TheUC 055: The Myth of the Win-Win Scenario

 

055win-win

  1. Is there really ever a true ‘win-win’ scenario? You hear it all the time, in business and even in life situations: ”Hey this is a win-win!” However, if you have to convince someone it is a ‘win-win,’ then it probably isn’t. And if one party’s definition of a ‘win’ is that someone else loses, then there is no deal to be had and you will certainly end up with a ‘lose-lose’ scenario. Join this discussion about how to give yourself the best chance at actually achieving the theoretical ‘win-win’ and avoid the pitfalls that unwittingly suck you into a ‘lose-lose.’
  2. Brief Recap of Past Couple of Shows
    1. Optimal Time Management…Don’t strive to be ‘busy’ strive to be accessible
    2. Don’t take the blame…take responsibility
      1. Blame or fault is backwards looking
      2. Responsibility is forward thinking
      3. ‘No one is coming’…acknowledgement and responsibility opens up innovation and opportunity
  1. Introduction of Discussion Topic
    1. Sports is a true zero sum game…one team wins, one team loses or there is a tie, but the goals scored for equals the goals scored against.
    2. Business isn’t always a zero sum game…because a ‘win’ in business isn’t always as clear as the scoreboard when time expires on the field.
    3. A successful negotiation is that everyone leaves the table believing they’ve done the best they can given the circumstances…that is a success… a theoretical win-win.
      1. If someone is buying, someone is selling. The hope is that the buyer believes they are getting a good value and it works out the the sellers believe they are being appropriately compensated…and isn’t that a win-win?
      2. A Venture Capital fund buys equity from an early stage company…the early stage company hopefully gets much needed cash infusion plus some expertise and management support…and the VC gets in early on a venture that will hopefully grow 10 fold…isn’t that a win-win?
    4. While deals should be that rational they unfortunately rarely are what they should be in theory.
  2. Can there be a win-win? Yes, there can be a win-win, but only if the focus can truly be on generating long term value. However, in business we can’t avoid working with people. People are the greatest asset to any company and can also be the greatest liability. There is NO win-win if someone’s win depends on someone else losing.
    1. The uninvited guests to every negotiation are hubris and ego…and they insidiously destroy value while making you think they are there to protect and defend your interests.
    2. Calling a lawyer to try and validate your paranoia or perceived injustices (they are rarely real) means you have failed on MANY levels. In negotiating any deal, a lawyer should be there to ensure you have kept a value generating perspective and help you with clean paperwork. If you are using a lawyer to forward an adversarial objective, that just makes you a coward and your lawyer is a shame to his or her profession for galvanizing your plight because that isn’t the job of a competent attorney.
    3. Get over yourself. If you are whining about some perceived injustice it means that your actual work or contributions weren’t good enough to speak for themselves…and you are so much of a coward that you couldn’t have a rational discussion that you’d have to find someone else (like a crappy attorney) to fight your battles for you.
  3. What can you do to try and get a win-win?
    1. Check your ego at the door
    2. Prioritize the needs of the venture above your wants
    3. Know the genuine value proposition
    4. Be open to the perspective and incentives to all those around you. The win-lose is contagious! Beware the instigator who throws kerosene on the fire.
    5. Ask the key question: Why are we here? The answer should be: We are here to make money or some variation of: We are here to generate significant value. Don’t be afraid to go around the table and ask each person to answer that question. The answers can be very revealing. And if the answer is any different from some sort of acceptable variation of we are here to make money, then you need to seriously consider getting up and walking away.
      1. Sometimes the answer might be: “I’m here to see that so-and-so doesn’t get screwed” If you hear something along those lines, you should all just pack up and go home. I can promise you that no good will come from continuing the discussions.
      2. If you notice someone who starts out on the defensive, then you shouldn’t continue discussions. Do what you can to eradicate that person from any discussions. Even if that means giving them some cash to go away or just walking away yourself. I’ve walked away from deals that had great potential value that was thwarted just because 1 person was irrational. I have even brought other financial backers to a table and seen 1 paranoid and delusional guy who didn’t have any relevance to the company screw the entire deal for everyone else involved because he was like poison. Even if the business was a good one, no one wanted to be anywhere near this guy. People can be the best thing to invest in, and boy can they just tank value like a black hole.
      3. At the end of the day, investors want to back the right horse. Having management that is reliably solid with a meaningful track record is what gets the big bucks. At the same time, investors will leave skid marks from a person who seems defensive or paranoid. After all, there’s no negotiating with crazy. There’s no opening a closed mind.
  4. Remind everyone of this over and over again as to why you are here.