Since I initiated this newsletter, I have received hundreds of emails; many that chronicle personal experiences with business negotiation. Some of you firmly suggested that I am ‘off-path’ on my attempt to promote ‘sustainability through mutual benefit/mutual satisfaction’ as a more desirable negotiation modality.
W. J. emailed me:
“Gary, while I appreciate this concept of sustainability, I don’t see how that applies to modern business. The pressure to negotiate ‘for the kill’ is too great; clients would cut me off if I started talking about mutual benefit.”
I didn’t say this was an easy task. I have also explained that ‘business diplomacy’ requires that you drive your interests while playing the role of a ‘mutual partner’. I recall an earlier installment where I suggested that negotiation is like a living play where the participants take on certain roles. Most time that role has to be multi-faceted; the one that faces the negotiating partner (your opponent) should not be the same one that talks to your client or business partner. Conversely, your internal voice isn’t likely the one talking during an especially intractable negotiation either.
My point is this, being a ‘business diplomat’ doesn’t suggest that you turn yourself into a rug. Use your God-given talents of conversation and reason to move the negotiation toward your goals without shoving.
Here’s another point. I used the metaphor of the ‘play’ to contradict the other popular metaphor: that negotiation is like war. But I admit that sometimes war is the only avenue. While the role of a business diplomat seeks relationship-building; making constructive conversation and common understanding; this only works when people are interested in constructive relationships. What do you do if you are facing a horde of barbarians? What if you’re the only guy who wants to ‘play nice’?
I have played the role of the diplomat, even to the point where it gives the appearance of weakness. I always seek strength from appearances; weakness in one area begets aggression from an unexpected quarter. Even then, you may find a situation that, despite your best efforts, develops into a conflict you never wanted. Sometimes, both parties can’t negotiate. It’s illegal, for example, for members of a specific sector of the economy to collectively agree to set prices, or to divide the market among them. Often we are driven into a mutually destructive path in which both parties lose.
On the other hand, one or both parties to a conflict may refuse to negotiate. There might be legal issues that have to be resolved in court or stockholders conflicts that can only be solved at an annual meeting.
And no matter how decent you are or how well you treat people, a corporate rival or a business competitor may develop into an enemy determined to drive you out of business by any means possible. Confronting this enemy will become a competitive knife-fight, and perhaps only a single player can remain in business.
Case in point.
A several years back, a dear friend of mine complained that he had found himself in a terrible bind. He negotiated terms for a land lease, but forgot to include certain provisions that dealt with financing long-term capital improvements. Often, the landowner and the lessee may share some of the cost of the improvement because the landowner benefits from increased value enhancement. In this case, the owner was raking him over the coals. My friend should have seen this one coming – in fact, he was pretty embarrassed over the whole deal, but the owner could have been more flexible – what happened to give a little, gain a little?
My advice to him: Suck it up. You messed up and now this guy wants all the marbles – so let him keep them. Time is on your side. Eventually, situations will change and you’ll be holding all the marbles.
Then, a wonderful thing happened. The tax assessor came in and reassessed the value of the property which, after improvements, was nearly quadruple the previous tax rate. And guess who got the bill? Not only that, but guess who forgot to include a tax override provision in his contract? Next thing my friend knew, he was getting desperate calls from the guy’s wife about how the tax bill was going to ruin them if the current tenants didn’t help out with the tax bill. Some of us might have used this opportunity to renegotiate better terms for the overall lease (not to mention the financing charge for the developments). But not my friend. He saw another path (and I could hear his talons stretching out).
What was good for the goose was also good for the gander – said my friend. He flatly refused to help with the tax bill. The owner was forced to mortgage the land to pay said tax bill. Suddenly I looked like a prophet when things turned hard in the economy. The owner ended up defaulting on the loan and today, my friend is the proud owner of some nicely developed property.
There are lessons for both sides of this scenario. Obviously, the business diplomat recognizes the lost opportunity for a sustainable arrangement. Had the landowner been more workable; had my friend been a tad more aggressive with his contract making, the landowner might not have lost his property. The fact that my friend now owns the property is a byproduct of these compound errors.
Next time, I’ll show you an example from fairly recent history where an error in negotiation was not recoverable and led to far-reaching and tragic results.
]]>Decision-makers should never underestimate the power of retribution, spite, and loathing in the world of business, not to mention a specific competitor’s desire to be the only player at the top of the hill.
Sometimes, decent people think that everyone else is decent. They assume that if they are reasonable, then everyone else will attempt to be reasonable as well. When that happens, they fail to recognize that someone else seeks to destroy their business or career.
