( ESNUG 575 Item 3 ) ---------------------------------------------- [09/08/17]
Subject: Clever negotiation tips for engineers from Rajeev, Hogan, and Amit
Wally Rhines, Dean Drako, Aart De Geus, and Joe Costello are arguably the most
successful Engineer-CEOs we have had in EDA. And they each
have an established multi-decade track record of successfully influencing
both large and small audiences. ...
What follows are their insights on persuasive speaking plus a short video
clip showing their own unique speaking styles. ...
- from http://www.deepchip.com/items/0531-03.html
From: [ Gloria Nichols of LaunchM ]
As a follow-on to my earlier article on persuasion skills, let's look at
engineering and engineering management's negotiation skills.
I ran a blind survey of engineers and engineering management, asking them to
rate themselves as negotiators. 204 responded.
As you can see, they rated themselves highly: three-quarters felt they had
either "good" or "excellent" negotiation skills, with nearly a third rating
themselves as excellent. This is an analytical group after all. They are
good at reasoning through problems in general.
We use negotiation all the time with our families (which movie to watch,
which restaurant to eat at, children's bedtime) and with our work (how
many resources, when is the deadline, what product features, price
discounts, a promotion). And those small wins add up over time.
But what about the big moves?
This survey asked engineers and engineering management if they had
experienced a major business or career move in the last 5 years that
required negotiation.
More than two-thirds said "yes".
The pivotal question was, how many of these engineers and engineering
management wished they had negotiated that big move better?
As you can see, half of them had some regrets on how they performed for
something so important.
Negotiation skills can be developed. In that vein, I asked 3 executives
who I knew to be outstanding negotiators if they would share their own
tips on negotiation.
  
Rajeev Madhavan Amit Gupta Jim Hogan
Magma founder President & CEO Managing Partner
Clear Ventures GP Solido Design Vista Ventures
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RAJEEV MADHAVAN, MAGMA & CLEAR VENTURES
1. Understand your own position first
Know what your needs from that point in negotiation are; and what
you are willing to tradeoff.
Negotiations are generally highly complex, with several parameters
to work through. By thinking through your goals and separating
out your most critical needs from the noise, you will be able to
clearly communicate to the other party what you are seeking. You
will avoid bogging down the discussion with lower priorities and
move more quickly to a solid agreement.
2. Understand the other person's position
Put yourself in the other person's shoes. Part of this involves
collecting as much information as possible as to what their own
important needs are. You can learn this from them directly, and
often from outside sources by doing advance research.
You will have greater success in focusing the discussion and
finding common ground if you understand the other party's
priorities as well as your own.
3. Strike a win-win relationship
To me, a successful result from a negotiation means finding a
win-win scenario that enables both parties to walk away with pride.
Rarely are business negotiations a one-time event. The vast
majority involve laying the groundwork for an ongoing successful
relationship. Further, over time you will build your reputation
for collaborating on mutually beneficial deals. Your career spans
many decades -- not only will you will frequently find yourself
negotiating with the same people on multiple occasions -- but also
the reputation you build for yourself will often precede you as
you enter negotiations with new people.
Rajeev Madhavan's Background
Rajeev Madhavan is a serial entrepreneur, with his first business in 10th
grade, running a "comic book rental library" business on his grade school
bus. After a successful 9 months, the business was shut down by school
authorities with a school bus suspension handed down.
Not to be discouraged, he went on to found Ambit (acquired by CDNS) and then
Magma (went IPO as LAVA, later acquired by SNPS). He was also one of the
founders of LogicVision (went IPO, acquired by Mentor). A triple hitter of
founding 3 start-ups later acquired by each one of the Big 3 EDA companies.
Rajeev Madhavan is now a founder and General Partner of Clear Ventures,
where he focuses on early stage technology investments. He's funded over
35 companies. He has a BSEE from KREC, Surathkal, India, and an MSEE from
Queen's University, Ontario, Canada.
---- ---- ---- ---- ---- ---- ----
AMIT GUPTA, SOLIDO DESIGN
1. People negotiate with people
Ultimately, people negotiate with people, so it's important to
know as much as possible about who you are negotiating with and
to keep an open dialog during the negotiation.
