The Impact Of Negotiation Skills For Product Managers

Impact Of Negotiation Skills For Product Managers
There is no secret that poor negotiation can cost you your authority on the market, and even your business. The inability to reach consensus and correctly communicate your demands can cost you money, your customers, and your partners.

This is what happened to Amazon and Hachette Book Group.

Bad Negotiation In Product Management: The Case Of Amazon and Hachette

Everyone in the business world remembers the conflict that happened between these two companies back in 2014. Both Hachette and Amazon failed to negotiate the extension of the contract, as Amazon wanted Hachette to lower the prices for e-books.

Hachette refused to lower the prices for Amazon’s customers, while Amazon punished the publisher by terminating the pre-order option and extended the delivery time up to several weeks.

What were the demands behind this feud?

Amazon wanted to level the market and make sure that e-books can be in fair competition with other goods from the relevant sector. Hachette’s product managers, however, insisted on high prices and claimed that lowering them would be suicide.

The Takeaway

Both Amazon and Hachette had their own best interest at heart, which, unfortunately, killed the future of this negotiation. And this future could have been different, had the product managers delivered the message in a different way.

This is how significant the role of negotiation skills is. And, as product managers often become spokespeople for a company, these skills play center stage to help them communicate the message of their company in the correct way.

How Negotiation Skills Define Your Career As Product Manager

Let’s take a look at a few cases when negotiation skills defined the careers of product managers and discuss the impact of these skills.

1. Lack Of Negotiation Skills Can Cost You Your Job

Let’s start with the most obvious outcome of lacking good negotiation skills.

You’d think that this would be the case for an entry-level product manager. But Apple’s case proves otherwise.

Back in 2012, Apple fired its product manager Richard Williamson, who worked on the Maps feature for Apple products for many years. Under Williamson, Apple made a transition from using Google Maps to implementing its own Maps feature, which, however, had a few deficiencies.

Apple’s top management confirmed that they fired Williamson because of an ‘unforgivable’ HR communication mishap, implying that Richard Williamson failed to address and negotiate the deficiencies that the new Maps feature had.

What’s The Takeaway Here?

Having experience as a product manager doesn’t mean that you become a good negotiator right away. This was the case with Apple. And, in this case, Apple is not alone.

There were cases over the past few years with writing companies and major publishers, like Hachette, who had clashes with their partners or other companies and had to fire product managers due to poor negotiation practices.

So, as you can see, having a big experience as a product manager, doesn’t guarantee that you’ll keep your job forever, as one negotiation mishap can cost you your career.

2. Good Negotiation Skills Create Win-Win Situations

Good negotiation skills can resolve any kind of conflict, even if paying $1 billion in damages is on the line.

This was the case for Apple and Samsung, who had to take their conflict to court but resolved it with productive negotiation.

In 2012, Apple filed a lawsuit against Samsung, claiming that Samsung violated Apple’s patents. In other words, Samsung was accused of ‘blatantly copying’ Apple’s products. As a result, Apple claimed they lost significant profits.

The case got three court decisions. The first one obliged Samsung to pay $1 billion in damages. The second court decision, however, reduced this compensation to $600 million.

However, the final court decision taken in November 2013, obliged Samsung to pay only $290 million in damage.

What prompted such a significant drop?

Samsung played its trump card. The company remains Apple’s biggest supplier.

Although the first court-ordered mediation between companies ended in an impasse, product managers from both companies, together with legal teams, negotiated a solution that not only reduced the payment that Samsung had to reimburse but helped both companies remain partners.

What’s The Takeaway Here?

Good negotiation skills help product managers create win-win situations.failed

How do you do it?

You listen to your opponent’s requirements, and try to comply with them but also integrate your strengths into the solution.

To win at negotiations, you need to do a lot of analytical work defining the strengths of your company.

3. Negotiation Skills Help Product Managers Protect The Customers

Although we’ve talked a lot about the costs of bad negotiations, money loss is just a consequence.

One of the major concerns that come with bad negotiations is losing customers, which are the source of your company’s success.

This is what happened to Apple, and the other five major publishers in April 2012 failed to negotiate the prices for e-books. Apple settled on the agreement that allowed the publishers to set the prices for the e-books.

Although the agreement meant bigger financial advantages for the publishers, it failed to consider how it will affect the outsiders – the customers.

As a result, product managers and legal teams, both at Apple and other companies involved in this negotiation, failed to consider the ethical and legal implications of their decision in relation to their customers.

What’s The Takeaway Here?

You can’t always play the money card. And this is why the ability to negotiate is among the top skills for product managers, as you need to be able to recognize the outcomes of the negotiation before it reaches its end.

As a product manager, you are always more inclined to protect the interests of your company. But as a good product manager, you not only represent the interests of your company but the interests of the consumers as well.

This is what constitutes a successful negotiation – being able to see a bigger picture and how it will impact your relationship with your customers, who, at the end of the day, define your company’s success.

It’s Never Too Late To Learn

The impact of negotiation skills for product managers is undeniably strong, and a lot depends on how well you, as a product manager, can communicate the message, listen, and compromise. You might not work for a giant company, but even if your work consists of regular attempts to get a social media report from your SMM manager on time, it requires a certain negotiation skill.

Negotiation skills do come with experience. But only if you are open to the idea that they have a big impact on your career, which we’ve proven with a few examples from big corporations.

Negotiations do start with a ‘No’, but it’s all about how well you can handle it. You may remain stubborn, but it may not lead you anywhere besides the financial loss, loss of authority, or continuous lawsuits.

Or, you can choose a different way to approach your opponents, and approach the negotiation with prior preparation and readiness to listen to their demands.

It’s never too late to learn. So, invest time and effort in improving your negotiation skills to represent the company, its products, and its customers in the best way you possibly can.

AUTHOR_NAMEAbout the Author:
Daniela McVicker is a professional content manager and a hobby blogger. She enjoys reading classic literature and doing research on internet marketing. Her favorite pastimes are to write, listen to jazz tracks and take quiet walks.
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