The result of this myopic view can be disastrous. Thirty years ago, the largest corporate fortune in history was lost to an upstart because one man failed to understand Sun Tzu’s famous maxim, “Know thine enemy.”
Many are aware that MS-DOS, the foundation of the Microsoft empire, was originally called 86-DOS and purchased for $50,000 from a tiny operation called Seattle Computing. That operating system was renamed and licensed to IBM under terms that required all of its new PC model to be equipped with MS-DOS – only.
Few are aware, however, that industry insiders recognized 86-DOS to be a reworked, but wholly unlicensed copy of another operating system called CP/M-86, then the industry standard produced by Digital Research, Inc (also known as DRI). IBM equipped every IBM-PC it sold with MS-DOS, but charged a prohibitive $240 for CP/M-86. The managers of DRI never acted, never sued. As a company then worth well into nine figures, DRI could have afforded the legal fees necessary to seek an injunction against the sale of MS-DOS.
Within two years, virtually every computer in the world, other than Apple, came with MS-DOS. Microsoft’s control over operating systems provided the upstart with a gigantic, almost effortless cash cow. This money allowed Microsoft to rise above all others and bludgeon almost all of the once flourishing consumer software industry into absolute obscurity, including the once venerable DRI.
Dr. Gary Kildall, the founder of Digital Research; and the first man to build a direct forerunner of the PC; later revealed why he was hesitant to take legal action against Microsoft. “Bill (Gates) was my student back in high school. I taught him computers. You can’t sue your student, can you?”
You can, if you are willing to understand his intentions, his unreciprocated ill-will. Humiliated, Kildall died following an accident attributed to alcohol. I heard that Kildall had started drinking pretty heavily around the time that Novell purchased his company in 1991.
Had Dr. Kildall understood the nature of the threat that he faced, and the consequences of ignoring it, I believe that his career, and his life, would have taken on an entirely different track. He should have fought tooth and nail for what was rightfully his. At least he should have followed the example of the oil industry of the late nineteenth century. When confronted by the ruthless Standard Oil trust, smaller companies could choose to fight, and inevitably lose, or sell out gracefully and receive a generous allocation of Standard Oil stock.
Some critics suggest that Kildall simply did not have any options. Personally, I don’t concur. Over the years, both Microsoft and IBM acquired troublesome competitors just to get them out of the way. Non-action was the last thing that Kildall should have considered. If he didn’t have the option to sue, the least he could have done is seek an accommodation. Therefore, this tragedy was of his own making.
The first act is to recognize that you have an enemy. The enemy may be as soft-talking and reasonable sounding as you. But as the old adage instructs, not only should you know thine enemy, you must anticipate his plan.
Remember the power that you have in your grasp when you enter a negotiation knowing – in advance – what necessitates a successful deal. Not only should you carefully review the conflict and avoid overindulgences, you should seize every opportunity to create sustainable business through mutual satisfaction. However, such relationships are not always possible. Sometimes you must draw the shield and sword, if only to establish mutual respect.
That’s the whole reason why I have created these personality ‘constructs’ for negotiation. These are helpful in defining roles that we play at the negotiation table. However, among them: the Watcher, the Realist, the Nice Guy, the Listener, the Samurai; each hold fast to the idea that sometimes, you can’t avoid the fight.
]]>It is a region that carries many stereotypes in the West; broad generalizations about a diverse and expansive culture. To be honest, in my twenty years of shuttling between North America and my former homeland, I have found plenty of stereotypes held on both sides.
Yet, people from East and West are able to find enough commonality to work around the fiction and establish durable relationships and sustainable partnerships - many of which have been very profitable. How? The answer to that question has fueled my ambitions and my business for almost a quarter century.
An ongoing series of articles illustrating the elements of “business diplomacy” – the art of drawing parties together for mutual benefit and for building sustainable long-term business relationships.
The news these days makes me want to cry. Don’t we ever learn from our history? Wasn’t the Great Depression ‘great’ enough to teach us that unregulated, dishonorable people will do bad things to our financial system and our economy?
Of course, we all know that learning is an individual experience. Even the most valuable lessons may mean different things to different people. In the group experience, lessons are diluted by variables in interpretation and perception. How does a group go about applying a ‘valuable’ lesson if it can’t even agree on the causes (or effects) of a given situation? The old saying about pearls before swine comes to mind.
Let me be very clear, local prosperity depends upon global business. There are undoubted opportunities to be had. Currency fluctuations coupled with rebounding economies (and they are rebounding, by the way), means that this is an excellent time to venture out into the Middle East for new opportunities.
