Negotiation Madness

Peter Nelson

• Publisher: Business Expert Press
• Year: 2018
• ISBN:
  9781948580946
• Topic: Economics
• Subtopic: Economic Theory
• Index: Economics

There have been many books written about negotiation techniques, but all of these have been turned on their head by the ability of Donald Trump to make it to the White House. Ignoring all precedents and defying even his own party, he has opened an era where neither tradition nor precedent remains the order of the day. Fake news has become the entertainment watchword in an era where a president can send out his own daily tweets to millions of followers and the world press, and no one is able to pre-empt his message or know how to respond. In what would be described negotiation madness, Trump incites confrontation into intransient situations: opening an American embassy in Jerusalem and provoking a North Korean leader by a silly name, which nevertheless still initiates first-time discussions between north and south. If he doesn't get his wish through Congress, he pretends to give up, plays the man not the issue, going against what all the negotiation books tell you, then comes in again to get what he wants. At every turn the standards of negotiation need to be rewritten in what has become as much politics as entertainment, ego rather than substance, and this is what is targeted in Peter Nelson's Negotiation Madness.

Five Phases of Negotiation

1. Phase One: Preparation

(i) Homework

The need to do your homework before entering into a negotiation you are serious about cannot be stressed enough. Following on from the previous section, as an example, in Vietnam, there are different forms of address for people older, younger, or senior. People often think it is rude when straight off Vietnamese will enquire about your age when they are just trying to find out how to address you.

On homework, starting from the position of a sales person, the preparation has to be an intimate knowledge of your product and what it is competing against by other compatible or nearby offers and your competitors.

If you are the buyer, a similar situation applies. You need to know about features, warranty, and price; the history of the store (Dick Smith in Australia didn’t help when it went bankrupt after floating despite the founder’s name); and the background of the people you are dealing with. Obviously, the amount of research you do will depend on the importance of the deal you wish to strike; but if one starts doing homework on simple issues, the mentality will follow you into the big ones. Homework then follows into specific areas.

(ii) What do you want?

Remembering the part about doing your homework, the first question as if you are formulating a business plan is to determine exactly what you want out of a negotiation, whether personal or commercial. Are you buying or selling?

For example, you are a salesperson for the XTRA Computer company who wants to sell one of your latest wiz bang super computers to a Russian company that wants to upgrade its internal statistical capability. You want to make one sale of $3.5 million covering cost, insurance, and freight (CIF), delivery within three months on site in Russia with a six-month service contract and warranty, after which they are on their own with no further warranty. Throw in that their technicians can come to your HO at their expense to study the full potential of their new system.

Offer a price reduction to $3m for a subsequent computer if they require.

Offer a new operation system at $500,000 to connect their computers to the new system.

The options for outcomes are as follows:

WIN–WIN: Both sides get what they want.

WIN–LOSE: You win but they lose.

LOSE–WIN: You lose but they win.

LOSE–LOSE: Both sides lose.

But make a plan along the line of what can be called a Road Map. Onto the plan you can plot in deviations so that your real final goal is not obvious, can throw in red herrings and offer proposals you don’t really want accepted. You never deal with the whole hand up front. You can even imply that you can walk away.

Webster & Woolgrowers Ltd. had the Fiat tractor franchise for Tasmania. We were sent a memo from Sydney head office that we were not selling enough tractors and we should front and be put on the carpet. Director Jim and I flew to Sydney and headed out to Ryde. After being chastised, which we did not appreciate, Jim upped and we walked off down the street with the Italian Fiat managing director following us to apologize. The meeting resumed where we explained that their tractors were not suitable for the hilly country in Tasmania and we were lucky we sold as many of their tractors as we did. We got our apology, an increase in margin, and a sizable advertising budget, all from just walking away.

And as with any good Plan A, always have a Plan B, Plan C, and so on, just in case.

You are going into a negotiation where ideally you want both sides to win. You do not want both sides to walk away and lose. Ideally, if not a Win–Win you want to be on the winning side, so you plan accordingly. Whatever you do, do not go into a negotiation before you know exactly what you want to achieve.

Have Plan A—Ideal achievement

Plan B—Fallback position

Plan C—Retreat position

MINIMUM ACCEPTABILITY

MAXIMUM ACCEPTABILITY

(iii) What do you think they want?

Entering the negotiation, you might expect that they will want a lower price and an extended warranty.

When looking at what the other side might want, don’t just stick to the obvious. Look at what you might want if you were on the other side and think outside the box, so you don’t get blindsided. For example, they might be a big company but still demand time payment or other warranties. Trump dealing with North Korea understands the power of ego. He understands the one thing Kim wants more than anything is not nuclear weapons, not world domination, or the well-being of his people, BUT he wants to be recognized as a player at the BIG table with the BIG boys. Trump gives it to him and suddenly there are talks between North and South, which has not happened since the end of fighting between North and South.

Remember that perceptions play an important role. It is not always what is the reality of a situation but can also be what people perceive it to be. This means both sides should ensure they are talking about the same thing. Determine also what is their need. Their perception might be ­different from yours. Or they may have an unfulfilled need that no one has thought about.

In the example of the 1975, upcoming Lake Gordon flooding for the hydro scheme in Tasmania, there was concern that the flooded forest timber would be wasted. Every Australian timber company tried to find a solution where they could use this timber with no result. I found a Japanese company Marubeni, who had a Japanese client having just completed building a chip mill to be sourced from Brazilian trees. Brazil, I learned, would not be ready to ship for two years during which time the Japanese plant would stand idle. We could fill the gap. With this proposal put to them, the Japanese came to the party, and with government approval, eight full shiploads of logs were sold for the highest price for timber ever achieved from Australia. Thinking outside the box.

But watch perception.

In another instance I went with a rugby team to play the Seychelles. We were met at the airport by our counterparts and entertained lavishly that night. The only problem was that those were not the team we had to play but their Second Team we thought would be easy to beat, but it was only when we got to the actual match we met their Number One Team, with us all slightly the worst for ware. Totally blindsided.

Remember also that people usually look to their own interests, even if they have to tailor these to fit within the group.

(iv) What is their history?

Doing your homework, you know that this company is a leader in their industry and are used to getting their own way.

In early jobs with the Food and Agricultural Organization of the United Nations, I was always worried that when I negotiated the next contract my financial demands would exclude me from consideration. It took about two years before I learned that recruitment was a two-stage process, the technical people chose you and then told the HR people to finish the recruitment at any reasonable price. So HR offers you a P5 when you already had that and want to move ahead to D1. Not good if you could be beaten down in salary or to P5 not knowing that.

The history of the company is important along with the history of the individuals in their organization. Sometimes the situation itself can be part of history and you can lay down warnings ahead of time.

In my first assignment in East Africa, the Tanzanians had just driven Idi Amin out of Uganda and returned home the heroes, notwithstanding that they had shot down President Nyerere’s son by accident when his fighter overshot Bukoba onto Lake Victoria and returned with his plane mistaken as one from the enemy. Nyerere told them to go back to plowing fields. They said NO, we are heroes and gangs of armed men raided houses every night. With my team of five, four of them were robbed at gunpoint in their homes. Two of the wives were raped. The p...

Table of contents

• cover
• halftitle
• title
• copyright
• Abstract
• contents
• 01_Chapter 1
• 02_Chapter 2
• 03_Chapter 3
• 04_Chapter 4
• 05_Chapter 5
• 06_Bios
• 07_Index
• 08_Adpage