Before you jump into a negotiation, do your research. For each
party, map out their goals, constraints, and their jury of decision
makers. Plus gather any recent comparables relevant to the
negotiation, and read any agreements you may already have in place,
all to determine the framework and positioning of the negotiation.
For example, when I negotiated the terms of a follow-on venture
capital investment round for my first startup, Analog Design
Automation, I started off by reading all agreements we already had
in place (e.g. shareholders' agreement, subscription agreement,
etc.) to understand the rights and obligations of each investor
and shareholder. I researched each investor by talking to legal
counsel who had experience doing investments with the investor in
the past, talked to other portfolio companies they invested in,
talked to the investors themselves and researched comparable
transaction terms and conditions for similar investment
transactions made at the time.
This allowed me to get a baseline for the negotiation and a sense
of the negotiation path to closure. We negotiated an $8 million
investment round.
2. Watch for opportunities, because timing matters
Timing is everything. What may be a bad deal for the party you
are negotiating with one week may quickly turn to a good deal the
next week due to external factors beyond your control. It's
important to watch for and seize opportunities when they come up.
One of my customers several years ago was unable to justify the
price of our product to the company decision makers based on their
ROI calculations. This stalled the negotiation. However, after
their silicon run came back with failures which were traced back
to bugs our software would have detected, the negotiation quickly
came back on track, and we closed a purchase order.
3. Leverage negotiation momentum and avoid negotiation fatigue
You can build on the momentum of a negotiation to get to a deal
closed quickly and efficiently or, conversely, you can
over-negotiate and cause the parties in the negotiation to get
frustrated and bail. So, watch for opportunities to leverage
negotiation momentum for your benefit, while being careful to
prevent negotiation fatigue that will cause frustration and
annoyance.
My example here is from when I was on the receiving end of a
situation where the other party made some missteps. I had made an
employment offer to a potential new hire and he had several changes
he wanted to the employment contract that he outlined at the
beginning of the negotiation. I went through each of these changes
with him, letting him know what we could and could not do.
His tactical error was to then add two more rounds of new request
for contract changes. This caused me to experience negotiation
fatigue and we never hired him. Had he outlined all his requests
in the beginning, so that we could quickly and efficiently go
through them all at once, he might have had a successful result.
Amit Gupta's Background
Amit's interest in science and technology began at an early age, winning
the silver medal at the Canada Wide Science Fair for developing a neural
network model of the human ear while in high school.
Amit started his first company immediately after undergraduate school,
founding Analog Design Automation in 1999. After raising $18 million
in venture capital funding, he grew the company until its acquisition by
Synopsys in 2004.
In 2005, he founded Solido Design Automation, a machine learning based
variation-aware design and characterization software company. In 2016,
Solido was one of the Deloitte Technology Fast 50 winners.
Amit graduated with bachelor degrees in Electrical Engineering and Computer
Science with Great Distinction from the University of Saskatchewan. He
also serves on the Electronic System Design board, and mentors entrepreneurs
at various stages of company development.
---- ---- ---- ---- ---- ---- ----
JIM HOGAN, VISTA VENTURES
1. Don't declare unless it advantages you
The genesis of this rule was from watching engineers give project
reviews. The management audience would often would listen, but
not talk. So, the speakers kept talking and dug holes deeper and
deeper.
Say what you have to say, then wait for other party to say
something. Otherwise you are negotiating against yourself. By
making sure you listen to what they have to say, you can do a
better job of understanding their problems, focusing on their top
criteria, and finding common ground. Further, you are less likely
to give up things that are important to you but not to them.
Delays are rarely good when negotiating. Any deal that slows
down, runs the risk of faltering. By finding common ground quick
helps you get the deal done fast.
2. People often the blame the non-present third party
As you listen to someone express their limitations, they will
often cite factors beyond their control, i.e. their manager,
their board, their CFO, even "policy" prevents them from making
a certain concession or going in a specific direction.
The first thing to do is try to quantify the roadblock, i.e. what
exactly can't they do. Occasionally, the other party will bring
up a barrier to closing a deal as a negotiating tactic; if this is
the case, then your job is to discern and navigate thru the true
barriers to the extent you can, to get the deal done. It's always
about keeping things moving forward and closing the deal.
3. Don't take on matters not under your control
Often other party will present additional reasons why your deal
won't work for them, some of which don't directly relate to you.