For the well-prepared entrepreneur, the Middle East offers substantial opportunity to build business and grow wealth. This is one of the developing economies where expansion is projected to continue unabated into the foreseeable future. And so that we are clear, this is not all about oil. We will see continued and significant demand for European and American products - especially for commodities, but also for durables, perishables, and a broad range of services.
However, as always, if you wish to do business in a place where you are unfamiliar and innative, it is imperative that you learn as much as you can about the history, the culture, the etiquette, and the protocols of negotiations present in your host nation. Let me emphasize – this is a vital prerequisite.
Through knowledge, stereotypes dissolve. Armed with awareness, you can overcome barriers to communication and bridge those simplistic generalizations that keep people apart. Ah, but here’s where the hard work comes in.
The Middle East is a region with an estimated population of more than 360 million people. The economies range from very poor (examples: West Bank/Gaza and Yemen) to extremely wealthy (example: Qatar, United Arab Emirates, Saudi Arabia). Still considered “emerging” economies, the Middle Eastern nations represent almost $2 trillion in GDP. Admittedly, some economies rely heavily on hydrocarbons (oil). But most others – almost half of the total GDP – is highly diverse.
The Arabic speaking Middle East includes the countries of Lebanon, Syria, Jordan, Egypt, Bahrain, Saudi Arabia, United Arab Emirates, Oman, Kuwait, Qatar, and Iraq. Other countries considered to be in the Middle East include, Israel, Turkey, Afghanistan, Iran, Armenia, Libya, Gaza, and the West Bank.
While there are many subtle differences within the Arabic speaking Middle Eastern countries, there are vast differences among most non-Arabic speaking countries. As such, this article will deal mostly with the Arabic speaking countries only.
When doing business in the Middle East, it is wise to bear in mind the contradictions.
While there are huge differences within the region, nowhere else in the world will you find a region as vast as the Middle East that shares a common religion, language and culture.
It may seem obvious that when entering any country to do business, it is best to leverage established ties rather than attempt to build new ones. But in the Middle East, this is clearly vital. As difficult as it may be to accomplish, once a relationship is established, your Arab partner will want to be your friend and will be unlikely to change. As it turns out, they are quite similar to the rest of us: they tend to stick with people they know and trust.
You will never complete successful business ventures in the Middle East via long distance. Arabs hold a keen value on personal relationships. Much emphasis is given to family ties, friendships, trust and most importantly honor. It is crucial for a foreigner doing business in the Middle East to understand not only the value of business and personal relationships but also the time it will take for these relationships to develop as they are built on mutual friendship and trust. That is one of the reasons that you need to send the same representative each time you go there. And yet - your host will likely drop changes on you at the drop of the hat.
Although Arabs place a high emphasis on punctuality of their foreign guests, they rarely practice it themselves. And yet, Arabs may say ‘mow’id inglizee’ (translation: ‘English meeting’) to stress that an appointment will be strictly observed. By the way, if you find that you cannot avoid being late, prepare a polite explanation and all will be forgiven.
Much of the Middle East is very modern, but there are exceptions – some of them are a bit amusing for the uninitiated. While on a business trip to Aleppo, Syria, I checked into a hotel with one of my investors late at night. I told him that I would get him in the morning to have breakfast. When I went to pick him up in the morning, I saw a cat lying on his bed, I asked what the cat was doing there and that I didn’t know he liked cats so much. He told me that he heard a mouse running around in his room at night and called the front desk. Ten minutes later, they delivered a cat to his room. His comment, “No more mouse.”
You will also find a sense of pride and humor imbedded in the Arab logic. For that reason, I strongly advise against making overt comparisons between the United States and any of the countries in the Middle East – even on obvious issues like freedom of speech. While on a business tour recently for a property investment firm, my client commented to our host that in the United States citizens can speak freely against government and its policies. “Same here,” quipped our host. “We also speak freely against the United States government and their policies.”
Despite some of the little speed bumps you may confront, consider this point: Arabs are easier to read than the Chinese. A friend of mine complained that he spent considerable effort to set up a manufacturing deal in Shanghai. But he could not get a firm reaction about his proposed terms and pricing from his host. “They kept smiling and nodding,” he said. They happily responded “yes” and eagerly nodded when he asked if they had read his proposal. He thought he had clinched his deal, but as it turns out, their obedient “yes” only meant that they received it; they had rejected the proposal long before he had arrived.
Arabs will give you a clear cue if your deal is in trouble. They will raise their hands and respond pleasantly, “In šā Allāh” which translated means “God Willing.” If you hear that, you’d better be ready to roll out your plan “B.”
