Negotiating High-Risk Projects in a Risk-Averse Environment
In today's anemic economy companies are taking a closer look at the projects they'll fund, particularly those with high-risk elements associated with them. The risk could be purely a financial play or potentially a public relations nightmare. Quite often in a risk-averse environment, it's the perception of risk that creates a roadblock to whether your project moves beyond the drawing board stage.
Setting a high-risk project idea and negotiating its funding requires you to take a more strategic view of what you expect to achieve. Here are ten ways to assume more responsibility for your project's risk and improve its chances of success.
1) Fine-tune your communication style. Listening is a key aspect of effective communication. The ability to listen on multiple levels-what is and what isn't being said-is key during negotiations and in building rapport with others.
2) Build early cross-functional alliances. Invest upfront time in building relationships across the organization, as well as with external partners and customers who may be directly or indirectly impacted by your proposed project. Remember to include finance and customer support alliances as these contacts can help you cross-sell your product. Early support and buy-in with key players and "influencers" can provide you with additional clout during negotiations.
3) Be prepared to present your project's risk and benefits. A risk-averse environment will expect project owners to present a financial picture of their proposal and its impact on the organization. Using a risks/benefits model or Cost-Benefit Analysis (CBA) will address this requirement and allow you to include both hard and soft dollar savings associated with your project. You'll also want to look at the personal side of risk with respect to your project plan, including the risks/benefits for your manager, his manager, and for yourself. Another effective way to address concerns that can arise during negotiations is to prepare responses to "what if" scenarios. Invite a cross-section of individuals to a brainstorm meeting and be certain to invite any known naysayers whose skepticism will help you prepare for and address similar issues and concerns during negotiations.
4) Adapt to the risk styles of others. Flexibility is key when negotiating with those who may have both a different communication style as well as a varying degree of personal comfort with risk. You'll want to sell your idea across the risk spectrum: someone with a more entrepreneurial bent who may need to sell it to their boss who is a risk skeptic, or a counterpart who is more risk averse that even their environment requires.
5) Build early rapport with your counterpart. People negotiate with people-not tactics; therefore it's important to establish early rapport with your counterpart by applying effective communication and listening skills. The ability to "read" your surroundings through body language, while using silence and intuitive skills when appropriate will help in establishing a solid foundation for your negotiations. Tactfully weave in your alliance contacts during the course of the conversation, but be careful that it doesn't come across as a power play. Your goal is to extend your counterpart's relationship network, not to brag about your own.
6) Understand your counterpart's pain. When preparing your negotiations plan you'll want to address both the formal and informal needs of your counterpart(s). Formal needs are those that address the business in measurable terms and that can be tracked throughout a project's lifecycle. Informal, or psychic, needs are oftentimes less obvious but can be more crucial to achieving a win-win outcome. Informal needs are typically personal but with professional overtones, for example, a political agenda that must get met in order to achieve business objectives. Formal and informal needs are best researched before you enter into negotiations, using your face-to-face time to fill in knowledge gaps.
7) Assume more of the risk. Assuming more risk can be used as a negotiations tactic when you think closing the deal could pose a problem. You don't want to give the other party a reason to say "no." Assuming more risk will depend on where the other party sees the risk with your project. Perhaps, it's financial exposure, but due to your early efforts in building alliances and acquiring additional funding sources, you're able to assume more risk associated with the project's costs. "What if" scenarios are often a great way to identify areas where assuming more of the risk can help you close a deal.
8) Pace the flow. The more risk averse the environment the greater the need for you to manage the pace and flow of negotiations. .Do more listening and less talking. Don't rush the process and ensure that you build enough time into the negotiations to address formal and informal needs.
9) Show, don't tell. Be prepared to walk your counterpart through the steps associated with the success of your project. Share your project's story and include visual cues for key milestones, focusing on areas where you sense a stumbling block could exist for achieving a win-win outcome. The more people who can win with your project the easier it will be for you to sell it.
10) Finesse your way to closing the deal. Don't walk away without closing the deal (unless it's a no-win situation). At the least, you'll want to understand what steps need to be taken by the participating parties before reconvening for further negotiations. Be prepared to address any concerns that prevent you from closing the deal on the spot. Set a date and time to reconvene with follow-up action items.
Dee McCrorey, Founder and CEO of Risktaking for Success LLC, provides training and coaching to business leaders and managers in becoming more effective negotiators. She has over 20 years experience negotiating for companies such as Intel, US Bancorp, and Rosenbluth International. Email her at firstname.lastname@example.org or visit www.RisktakingforSuccess.com