The power of persuasion

A critical part of a lawyer’s job is being a good negotiator. It requires people skills, well-ordered priorities and a positive approach to doing business, writes Ritika Sharma.

A single negotiation can make or break the prospects of any enterprise. To demonstrate how negotiation skills can be decisive for businesses, let’s have a closer look at a major deal that not only changed the fate of a company, it transformed an entire industry.

In 1980, intense rounds of negotiations were in progress at a discrete IBM office between the company’s executives and Bill Gates, the founder of up-and-coming tech startup, Microsoft. While negotiating royalty payments for licensing the DOS (disk operating system) software, Gates agreed to a very modest royalty payment.

On paper, IBM seemed to have secured a better deal. However, Gates’ stroke of genius was in keeping the DOS licence non-exclusive. This meant that Microsoft could sell the rights of the software to other companies. Gates had realized that the real money was in software, not hardware. Prudently, he incorporated this key insight into the terms of the agreement.

As the years rolled by, Microsoft licensed DOS rights to companies across the globe, amassing huge amounts of wealth. A single clause in the IBM deal paved the way for Microsoft to become one of the biggest companies in the world.

Harvard Professor Michael Wheeler defines negotiation as “a dynamic, interactive process”. The dynamism of corporate negotiations arises from the need for custom strategies to address ever-changing scenarios. A strategy can prove to be extremely successful in one scenario, while being catastrophic in another. Consequently, it becomes imperative to approach every negotiation with due preparedness, which implies doing all the homework beforehand while avoiding the rigidity of a one-size-fits-all formula.