Misunderstandings happen all the time. A great many of them are caused by miscue. One of the things that I find surprising, even among folks who have considerable business experience, is how frequently the value of nonverbal communication is ignored. During any negotiation, a major part of the communication between the parties is totally nonverbal and indirect. I believe that this is true in any society. Here in the U.S., researchers have long since established that the vast majority of all interpersonal communication is nonverbal – the way you hold your hands, how you stand, the expressions on your face – these are all part and parcel to the total communication.
Nonverbal communication is also telegraphed by the ambience of the meeting place, the time of day (or night), the choice of entertainment (or not), and even the choice of beverages and appetizers served. Clothing, hairstyles, and jewelry play important roles in communicating who we are. They most certainly communicate how well we are attuned to local culture and style. For instance, do we not react to someone differently when they wear a suit as opposed to a Hawaiian shirt? I’ll tell you now though, that folks in Hawaii are more likely to attend a business meeting in their very best “Aloha” shirt than an Italian tailored gabardine. Well, here goes another one of those “When in Rome, do as the Romans do” questions – would you show up to a NASCAR race in your Sunday-School suit?
Please do not wear a thobe or kurta (robe). Shoot for modesty in your attire. You may leave simple cues if you like, but if you are unsure that they will be misread, go the safe route and leave them home.
Business folks in the Middle East have an even higher appreciation for nonverbal cues than in the U.S. or Europe. So, as they are constantly on the lookout for symbols, you should be too. Watch for raised eyebrows or a tapping finger on a table; which are often cues that you need to drop your own topic and pay very close attention to your host.
Which brings me to the art of business diplomacy – negotiating with your Arab partners.
I have found that in negotiating price with Middle Easterners, they will tend to discount by a meaningful percentage. I don’t agree with people who start with artificially high numbers thinking it will be negotiated down anyway. It is more effective to take your time and explain why the price is what it is and make sure they understand the realities of the situation.
The key is to be patient and negotiate from a strong position. Good relationships start from a strong proposal. For instance, do not negotiate with the idea of discounting at the start.
Remember that Arabs were a trading people long before the United States existed. Culturally, they are excellent negotiators. Haggling takes places everywhere, whether at the shop or in the boardroom. But keep in mind that all decisions are made slowly. Bureaucratic formalities tend to add to delays. Do not use high-pressure tactics, as they will be counter-productive.
Of course, we cannot have a discussion about the Middle East without mentioning the importance of Islam. What I could write about Islam and the Middle East would alone take up a whole series of articles – a book even. I strongly urge that you pursue gainful research before embarking on any business in the Middle East. However, I can offer a few pointers.
You must understand that Islam is not only a faith it is also a culture found in the very fabric of the Middle East. Islam permeates all levels of Arab society. It guides social lives, it gives value to relationships, and it offers rules and guidelines in the way people govern their personal lives as well as their business. I guarantee that Islamic values and rules will influence every aspect of your business.
Muslims, people who are adherents to the faith, tend to take their congregational obligations more seriously than the average American. For instance, you’ll find that many Muslims pray five times a day. So it is a good idea, if you can at all help it, to schedule your appointments and meetings around prayer times. If you cannot get a schedule in print from your host, you’ll hear the call to prayer (azan) from the mosques. Not everybody will go to the mosque. Some will pray at home or in the office. But on Friday, most Muslim males are obliged to attend the mosque.
I tend to avoid doing business in the Middle East during the month of Ramadan and two major festivals, often called the “Eids.” Eid al-Fitr follows Ramadan and Eid al-Adha follows the annual pilgrimage, or hajj. During Ramadan, Muslims fast from dawn till dusk; they refrain from eating, drinking or smoking. The Eid holidays last approximately three days apiece, but it is not uncommon for governments to extend the holiday period. The exact dates of Islamic holidays are determined by the Islamic lunar calendar – the expected visibility of the hilal (waxing crescent moon following a new moon).
As mentioned earlier, one element that works to your advantage: Arabic is the first language throughout the region. Even better: most of the business sector speaks English or has good access to interpreters. This will help pave the way for your negotiations and subsequent discussions; at least it will minimize the frustrating language gaffes that one can expect in Asia and Europe. It is also ideal to learn some basic greeting phrases that will help garner further respect from your host.
