lawyers). But again, they’re representing the business interests on the seller’s behalf – so while they’re in charge, they need to learn how to direct the activities of their team, even without saying a word during the actual negotiation.

Power also seems to manifest itself in a variety of strange ways. Most frustrating is the individual who wants to make sure they’re always the center of attention (which isn’t power). There’s also the person who tries to be a bully (again, many folks incorrectly believe that Microsoft acts in this manner, simply because of rumor). And most interesting to me, at least, are the folks seemingly oblivious to where power really sits – as it so often occurs in international relationships such as between Japanese and American business folks.

The key is just to remember that power surrounds and is infused in all negotiation. Knowing who has it, how much, and in what ways they use it will allow you to respond accordingly. Or not at all. 😉