The Steve Jobs Negotiation Method: Ruthlessness Is The Only Way
Last month, Steve Jobs showed everyone that he could still prove people wrong from the grave, this time around, it appears he’s still got more wisdom to impart.
Months after his death, people are getting an inside look at the former CEO’s negotiation skills after the U.S. government obtained emails between Jobs and book publishing giant HarperCollins, while the U.S. department of justice opened a suit against against the tech-giant for price-fixing.
Scandalous activity aside though, the obtained exchanges provide interesting insight into just how good of a businessman Jobs was, as he convinced James Murdoch (son of Rupert) to close a deal that initially seemed iffy, within five days.
The key to Jobs’s triumph appears to be his seemingly innate ability to absolutely school his opposition with varying degrees of ruthlessness so distinct that they deserve their own labels.
1. Caring Ruthless
The irony in all of this is that Murdoch made the first attempt at executing the caring ruthlessness, but the student cannot outdo the teacher. After sending an email to Jobs, in which he essentially expressed how Apple’s offer had shortcomings in comparison to Amazon’s Kindle, the HarperCollins executive said this: “I hope we can figure out a way, if not now and in time for this launch of yours, then maybe in the future.”
“The current business model of companies like Amazon distributing ebooks below cost [i.e. buying for $13 and selling for $10] or without making a reasonable profit isn't sustainable for long. As ebooks become a larger business, distributors will need to make at least a small profit, and you will want this too so that they invest in the future of the business with infrastructure, marketing, etc.”
The rules of pulling off this type of ruthlessness are simple. You take a shot at the opposition, usually by referencing a vulnerability of theirs in a friendly manner. The winner of this round is clear. Murdoch referenced Apple’s iPod launch, which was Steve Jobs’s vulnerability, the possibility of debuting a device without a deal being done.
But while Murdoch referenced the prospect of one feature of the iPad being incomplete, Jobs referenced the vulnerability of a whole industry that is way more important to Murdoch than it is to Apple. Translation: You need us to make a profit so that you can keep making money off ebooks.
2. Concerned Ruthless
As opposed to first the form of ruthlessness, it mentions the well being of an opponent, this type that Jobs expertly uses requires the offensive party to cleverly bring up the danger the opposition could face if they don’t comply.
Think of any famous mafia scene and the words “It’d be shame if someone were to get hurt,” then read this:
“Analysts estimate that Amazon has sold more than one million Kindles in 18+ months (Amazon has never said)” expressed Jobs. “We will sell more of our new devices than all of the Kindles ever sold during the first few weeks they are on sale. If you stick with just Amazon, Sony, etc., you will likely be sitting on the sidelines of the mainstream ebook revolution”
The message from Jobs is pretty simple — “we’re going to blow Amazon out the water and you could go with them” — but he conveys it in a subdued manner, which makes it all the more brilliant, but no less ruthless.
3. Ruthless Ruthless
This is the type of ruthlessness that pulls no punches. At this point, you know your worth and theirs. If these emails are any indication, it would seem that Steve Jobs reaches this level when he’s gotten tired of wasting his time and wants to directly and unequivocally separate the boys from the men.
But being ruthless ruthless didn’t just require Jobs to be in a dominant position, which he was, he had to be able to recognize and articulate clearly why that was the case. After reminding Murdoch that his company has more experience in selling online products (and thus knows how to set pricing), Jobs gives Murdoch an ultimatum. Either roll with Apple, stick with Amazon and eventually make less money when the market forces an adjustment, or…
“Hold back your books from Amazon. Without a way for customers to buy your ebooks, they will steal them. This will be the start of piracy and once started there will be no stopping it. Trust me, I've seen this happen with my own eyes.
Maybe I'm missing something, but I don't see any other alternatives. Do you?”
Ruthless Ruthless indeed. After sending this email on Sunday, Jobs saw HarperCollins submit to a deal the following Tuesday, a day before he unveiled the first iPad to the world.