Speaking of language, even as negotiations are concluded, I advise that my clients retain a trusted interpreter. I say this not because your host could take advantage of you, but because it is good policy. At the least, it helps balance the playing field when someone on your side speaks their language. Note that whenever you deal with the public sector, not only will you need an interpreter; you will also need a guide adept in the local political structure. For instance, not many people realize that, despite all of the capitalistic endeavors, much of the entire region features a mix of socialism – an often overlooked fact that often produces some interesting results when mixed with the aforementioned cultural attenuations of Islam. Moreover, each locality will also have their own way of doing things.
The one word that many Westerners who have done business in the Middle East use to describe their endeavors is “chaotic.” They may also say “frustrating” and “irritating.” One very good friend of mine, a well-traveled man who has done business all over the world, counters with, “refreshing, enlightening, bold.” So, how you feel about it is totally a matter of personal preference. Business meetings are all about relationship building: establishing trust and compatibility. Towards this end, your Arab partner will likely want to engage in personal conversation in an effort to get to know you as much as the deal you are pursuing.
Trust and honor are held in such high regard that they are treated as commodities; invaluable, imperishable, impermeable. As such, people tend to prioritize personal matters above all else. Business is therefore one of the social spheres with which well-found relationships and family ties are constructed. This system known as ‘wasta,’ is not only a manner of course, it is prerequisite. If you have friends or contacts in the right places then rules can be bent or things done more quickly. The system works on the basis that favors are reciprocated and never forgotten. Although it may seem biased, it is something that makes doing business in the Middle East among the most satisfying of my professional endeavors.
For me, I find Arabs to be personable, hospitable, and warm people. They are among the most family oriented in the world – they do not separate their professional life from their personal one. Given some of my experiences in the last several years, America could use a little touch of ‘wasta’ in its business practices. With such an emphasis on family and close relationships, the business culture places more value on your word than on a written agreement. Consequently, contracts are often viewed as ‘memorandums of understanding’ or ‘protocols’ rather than binding, fixed agreements.
Like all business endeavors, you must be determined to succeed. Let the culture define your anticipation and goals, otherwise you will be frustrated. Arm yourself with knowledge and a clear understanding of expectations and limitations. If you are patient, the Middle East will become a place of beauty, adventure, and success.
]]>The news these days makes me want to cry. Don’t we ever learn from our history? Wasn’t the Great Depression ‘great’ enough to teach us that unregulated, dishonorable people will do bad things to our financial system and our economy?
Of course, we all know that learning is an individual experience. Even the most valuable lessons may mean different things to different people. In the group experience, lessons are diluted by variables in interpretation and perception. How does a group go about applying a ‘valuable’ lesson if it can’t even agree on the causes (or effects) of a given situation? The old saying about pearls before swine comes to mind.
Yet, history is one of the best teachers you can ever hope to meet. Filled with dazzling anecdotes, colorful examples and endless opportunity for comparative examination, history offers clear lessons on what was done, what was not done, what could have been done better, or if any ‘doing’ was needed at all. The least you can do is prepare yourself should a similar situation arise. With hindsight and the present financial crisis in mind, I wish I had bought a bigger mattress.
Speaking of history, in previous installments I have demonstrated how negotiating through mutual satisfaction can draw people together into sustainable business relationships. I have spend most of my time describing how the business diplomat may respond to the negotiating partners with personality archetypes I call “The Listener,” “The Nice Guy,” “The Realist,” and “The Watcher.” I also examined the ‘rational’ negotiation vis-à-vis the Samurai’s code of Bushido. Today’s installment deals with another aspect of the Samurai, that of personal honor.
Honorable negotiations happen when the business diplomat can craft a good agreement that doesn’t leave the other guy feeling as though he had been mugged in a back alley. Obviously, you must push for your own advantage, but you must also leave something on the table for the other side that makes them feel that they earned an honorable dividend from the deal – that they are a part of a shared vision rather than a slave to your designs.
No matter how victorious you may think it is getting a “good deal” for yourself, leaving your opponent groveling and bitter means trouble. The mere perception of unfairness may lead to more haggling, managing, and renegotiating. You will erase any gains you may have thought you earned.
It may seem a bit misplaced making ‘honor’ such an important feature of business arrangements. After all, we are talking about human relationships. William Shakespeare often grappled with the nature of honor and of human relationships. On this point, scholars frequently point out the so-called “Henry” plays, Henry IV and Henry V.
Shakespeare was fascinated by the relationships held by royalty. In the Henry plays, he sought to illuminate Prince Harry’s friendships prior and immediately following his ascension to the throne. In Henry IV, find the prince hanging out in the 14th century equivalent to today’s ‘dive-in, crawl out’ bar where he is a denizen of the “hood.” Around him are common pub-crawlers: knaves, thieves, and all sorts of dishonorable types. His apparent drinking buddy is the immensely dishonorable Sir John Falstaff.
