February 2011

Business Diplomacy 101

Personalities of business diplomacy.

By Gary Bedian

Aggression as a Tool (Part B)

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.

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.

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