Tag Archives: Negotiation

Finding The Black Swan

Many centuries ago, people were convinced that there were no such things as black swans. That thinking is so old, in fact, that there are references to it in Roman literature. That thinking was disproven around 1700 when a group of explorers sighted some black swans in Australia.

Since then, the term “black swan” is used to refer to something that, as Wikipedia states:

comes as a surprise, has a major effect, and is often inappropriately rationalized after the fact with the benefit of hindsight.

If you’re in business, I’m sure you’re familiar with black swans even if you’ve never called them by that name. My team often used the Monty Python quote that “NO-body expects the Spanish Inquisition!” when something surprising would happen.

I don’t think of Black Swans as negatives, necessarily. In fact, it’s exactly the sort of rare bird we should be seeking in business on many levels. For example, you’ve read many times in this space about the need to understand your customer. If you’re approaching them with an open mind, what you might find can be surprising. You might find, say, that your ad that’s aspirational in nature might have the exact opposite effect on your audience – it reminds them of what they don’t have and makes them mad.

Where I find Black Swans particularly useful is in negotiating. It’s critical to understand the needs and wants of the person with whom you’re negotiating and to get on the same side of the desk as they are, meaning you’re not in an adversarial position. In the process of doing that discovery, you often find a Black Swan – something you didn’t know about them or about something that’s part of their bottom line for the negotiation. Every party in a negotiation has a bottom line – things they can’t or won’t give up – while other things are far more fungible. Unless and until you can understand what those things are, you’re wasting time. If you find a Black Swan in the process, it’s important that you incorporate it unless it crosses your bottom line.

Part of finding the Black Swan is keeping an open mind, whether it’s in negotiating or in reading data or even in a brainstorming session. Be open to possibilities even if they don’t match your current understanding of the world. The Black Seans are out there – find them!

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Making A Deal

If you spend any time in business, you end up in a negotiation of some sort. It might begin even before you start at a job as you negotiate your salary. More likely, it happens as you work on a deal and document that deal with a contract. You might think that the deal is done when you shake hands but my experience has been that the deal is never really done, even once you’ve both signed that contract.

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To me, the contract is a reference point, something to which the parties can turn if there is a change in circumstances or confusion about expectations. As with any relationship, business deals tend to be fluid, but if the partners work in good faith, any problem is solvable. You should also remember that contracts generally last beyond the actual deal itself (check those clauses in the “survival” section).

Because agreements and partnerships are long-term, the negotiations have to be viewed in that long-term context as well. The odds are that success in the negotiation is not immediate. I have had a contract take longer to get done and signed than the term sheet that documents the general business points. It’s not because the former is done by lawyers and the latter generally by business people either. It really has more to do with the fact that others are getting involved. I’ve found that negotiating success is inversely proportionate to the number of people involved – two people can get something done that ten can’t, even though those ten can be helpful in surfacing new approaches when things bog down.

You need a couple of things to negotiate well. First, you need to know your bottom line – the boundaries you are unwilling or unable to move beyond no matter what the other side offers. You must be willing to walk away if those boundaries are crossed. You also have to be realistic about where to draw those boundaries and let the other side know when they’re asking you to cross them and why. It’s no place for dogma. If you don’t have a real reason and just want to “win,” you’ll lose.

Second, you need a vision of what the possible end result might be. You need to consider solutions with an open mind. Finally, you need to sit on the same side of the table as the person with whom you’re negotiating. I don’t mean physically. I mean you need to convey a positive message – if we work together, we might find some solution that addresses all of our concerns. We are partners in solving a problem.

I’ve had deals fall through during negotiation but they’re the exception. I’ve also had partners not live up to the contracts they signed for various reasons. That’s more common and generally because they weren’t thinking long-term when they signed the deal. What’s your experience been?

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Taking Sides

I’m in the middle of a few negotiations. Actually, I’m more of a mediator than a negotiator and I’ll explain that in a second.  What we’re negotiating isn’t important to the screed today but the manner in which the negotiations are taking place is. Frankly, I’ve rarely been as frustrated as I am at the moment and I’d like to explain why because it illustrates some things people sometimes do that are self-defeating.