Falstaff is fat, gluttonous, lecherous, and unscrupulous. He steals. He has a misplaced vanity that leads him to drag an opponent’s corpse around long enough to claim credit for slaying him in combat. Of course, somebody else has done the deed — it is Harry himself.
Shakespeare’s Falstaff is filled with humankind’s most dishonorable vices. But, he also graced with a quickness of wit and cunning that Harry finds impossible to resist. On the other hand, Harry is young, impressionable, and fun loving. The juxtaposition of the two characters wears on our expectations at times. Falstaff’s dishonor is as large as his girth. At every turn of the page, it seems that Harry has come to a cross-roads with the relationship. Finally, just as we begin to feel that the relationship will weather any transgression, young Harry abruptly discards Falstaff with such suddenness that it seems overly cruel and vicious to all.
While his plays often remind us of the sheer brutality among kings and princes, Shakespeare also causes us to see that dishonor even among those we presume to be honorable is to be expected. However, it’s just a fact of life that some people have a disposition for dishonor. They don’t hide how they abuse people and relationships. They openly cheat and brag about taking advantage of every weakness. They disavow pledges, obfuscate agreements, and ignore their responsibilities. In their wake is nothing but conflict, disappointment, and the virulent cancer of distrust.
Yet it remains that the forbearance for honor is vital to any successful relationship. Agreements that feel “honorable” are the ones that encourage mutual respect. You may not trust your negotiating partner with your life, but at least you know that he’ll play by the terms of the deal you just negotiated. When forbearance ebbs, that’s when we expect dishonorable behavior and distrust permeates all levels of the relationship. All sides will scrutinize every little deal point and spring into action with any perceived infraction.
If current events (e.g., Made-off, Stanford) is not enough to illustrate this point, then consider the so-called Treaty of Versailles. Germany expected an honorable negotiation, but instead they were handed an insulting list of hard-nosed demands and obligations. The winning side not only declared their victory over the vanquished foe, they shoved their faces into it and forced them to wallow in the swill of disgrace. Horrendously dishonored, bitterness quickly overcame the Germans and ultimately set the stage for Nazi propaganda machine and the rise of fascism.
Do you think this is over the top? Consider the fact that after World War I, everybody wanted a lasting peace. And they might have succeeded had they produced an honorable agreement that encouraged a sustainable relationship. Imagine all of the waste and suffering that could have been avoided if they had given honor a chance to work. I submit to you that business relationships are no different.
While at the negotiating table, we must keep in mind that all negotiations are, by their nature, adversarial. People are ready for conflict and ready to fight. There are also personal aspirations, ownership, and pride. A professional business diplomat must separate the emotions from the hard deal points. He must sort out the soft issues that allow barter or trade. But first, there needs to be an open dialog and a sense of equanimity that fosters mutual honor.
Negotiation without honor is not pretty. People strike out against adversaries as they dig in and become intractable. They may even interrupt or sabotage ongoing negotiations just to prove a point.
Dishonorable behavior cannot be outlawed, so a professional business diplomat has to work like hell to encourage people to play nice in the sandbox. Through “honorable” negotiations, we stand a greater chance producing workable outcomes, sustainable deals, and productive relationships. Which is why we’re all here doing business, isn’t it?
]]>I have suggested that negotiation is like a living play where the participants take on certain roles according to a scripted plan. I use the metaphor of the ‘play’ to contradict the other popular metaphor: that negotiation is like a war.
Too many people use the allegory of warfare for activities involving human communication. Relationships should be constructive and build toward common understanding. Understanding is best achieved when people are thoughtful and considerate; even to the point where it gives the appearance of weakness. I can’t tell you how many times I’ve sat down on the opposite side of a table and felt as though I was facing a teaming horde of barbarians ready to slash and burn everything.
With warfare as context, the civilized act of negotiation devolves into a wasteful effort that often achieves very little in terms of sustainable business, much less good relations. I’ve seen aggressive negotiators turn good friends into enemies and render excellent business opportunities into meaningless trash. I shudder to think of the waste caused by the boardroom barbarians.
A little while ago, I was reflecting on a difficult negotiation where I felt that I was completely undone by such wanton characters. Then it occurred to me - what would a samurai do?
When you see the word “samurai,” you probably think of a stern-faced man wrapped in a robe and welding a long sharp sword. Yes, I couldn’t help drift into a satisfying fantasy of sitting down at the conference table and pulling out a 3-foot long sword sharp enough to slice a feather floating in the air. I’d certainly would get people’s attention and maybe some easy concessions, but then there would be the whole liability thing, police, a messy trial, maybe prison… not a pretty picture.
