The Difficult Art of Negotiation

It’s a sensitive and touchy topic to choose. And one which I have really no mastery over. But then, when does one have to be a great master of the subject, to be a great teacher? It is more important to be a sincere and dedicated student of the art, the learning shall come, and it shall be shared. 🙂

Had a difficult day at the office yesterday. Nothing unusual, except that even after 14 years of corporate career, and having greyed quite a few hairs at 37 already, am surprised that I could still get affected by any one conversation by anyone, be it close ones or strangers.

It was all about a relatively straight forward negotiation….and that’s why this topic…

Some of my observations (from both successful and failed Negotiations)…

1. Every conversation is a negotiation: Be it a simple blabber with your 2 year old to keep the mobile away, or one with your dad on your differing approaches to life; be it a professional conversation, or personal, or even a random conversation between intellectuals, each trying to make a point.

The point of negotiation may not be obvious, the benefits and losses may not be easily perceptible…but make no mistake…every conversation is a negotiation!

2. Give and Take: In every conversation, there is something to lose! It could be money, resources, happiness, peace of mind, time, pride! And there is something to gain…And not every person is capable of understanding the nuances of give and take, or capable of the little sacrifices for the big gains. Most people enter into a negotiation focusing on the gains. (like we do in investment circles). Whereas, the focus should be on risk management, on what we can afford to lose; and to ensure that we lose as little as possible so that the gains become outsized by comparison; that the loss is intangible where possible, while the gains be tangible.

I let go of a little bit of my pride yesterday, only a little, for the collective good of my investee company and all stakeholders. The loss – intangible – the guy we are hiring as a turnaround consultant, in the middle of a tenuous negotiation, essentially chose to tell my boss in indirect terms that I am a glorified clerk. Possibly cause he couldn’t handle having to negotiate with a guy 20 years his junior.

It hurt my pride like anything. But I let it go (as gracefully as I could under the circumstances). The gain? He is technically qualified, the project is difficult and the upside in equity could be huge. Fingers crossed! I chose to focus on keeping my loss to a small intangible (the hurt will soon be forgotten), while the gains would be outsized and tangible (and if the investment does make money, the intangible gains will also be immense). I may have looked silly for 30 seconds maybe, but I came out better on the other side of the negotiation

3. Cut the emotions out: As I was being insulted in third person (over a call, while I carefully heard it all on the speaker phone)….my first thought? Relieve the gentleman of his senior citizen ship for good… :-D. I chose the harder alternative – stepped out of the room, took out my anger out, took a deep breath, and within 15 seconds I was back in the room and on the call… I had the choice to respond in kind, but I chose to focus on the bigger picture.

4. Do you have a weak hand? Do they know it? Do they know that you know that they know it?: Never give anyone the satisfaction of knowing you have a weak hand. Enter into any negotiation with the instincts of a winner, and always have alternatives in mind, so that the other person cannot browbeat you into a disadvantage. And even when there is no alternative, focus on extracting the most optimum solution for all, not necessarily the solution that you desire. Focus on giving as little and taking as much as you can from the solution, but let what you give be important to the other person, and let what you take away be more important to you than him.

The caveat? Easier in theory, than in practice. 🙂

5. Negotiations aren’t a battleground or a place to prove a point: I have 14 years of work experience, an MBA from one of the top colleges in the country, countless number of commercial transactions successfully closed, reasonably fine grip on the nuances of the language and its implications, and reasonable experience dealing with legal documentation and negotiations. But today was not the day to recount it to my friend on the other side of the phone. I’ll get my chance one day. And even if I don’t, how does it matter? I am where I am cause of what I did right or wrong over an entire lifetime….likewise the other person….one conversation won’t make a damn difference to it!

6. Negotiations are often a process, rather than an event: They build up, sometimes over hours, sometimes over days, weeks, months….sometimes even over years! And there is constant posturing, sometimes a bit less, sometimes a bit more. And negotiations work in cycles….Like, how does our effort and dedication peak just before the annual appraisals, while our performance hits a nadir (as per the bosses) at the same time. 🙂

7. Know which battles to fight!: You won’t win every round, every point. You don’t have to win it either. Federer was the better player at this year’s Wimbledon finals for almost the entire match. Except, when it mattered! Would it have mattered if Djokovic lost the 2nd set more narrowly? Don’t think so. Long into history, what will be remembered is that Djokovic came out trump in a battle of the giants, not that Federer was the better player for most part!

Interestingly, by writing this article, I am turning a bad day at the office into a learning that I can share, hoping that someone actually gains from my perspectives. Even if I person does so (that person could be me also. 🙂 ) …. I would have actually won a lot more from the failed negotiation already, than I lost.

8. Don’t be too pushy (read Donald Trump 😀 ): Being right is not as important as being graceful. The posturing and deal making apart, the intent to win apart, it is also about being humble in winning and graceful in defeat. Often, in our desire to prove a point, or by being too pushy, we lose either the arguments or the relationship, or maybe both. Know when to back off…no matter whether dealing with a friend or foe, with family or rank strangers…

9. The closer they are, the harder and messier it gets: Talking of family, brings me to the most important takeaway – the closer someone is to you, the more difficult it will be to negotiate with them. Dealing with rank strangers is often easier. Dealing with people who have only a transactional relationship with you is easy. Cause the emotions linked to the discussion are not as strong; the stakes often not as high; the fear of loss and downside from loss are often subdued. But your close ones are harder to deal with. Cause they know you well, they know your traits, your strengths and weaknesses. Just as you know theirs. They are also more aware of the real benefit and loss to you, just as you know to them….

10. The instincts to close: Sometimes, negotiations can drag on and on and on. Cause of insistence on the simplest of issues, or bringing ego into the picture. Or cause of thinking in iterations and back and forth. At such times, remember, the idea is not to get into an intellectual tangle but to find a way out and reach a solution. Time is critical, and it is more important to get things done!

This comes with experience, and learning from people around you, learning from situations.

11. Changing the actors: Sometimes, especially in corporate negotiations, geopolitical discussions etc. the best way to close a negotiation is to change the actors on either or both sides. Not because there is a capability issue. Not because there is an intent issue. Not even because there may be egos involved. But simply because sometimes a fresh mind can turn things in a positive direction, simply because there is no baggage involved.

12. Walking Away: Sometimes, walking away from a situation is the best possible solution.

13. Position of Authority: Avoid entering into negotiations where you are not the ultimate decision maker. Or do not have the clear mandate on what’s possible, what’s not. And where you do not have the flexibility needed to manoeuvre discussions to explore a range of solutions. If you negotiate from a position of non-authority, you will often end up stretching the conversations, reaching sub-optimal outcomes and more often than not, failed negotiations!

14. Negotiation is an Art!: The last, and the most obvious takeaway. Negotiation is an art, which means, that you can practice it and become better at it. 1 day at a time. 1 conversation at a time. 1 challenge at a time. 1 opportunity at a time!