Total Click Solutions

Tag: negotiation

  • When to Walk Away From a Deal

    When to Walk Away From a Deal

    The pressure to close a deal has a way of warping your judgement. You’ve spent weeks in calls, exchanged dozens of emails, maybe even flown somewhere for a meeting, and now the thing that matters most is getting it done rather than whether it’s actually any good. That slow drift from evaluating a deal to just finishing it is how most bad agreements get signed.

    Knowing when to walk away isn’t a failure of persistence. It’s one of the most disciplined things you can do in business development, and it’s considerably rarer than it should be.

    The sunk cost problem

    The hardest part isn’t spotting a bad deal. It’s spotting one after you’ve already invested three months in it. Research from Kristina Diekmann at the University of Utah found that what a seller originally paid for something distorts both parties’ expectations in a negotiation, even when that original price has no bearing on the asset’s current value. The same logic applies to time: the six weeks you spent on a partnership proposal don’t make the partnership any better, but they absolutely make you less willing to abandon it.

    Harvard’s Programme on Negotiation makes the point plainly: what’s already spent is gone. Your BATNA, your best alternative to a negotiated agreement, should be weighed against what comes next, not what you’ve already put in. If you don’t have one before you sit down to negotiate, you’re essentially negotiating from hope rather than position, and the other party can usually sense it.

    Signals worth taking seriously

    A counterparty that keeps reverting to initial terms after you’ve agreed to move past them isn’t forgetful. They’re most likely testing how much you’ll absorb rather than genuinely trying to find workable ground. Slow responses and withheld information don’t typically improve once you’re actually working together.

    Terms that chip away at your margins in ways that feel small at first are worth adding up properly. A pricing structure that feels borderline acceptable on day one has a habit of becoming genuinely painful by month six, particularly if the deal ties up resource that could go elsewhere. The question isn’t whether you can tolerate the terms today; it’s whether you’d design them this way if you were starting from scratch.

    Desperation on your side is also a signal, even if it’s an uncomfortable one to notice. Deals made under revenue pressure tend to attract onerous conditions, because the other party can usually tell you need it more than they do. If you find yourself arguing yourself into a deal rather than being genuinely convinced by it, that’s worth pausing on.

    What walking away actually looks like

    It doesn’t have to be dramatic. Being clear about your reasons, keeping the door open, and staying professional costs nothing and occasionally results in better terms coming back the other way once the other party realises you meant it. Burning bridges over a deal you turned down is just a waste.

    The practical discipline is to define your walk-away point before negotiations begin, not during them. When you’re in the room and the pressure is on, your sense of what’s acceptable shifts in ways you don’t always notice. A written note to yourself about minimum acceptable terms, made before any conversation starts, is a genuinely useful thing. It doesn’t need to be a sophisticated document. It just needs to exist.

    And every deal that isn’t right for you is time and attention that isn’t going to one that is. That’s the real cost of staying too long at a table that isn’t working.

  • Before You Sign: Vetting a Strategic Alliance

    Before You Sign: Vetting a Strategic Alliance

    The failure rate for strategic alliances sits somewhere between 60 and 70 percent, which is remarkable given how enthusiastically businesses pursue them. Everyone agrees partnerships are a fine idea, and then a substantial majority quietly collapse within a few years. The problem is almost never bad luck. It’s that the groundwork wasn’t done before anyone picked up a pen.

    Why most alliances go wrong before they begin

    The most common explanation is deceptively simple: most alliances that fail should never have been started, because there was no genuine compatibility between the parties. Not a clash of personalities, not a bad contract, not market conditions, just two organisations that wanted different things and never properly checked whether they were aligned before committing. Research consistently points to the same cluster of causes: incompatible objectives, poor partner assessment, and a lack of executive commitment on at least one side of the table.

    Companies that approach alliances in an ad hoc, instinctive way report roughly a 20 percent success rate. Those that follow a structured process do considerably better. The structured approach isn’t complicated. It’s mostly just asking the right questions early enough that the answers can still change your mind.

    The questions worth asking before anything is signed

    What does each party actually want from this? Not what they say in the first meeting, but specifically: what does success look like in 18 months, and whose priorities take precedence when those definitions conflict? If neither organisation has written this down and compared notes, you’re already in trouble.

    Who will own this relationship day-to-day? One of the quieter killers of a strategic alliance is that senior leaders agree on the vision and then the whole thing gets handed to whoever has a spare hour. Companies with the best partnership track records tend to have a named person whose actual job is managing the alliance, someone with real authority and a budget, not a project manager carrying it alongside three other responsibilities.

    What does the other party’s history with partners look like? Ask directly whether they’ve been in alliances before, how those ended, and what they learned. A company that has dissolved several alliances isn’t automatically a bad bet, but the explanation matters. If the answer is vague, or they point the finger at every previous partner, that’s genuinely informative.

    How will you measure whether this is working? It sounds obvious, but a great many alliances that collapse do so partly because neither party agreed on measurable milestones at the start. Without a shared definition of progress, one side always ends up quietly concluding that the other isn’t pulling their weight, and resentment grows faster than revenue.

    What happens if one of you becomes a competitor? This is uncomfortable to raise early, but Cisco’s experience is instructive: its alliances with Motorola and Ericsson fell apart after acquisitions made them direct rivals, whilst its partnership with Microsoft survived because both parties were willing to limit the scope of their collaboration when competition grew. Building an exit or adaptation clause into the agreement from the start isn’t pessimism. It’s just tidiness.

    The thing most businesses skip entirely

    Before you assess anyone else, it’s worth being honest about what your own organisation actually brings. A good strategic alliance should mean each party contributing something the other genuinely lacks: complementary capabilities, market access, technology, distribution, whatever it might be. If you’re not clear on your own gaps and strengths going in, you’re not well placed to judge whether a potential partner fills them, or whether you’re both just hoping the other one will do the heavy lifting.

    The alliance that works is usually the one where both parties were a little nervous to commit, because they’d done enough digging to understand what they were actually getting into. That discomfort is, oddly, a good sign.

    Frequently Asked Questions

    How long should vetting a strategic alliance partner take?

    There’s no fixed timeline, but rushing it is the single biggest risk. For a substantive alliance involving shared resources or co-development, a few weeks of structured conversations, reference checks, and written goal-setting is a reasonable minimum. Larger commitments warrant proportionally more time.

    Do we need a formal legal agreement for a strategic alliance?

    Yes, even for relatively informal arrangements. A written agreement that spells out goals, responsibilities, how decisions get made, and what happens at exit protects both parties and, more practically, forces you to have conversations you might otherwise avoid until things go wrong.