However, there is something attractive about negotiating like a samurai, and it has nothing to do with sharp objects.
First, let’s explore some samurai basics - with a tip of the hat to my trusty researcher Ray. The samurai is a product of Japan’s feudal past, the equivalent of medieval knights, sans horse and armor. Samurai were honorable and loyal warriors skilled in many forms of combat. He characterizes intensity, absolute dedication and determination to whatever mission moves him. His raison d’être is found in a rigid system of beliefs called “Bushido” or “Way of the Warrior.” The ultimate goal is to find honor through death, which is a fairly common theme throughout many warrior societies (even barbarians) and is usually used in movies as an excuse for a nicely placed bloody martial arts fight scene. But the samurai warrior uses Bushido to be totally logical, painstakingly methodical and absolutely practical.
Unlike a barbarian, the samurai knows that there are consequences to every action. Therefore, battle is something that you do for good reason; every motion has a specific purpose and every outcome has an expected moment. The samurai also knows that victory and defeat are temporary states of human relations. One must always expect change; change is natural and balance is illusive. Finally, the samurai warrior questions all things - looking beyond words and reactions, reaching out to nature for understanding and enlightenment.
This is hardly what you would call “do or die” warfare and not at all “slash and burn.” Bushido is highly analytical and requires a rational state of awareness that is unappreciated among Western negotiators. But where we often fail is in our lack of understanding of the virtue of satiety.
I was watching several old black and white samurai films that were loaned to me a little while ago. In one, a bedraggled samurai warrior wanders into an inn and is given a bowl full of rice. He is injured and famished. At first, he practically dives into the bowl, ravenously gobbling every grain. He stops and looks around - the other people in the room are watching. He takes a deep breath, pays the innkeeper and leaves the last morsel of rice behind.
Bushido requires that the samurai shun self-interest and riches; such qualities are the corrupters of character and can lead to gluttony. As a symbol of this restraint, the samurai never finishes his meal - no matter how hungry he may be.
Ah, what we could accomplish at the negotiating table with that kind of self-control at our beck and call. Imagine the power that you have when you enter a business deal knowing what you will take and what you will leave behind. The ‘bushido’ of the samurai negotiator, if you will, is rejecting overindulgence and excess and dedicating himself to creating sustainable business through mutual satisfaction; utilizing satiety to help build lasting relationships that can endure the changing tides of economies and trends. His test of loyalty is to the agreement that can stand the test of time.
I have run the course of my personality ‘constructs’ that I have used to help define the roles we play at the negotiation table. I will review past discussions about the five negotiating personalities - the Watcher, the Realist, the Nice guy, the Listener, the Samurai - but I’m anxious to move on to another idea that has fascinated me since college: that everything we need to learn about human relationships can be found in the plays of Sir William Shakespeare. So, keep a look out for a new chapter - “Negotiating with Shakespeare.”
]]>The fourth installment in a continuing series on the elements of “business diplomacy” - the art of drawing parties together for mutual benefit and for building sustainable long-term business relationships.
My intention for sharing my experiences and observations in business negotiation is not purely for helping my friends gain a new tactical advantage in their ongoing and future business relationships (of course, that wouldn’t hurt). My hope is that by sharing these strategies, more practitioners may achieve the balance of low cost and higher long-term productivity; the kind of balance that is vital in nearly every successful business negotiation I have engaged in the last twenty-odd years.
I was very happy to see that the last installment - “The Watcher” - generated quite a lot of ‘fan mail’. Most of it was congratulatory. A few were instructive (thank you). People have also started sharing their anecdotes and personal experiences in business negotiation. I received quite a bit of mail about “The “Listener” - mostly from people telling me that they wished more people were listeners. “The Nice Guy” got some interesting reactions ranging from “you’re crazy” to full agreement, especially when facing overly aggressive situations.
Thank you - everybody - for your comments and suggestions. They are important to me as I try to hone these ideas and observations into constructive guidelines on business diplomacy. I also invite you to participate in my blog and offer your own personal anecdotes and observations on business diplomacy.
Today’s installment focuses on “The Realist.”
I discovered “The Realist” when I realized that balance was essential for establishing mutual benefits and mutual satisfaction; the keystone for building sustainable long-term business relationships. I found the Realist lurking in every successful deal I had made. It was easy. Where there was balance, contracts tended to outlive the original lifetime of the contract or, as in most cases, made lasting relationships that easily moved on to form new deals. In the few deals that had imbalance, there was more negotiation and management, thus decreasing productivity and increasing cost. The relationships tended to be acrimonious and hostile. Some even wound up in litigation.
