Executive Conversations - Executive Empathy

Executive Empathy is a topic which anyone engaging with senior leaders, especially at the level of the C-suite, should develop a deep understanding of. I’ve covered this topic in two segments of the Creative Leadership podcast, all segments of which you can find on YouTube and Anchor (video version) and Spotify (audio version).

Executive Empathy addresses the ability to enter the mindset of an Executive, to understand how they process information and anticipate how they react to your attempts to engage with them. Mastering this skill enables you to create paths for communications which are aligned with the Executive’s goals, are in the language the Executive speaks and understands and targets the receptors which the Executive affirmatively responds to.

In an earlier episode of the podcast on this topic we addressed the importance of prioritizing the WHY before attempting to engage with the Executive in the WHAT and finally we concluded with what is sequitur and non-sequitur in communications with the executive. If you haven’t listened to that first episode, I would strongly encourage you to jump back and do as, as this segment will build on the insights from the first part of the Executive Empathy topic.

Below we will cover three really important topics. As you’ll find with a lot of the content on these topic, some of these may at first seem subtle, perhaps even irrelevant, until you explore the impact a modest alignment in your positioning in these areas can have on the willingness of the executive to engage with you.

VALUE OVER PRICE

A few terms in an executive conversation can either put you on a solid footing and create a platform for discussion or derail you completely. Among these are VALUE and PRICE. You might find it baffling, but an Executive really does not understand the concept of PRICE – it is something quite foreign to them in that it is a transactional measurement from a different dimension than the one the executive operates in. The mythical dollar sign preceding a number is an abstraction to them in that it represents nothing which would compel their action. One, two, five or 10 zeros in that number do not translate to anything that the executive will make any effort to rationalize.

Then, in the executive’s operating dimension, there is the concept of VALUE. Now that has real meaning. It is real, consequential, observable and aligns with the executives’ priorities to create impact within the organization. Yes, you may argue that Value is created through a transaction involving a Price. While that may be true, price is nothing more than an amount of currency agreed upon between two parties to deliver a product or service in a specific way. It is a transaction tool – nothing more. What Value is generated from the transaction at the agreed upon price may be loosely related, but it certainly is not linearly matched, that is to say, more value isn’t necessarily achieved at a higher price or vice versa.  And it is because of this non-linear relationship between value and price that the Executive delegates all price conversations to secondary staff, while choosing to focus on the resulting value.

Let me dive a little deeper into this. Value is what is created from the services which you will offer, from the products or solutions that you will create. It is the impact that you will have created through whatever it is that you offered. And value can have a lot of different definitions and operates in a lot of different dimensions. Value to an executive could be in the form of efficiency because they’re coming into a company which has horrific efficiency problems. Or it could be revenue. It could be something that’s going to feed future growth and any of these things could be value to an executive.

And it’s your job to find out which. As an example, if you find yourself facing off with a highly environmentally centric CEO, and there are many of them out there, you may find that efficiency gains don’t necessarily cut mustard with them. You'll need to construct a very different value proposition to that person as compared to for someone who is a purely accounting type of a CEO. 

Please, please make a concerted effort to understand this distinction. It will save you the time you would otherwise spend with the executive trying to convince them of your superior offer discounts and the stress of being rejected, dismissed from the conversation, and relegated to subordinate staff tasked to take you on to engage in price negotiations.

PRICE vs COST

And then we get to the even more juicy part of Price and Cost as part of your vocabulary in executive conversations.

As already established, Price is a relative non-sequitur to the senior executive. Cost, on the other hand, triggers the Executive’s accounting mind function and can lead to a productive conversation. Let me explain.

To start with, the difference between Price and Cost is actually a little less subtle than you might think. It’s really about the agenda. Think about this. When you speak about Price, you’re speaking about your agenda. It’s your price to a customer. It’s your manipulation of your internal costs to create a transaction value meaningful to you – your price. Why should the customer care about that? The moment that you utter the word price, a shutter switches off in the Executive’s mind. “Clearly, you must not be speaking to me, you’re speaking to that other guy down there in the purchasing department who's going to negotiate the price with you, right?”