The Inner Cloister

(Photo credit: kern.justin)

One thing I’ve always believed about business dealings is that there needs to be a certain amount of trust.  You have to believe that the other party is acting in good faith.  In my mind it’s like our system of justice:  innocent until proven guilty. In this case I’m working with two parties who completely mistrust one another.  In part that’s because they’re in a field that’s filled with people who misrepresent themselves.  In part it’s because neither of them is willing to reveal more than a little information at a time which fosters mistrust and doubt.  It’s a prescription for disaster.

Another thing that’s become obvious is that rather than the two parties positioning themselves on the same side of the table trying to solve mutual problems they’ve taken seats on opposite sides.  They’re missing out on the mutual creativity and solutions that can come when the parties work together.  Instead, they make demands of one another which arise from their own needs without any recognition of the other side’s reality.  It makes for a protracted discussion rather than a quick resolution.

I think it boils down to the people involved.  It’s way too easy to write it off to the industry or to the money.   Negotiating requires maturity and empathy – these folks seem to have neither.  As is the case in most business situations you can’t fix the business until you fix the people involved.  That’s a far more difficult process than any business deal.  As the intermediary, my role has been to keep the information flowing, the dialog alive and the emotion each party has been expressing to me from arriving on the other party’s doorstep to make things more complicated.  I’m successful at it some of the time but once in a while some of the above factors leak through my firewall.  It makes for interesting days.

There is only one side in a negotiation – the one on which things get done.  Of course there are divergent needs and priorities but unless and until everyone commits to a solution that is mutually-beneficial and encompasses the entirety of those things, not much gets done.  Do you agree?

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The Missile Crisis

With a presidential debate on foreign policy tonight, it’s interesting that today is the 50th anniversary (boy do I feel old) of the start of the international incident known as the Cuban Missile Crisis.

English:

(Photo credit: Wikipedia)

If you’re unfamiliar with this time, there is a great movie called Thirteen Days which captures that period in 1962 when the U.S. and the Soviet Union came very close to starting a nuclear war.  I vaguely remember the “duck and cover” drills in school but little else.  The basic facts are the we had deployed some missiles in Italy and Turkey; the Soviets retaliated by sending missiles to Cuba.  We implemented a naval blockade to stop the ships, the Soviets threatened to start a war if the blockade didn’t end.  Harsh words were exchanged and the  situation escalated into the unthinkable – a nuclear war that would wipe out 100,000,000 citizens of each country as well as create an environmental catastrophe for the entire planet.

What does this have to do with business (since that’s what we do here on the screed)?  Maybe you and a customer have a disagreement   Maybe your management team is aligned on goals but very far apart on how to achieve them.  Maybe you have a work team in which some folks do all the work while others get all the credit.  Those are just a few of the business situations which can escalate into the business equivalent of nuclear war.  Those situations usually involve lawyers, money, a lot of time, and most of your emotional energy.  They take away from the reasons you’re in business.

The Cuban Missile Crisis was solved by the parties realizing that they did share one goal – avoiding the mass casualties and planetary destruction that a nuclear war would bring.  Back-channel negotiations solved the problem in a way that accomplished that goal as well as each side’s own goals while saving face on both sides.  That’s how it gets done in business as well.  Obviously, the best situation is to anticipate things that could become problems and write careful agreements before the situations happen.  However, a lot of the time that’s not feasible  as in some of the cases above.  In those cases, the sides need to come together  identify the goals they DO share, and listen very carefully to the other side.  Avoid posturing – speak openly and honestly.  Think creatively.  Commit to solving the problem.

Few business issues (OK, none) are of the magnitude of those weeks 50 years ago but we can still learn from what occurred.  What thoughts do you have?  Ever gotten to “the brink” in your business life?

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Both Sides – Now!

Today’s screed isn’t about Joni Mitchell or her song from the late ’60’s. It’s about being an effective businessperson. I was going to write “negotiator” but as I’m thinking about it, this is really applicable to all areas of business – sales, relationships with other members of the team, – pretty much everything. As an aside, I think it’s one of the factors behind the gridlock in our political system but we don’t do that stuff in this space so just file that away. Quite simply, if you want to get to agreements on things, there’s one ability you must have and that’s our topic. Continue reading

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You vs. You

One of the big mistakes I have seen over and over during my business career has been executives negotiating against themselves.  I’m not talking about simple role-playing to sort out how best to attack a problem.  What I mean is a group of businesspeople sitting together to plan strategy or review a contract and talking themselves out of a deal point because they believe that the other side won’t go for it even though they’ve heard nothing from the other side.   Dummies!  Here’s what I think is a better approach. Continue reading

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