In nearly every case where there was imbalance, at their core was a struggle between egos. Deep emotional rifts had formed; damaged personal pride and plenty of bruised feelings. Whatever their issues, the ego-involved negotiations were so volatile that they couldn’t help but lead to heightened emotions and a rough time at the bargaining table. And believe me, they were very tough. Some were so tough that I started writing journals just so that I could keep track of the arguments. God help me should I forget a point and say the wrong thing!
When egos are in conflict, there is an automatic imbalance between compromise and confrontation. One side may believe that they have the upper hand, the other side, maybe they were born stubborn. If you are lucky, somebody will quickly tire of the argument. But if the two sides have equal investment and equal strength, then prepare yourself for an equally long and arduous negotiation.
The Realist probes deeper into the conversation to uncover the motivation for conflict. As with nearly all ego-involved negotiations, you will find personal bias or ideological belief at the base of their position. Sometimes it may simply be a clash of personalities. Look for ‘hinge-issues’ - positions that can quickly convert into compromise if one side or the other is willing to yield a little.
But is it worth it?
I rather dislike ego-involved negotiations because they are inherently unproductive. Consider this observation of interpersonal dynamics: the kinetics of EGO is equal to the opposing inertia of PRIDE. Put another way, people do things for their own reasons, not for the benefit of others. The more one pushes their agenda, the more likely the opposing side will push their own and you have deadlock. Remember that rule you learned in physics law about balance through equal opposing forces? People can be as immovable as rocks wedged against each other.
Naturally, the goal is to bring both sides together by making them feel that the deal points are of their own making. If you are successful, you achieve the “win win” strategy of negotiating for mutual benefit - a deal where everyone wins, everyone profits. An effective negotiator, I believe, applies a veil of invisibility upon his/her intentions - in effect, masking personal desire for gain and, if possible, replacing it with a genuine sense of collaboration.
But, also consider the words of Ayn Rand: “You may evade reality, but you cannot evade the consequences of evading reality.” Reality is a state of disambiguation; a perspective on things as they actually exist. Therefore, the Realist looks for deal points that are founded upon actual knowledge, not hypothesis or wishful thinking. For that reason, the ‘reality check’ is probably the most important first step in any negotiation.
If you evade reality by rationalizing, you do so at your own peril. I’ve seen so many ‘unreal’ negotiations that I’m beginning to think some folks live in some surreal, bizarre netherworld where pigs fly and water flows uphill. What truly surprises me and many of my colleagues is that people are willing to invest in a negotiation without ever weighing the work to benefit ratio; is it worth the trouble?
There’s another way to put this: the KISS principle; the acronym for “Keep It Simple, Stupid.” Simplicity is essential and avoiding unnecessary complexity should be a key goal in every negotiation. Exerting heroic efforts to rescue a deal is not simple. Fighting personalities and egos can be extremely complex. A professional negotiator knows that everything is negotiable, compromise is a tool, “fairness” is a range of possibilities and, more important, sometimes a deal is just a deal. Grounded in reality, you can negotiate the compromises and establish a balance of fairness that makes relationships flourish. The viability of the business deal, therefore, depends entirely upon how grounded you are in reality.
What do we do when we come to a situation where reaching an agreement takes more effort than we’re willing to expend? We take Kenny Rogers at his word: you’ve got to know when to hold ‘em, know when to fold ‘em. This is to say, the most important act in negotiation is assessing whether or not a successful outcome with the least amount of cost and effort is possible. If not then we should walk away from the table. It’s that simple.
“No-win” scenarios are not failure. It just means that the current situation is overweighed toward effort and against benefit. By anticipating a potential deadlock, for instance, you can anticipate one of two courses: either engage and anticipate that somebody will have to reverse a key position or you must decline the negotiation.
This move also has a tactical advantage. Consider the affect on the other party by declining the negotiation. By declining, you may push the other side into changing a key position well before the negotiation has begun and thereby reaping a nice dividend from risk mitigation. If they walk away, consider this side benefit: by avoiding a useless debate and constant bickering, you may earn respect from the other party and save a chance for a better agreement in the future.
The Realist also forces us to acknowledge that negotiation is an act of communication that occurs any time somebody wants something. Draw the emphasis on communication - the gainful exchange of thoughts, messages and information. Therefore, with healthy lines of communication, you will reach goals that can be carved in stone, which is far better than drawing bottom lines in the sand.
In the next installment: Negotiating like a Samurai
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