Cost, however, is a much more meaningful concept. Cost is how much of my available purchasing resources I’m going to have to utilize to avail myself of your product or service. They care about that because, in the grand scheme of things, everything eventually lands somewhere on the balance sheet and they have to find a place on that balance sheet for what you're going to provide. Cost represents the way that the executive thinks; it has a tangible feel to it. So DO NOT engage in a conversation about Price, speak to them in terms of their cost. 

And one more thing. An Executive can rationalize COST. They might say “these million dollars we're going to spend, it will be apportioned across several operating entities, where 80% of it will be domestic 35% of that will be depreciated over 5 years.” Price will always carry with it an aura of negotiability (is this really the best and final? Let’s give it to Lisa in purchasing to squeeze a few more points out of it). Cost is final and structural, as it soon becomes part of an accounting transaction tied to debits and credits on the balance sheet.

And by the way, you can be an active participant in helping the Executive rationalize the cost. Later in this podcast, specifically in Session 8, we’ll talk about numbers, and accounting and the financial language of the Executive, but assuming you’re already there and have studied the company’s financials, being invited to the cost rationalization discussion with the executive is a sign of deep engagement, alignment and acceptance of you by the Executive as a true partner in a model of shared success.

OPPORTUNITY KILLERS

Let’s talk about opportunity killers. The famous one is when your wife asks "Honey, do I look fat in this dress" and you studder for a moment to give her an answer. But that’s not the kind we’re going to talk about here.

What we are going to cover is one specific cardinal transgression which you can fall into when dealing with Executives. I call this the master opportunity killer of all time when engaging with a senior leader or the C-Suite in general. It’s…

wait for it … wait for it ...

the word SELL.

The moment that word is uttered in the presence of an Executive, is the moment your entire world changes from one of engagement, to distrust, reservation, distance and skepticism.

When the word SELL, or any derivative thereof is uttered, a couple things immediately enter your reality. The first is the executive’s realization that you’re there for your benefit, not theirs. Clearly, that changes the conversation from one between partners to one defined by the power of a decision-maker over a supplier of goods and services. You’re no longer in a position of influence, but instead relegated to being the receiver of possible good will from a controlling entity, which may or may not hold you in their favor. Moreover, your entry into the C-suite is now shuttered, pretty much forever, with all the opportunities which hide beyond those now closed doors.

And while the word itself is a 4-letter creation, it’s not just the word but the intention itself which can be masked in other ways. The executive will interpret it in just the same way.

Let me give you a few examples of phrases which mask the word, yet communicate it just the same:

John, we’ve analyzed the firm’s operational requirements and we’re confident we can offer you our deployment services …

Oops, did you just say “offer me?” You mean like sell me something?  Hmmm…

Or perhaps …

You know Karen, we’ve just launched our operational analysis program services and, as you would be our first user, we could offer it to you with a special discount …

Ay yay, yay, did we just walk into that one again? Discount? Really? You know better than that.

And here’s one more …

Thanks Jeromy. We’ve really gotten to know your operational requirements very well and we think, if you were to allow us to access some of your engineering resources in the project, we might be able to reduce the price of our services by at least 20%.

Ok, so this one sounds reasonable but actually it hides multiple problematic messages. For one, the quid-pro-quo nature of the offer will immediately trigger a secondary valuation of what that actually entails and will kick the conversation over to a different department and your conversation with the executive is ended. And then, the bargaining of a discount triggers the executive’s brain to point you to Purchasing for that discussion. You’ve pretty much struck out with a single sentence.

In all these examples, while the word SELL was not explicitly used, its meaning and intention were clearly front and center and created, and then placed you on an off-ramp in your engagement with the executive.

What then to do? How about delegate the selling conversation to others on your staff who, together with their counterparts in the executive’s organization will present, help evaluate and together structure a value, not a price offer which will be presented to you and the executive, for review. You now are elevated to a partner status to the executive and can help them assess that value and the application of the offer, not its price.

So hopefully the message is clear.

Do not EVER, EVER, EVER, EVER …… EVER use the word sell in the presence of an Executive. EVER.