Deals are complicated enough, so it is important keep the
parameters simple and set boundaries -- there are some things you
simply can't help them with. E.g. they may say they do not have
enough budget. You can be flexible on terms but you must still be
paid at the end of the day.
The overarching goal of the negotiation is a win-win, or, at the
very least, something both parties can live with. There is a
difference between taking on their problems as your own, versus
understanding their constraints and collaborating on a creative
way to make it work within them, while maintaining some boundaries
of ownership.
4. Know when to walk
Sometimes the other party will walk away from the deal. Don't
give up right away. Sometimes it's a tactic, sometimes it's a
misunderstanding about a specific constraint. Do your due
diligence -- if you know someone related to the deal with whom
you can speak to learn if there is still an opening, then do so.
Although it is far easy and better if you can close the deal
sooner rather than later, sometimes it is just not the right time.
I find that about 50% of the time, it can be revisited and the
situation may change in a year.
One of the most powerful negotiating skills is to truly know your
own parameters. If you can't find common ground, then sometimes
you must just walk away from a deal.
Walking away is not a tactic; only do it if you are truly serious.
However, it is better to move forward than focus on a deal that is
not going to work. In the end, life goes on, and there is always
another deal.
Jim Hogan's Background
Another early entrepreneur, Jim paid for almost all his lunches through high
school, by helping other students with extra credit math problems. This
trade could be cash for a school lunch, or if their mother made a
particularly good lunch, that was fair barter, too.
Jim's early EE career was at National Semiconductor and Philips, where he
eventually becoming an engineering director, he established their device
physics laboratories globally.
At Cadence, he was an Executive Fellow, President of Cadence Japan,
Corporate Vice President of Marketing, and Corporate Vice President for
Field Operations. He held 15 different executive jobs while at CDNS.
Jim is currently the managing partner of Vista Ventures, LLC, where he
serves as chairman. Jim was a general partner at Telos Venture Partners
and senior VP of biz dev at Artisan, now part of ARM Holdings PLC.
Jim holds a BA in mathematics, a BSCS, and an M.B.A from San Jose State
University. He worked swing shift in a machine shop through all his
undergraduate years.
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WIN-WIN NEGOTIATIONS VS. THE PRISONERS' DILEMMA
Often in negotiation role-play exercises, including one Harvard Business
School ran at a recent class reunion, people are given some variation of the
"Prisoners' Dilemma". The way it works, according to Wikipedia:
"Two members of a criminal gang are arrested and imprisoned. Each
prisoner is in solitary confinement with no means of speaking to or
exchanging messages with the other. The police admit they don't have
enough evidence to convict the pair on the principal charge. They
plan to sentence both to a year in prison on a lesser charge.
Simultaneously, the police offer each prisoner a bargain. Each
prisoner is given the opportunity either to betray the other, by
testifying that the other committed the crime, or to cooperate with
the other by remaining silent. Here's how it goes:
- If A and B both betray the other, each of them serves 2
years in prison
- If A betrays B but B remains silent, A will be set free
and B will serve 3 years in prison (and vice versa)
- If A and B both remain silent, both of them will only
serve 1 year in prison (on the lesser charge)
Because betraying a partner offers a greater reward than cooperating
with them, all purely rational self-interested prisoners would betray
the other, and so the only possible outcome for two purely rational
prisoners is for them to betray each other. It's implied that the
prisoners will have no opportunity to reward or punish their partner
other than the prison sentences they get, and that their decision
won't affect their reputation in future."
- from Wikipedia on the Prisoner's Dilemma
In real life, negotiation doesn't have a fixed ending as this does. Most of
us will cross paths multiple times. Thus, pursuing the collective interest
of the group -- i.e. the "win-win" -- can also be the only chance for either
party to make any gains.
- Gloria Nichols
LaunchM Woodside, CA
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Gloria Nichols does VP/CMO and digital marketing consulting. She's consulted
for 47 EDA companies, including the executives above. She did product marketing at
Cadence for static timing and signal integrity. Gloria has an MBA from Harvard
Business School, and a BS in Engineering from Stanford University.
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Tech vs. Selling your ideas -- plus Wally/Joe/Dean/Aart's tips
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