Executives rarely view themselves as diplomats engaged in international diplomacy, but business negotiators often find the two fields share negotiation skills and negotiation techniques. Rightly or wrongly, diplomacy evokes images of frivolity – days spent wandering exotic capitals, nights spent cruising embassy cocktail parties. Sure, both diplomats and executives negotiate, but an ambassador doesn’t have to worry about protecting the company’s bottom line or losing a deal to a competitor.
Yet it would be a mistake for business negotiators to dismiss the diplomatic realm so quickly. After all, diplomacy is the art of creating and managing relationships among nations and the art of negotiation is that of forging relationships through agreements. As such, it offers valuable tools for all business negotiators, who themselves are in the business of creating and managing relationships among companies – whether they view this as diplomacy or even as their overall goal or not.
Unfortunately, many business negotiators don’t. While Jes Salacuse was researching his book The Global Negotiator: Making, Managing, and Mending Deals Around the World in the Twenty-First Century, he asked business negotiators from 12 countries whether their goal in negotiations was to create a negotiated agreement or to build a relationship. More than half the Americans surveyed revealed that their objective was simply to land a contract. This mentality may explain why many deals, however carefully crafted by well-paid attorneys, end up in court, in arbitration, or in hostile partings.
Negotiation Examples, Tips and Techniques for International Diplomacy
The globalization of business compels negotiators to work harder at creating and sustaining long-term relationships with other companies. To do so, they must understand and manage the forces that diplomats, as international negotiators, have coped with for centuries.
Where can executives find guidance about traditional diplomatic principles?
From the people who arguably invented diplomacy: the French. Nearly 300 years ago, Francois de Callieres, a distinguished French diplomat in the court of King Louis XIV, wrote on of the first practical manuals of modern diplomacy, On the Manner of Negotiating with Princes. First published in 1716, the book is still considered a primer on the subject and offers much useful advice for 21st-century negotiators. Here are six rules on negotiation for improving your deal diplomacy and fostering lasting partnerships.
1. Great Business Negotiators Negotiate Continually
De Callieres offered a novel idea for his time: “the necessity of continual negotiation” between states. To foster an ongoing and open communication, he urged countries to appoint permanent representatives in other countries – the model for modern diplomacy.
Just as negotiations continue after two countries seal a treaty, they continue after two companies sign a contract. A contract is no more than words on paper that a court may or may not decide to enforce. But a relationship implies a connection – a complex set of interactions characterized by cooperation and trust. While a written contract may attempt to express a deal, its essence is the relationship between parties. As a German manager once told me, “Just as a map is not a country but only an imperfect description of it, a contract, no matter how detailed, only imperfectly describes a business relationship.”
A business deal of any significant duration is a continuing negotiation between parties, who must apply their agreement to unforeseen circumstances and adjust their relationship to a constantly changing environment. No negotiation can achieve perfect understanding, especially when you and your partners come from different cultures or business sectors. For this reason, focusing on the contractual aspects of a deal to the exclusion of its relational dimensions can prove costly; you might overlook sources of conflict, neglect opportunities for additional profits, and bungle unanticipated events. Although signing a contract may be an appropriate goal for a one-shot deal, an alliance, partnership, or project founded on a contract alone may collapse.
Both before and after the contract is signed, negotiators, like diplomats, should think relationally about the transaction, developing strategies and deploying resources to facilitate their continuing negotiation. Those who negotiated the deal should remain closely involved in its implementation. In addition, at the outset of the deal, the two sides should agree to come together regularly to review progress, rather than assuming those meetings will spontaneously happen.
2. Great Business Negotiators Seek to Harmonize Interests
According to de Callieres, “the secret of negotiation is to harmonize the interests of the parties concerned.” Diplomats know that the key to building relationships lies in understanding other countries’ concerns and priorities.
“The more often (a negotiator) thus puts himself in the position of others,” de Callieres writes, “the more subtle and effective his arguments will be. … He should therefore at the outset think rather of what is in their minds than of immediately expressing what is in his own.”
Even when their positions seem irreconcilable, warring nations and squabbling companies can succeed in negotiations by harmonizing their interests. In the 1978 Camp David negotiations, for example, Egypt insisted on a return of the entire Sinai Peninsula, then occupied by Israelis who were equally adamant about keeping a portion of the land as a buffer zone. Through President Jimmy Carter’s mediation, Egypt was able to understand that Israel was more concerned about security than the land itself.
By harmonizing the interests of land and security, Egypt and Israel ultimately agreed to a set of measures that gave Israel a sufficient level of security to agree to return the Sinai to Egypt (see also, Focus on Interests, Not On Rights).
3. Great Business Negotiators Have the Patience of a Clockmaker
Diplomats know that creating and managing relationships in the face of conflict is a time-consuming process, one that invariably takes longer than originally planned. American executives have the unfortunate tendency to rush through negotiations, claiming the need for efficiency because “time is money.” Unlike the typical Japanese executive, for example, Americans often reduce negotiation preliminaries and other forms of personal interaction to a minimum, all in the name of hammering out a deal.
Yet it is these very preliminaries and interactions that are crucial to the creation and ongoing health of a relationship. Time is indeed money, but scrimping on time during a negotiation may result in an undercapitalized deal. Whether time, money, or both are in short supply, undercapitalization can be the kiss of death for any contract. A deal cobbled together in haste will likely require renegotiation later on and even perhaps litigation – both expensive prospects.
A greater investment of time at the front end of negotiation will help executives avoid an even greater investment afterward. De Callieres’ advice on this point remains valid today: “[A negotiator] must behave as a good clockmaker would when his clock has gone out of order; he must labor to remove the difficulty, or at all events to circumvent its results” with “a patience which no trial can break down.”
4. Great Business Negotiators Saturate Your Mind
De Callieres repeated one key lesson again and again to the diplomats of his era: study hard. He advised them to explore virtually every dimension of the organizations, countries, and people with whom they were to come into contact. Recognizing that all negotiators are agents, he also advises any negotiator to “saturate his mind with the thoughts of his master.”
Contemporary negotiators are well served by this advice. Business executives often fail to reach agreement or derive maximum value from their negotiation because one or both sides did not prepare effectively for their encounter. Probably the worst approach to negotiation is the common attitude, “Let’s hear what they have to say and then we’ll decide how to deal with them.” This mindset is akin to a general declaring, “Let’s see what they throw at us on the battlefield and then decide how to react.”
So prepare thoroughly for every negotiation. You may only need to understand the substance of the transaction, but also to exhaustively research the countries, organizations, cultures, and individuals involved. Of course, you should also be well versed in the interests of your own organization – your “master.” While flexibility and openness are certainly useful in any negotiation, they are not the substitute for systematic preparation.
5. Great Business Negotiators Are Apt Listeners
There’s a widely held assumption in the business world that negotiation is mostly about talking and that the best negotiators are often the best conversationalists. That view overlooks perhaps the most crucial aspect of the negotiation process: listening. In the words of de Callieres, “one of the most necessary qualities in a good negotiator is to be an apt listener.” He notes, “In order to succeed in this kind of work, one must rather listen than speak.”
More generally, successful negotiation requires vigilance about your own words and behavior as well as a keen observation of the other party. The ability to understand and harmonize interests depends first and foremost on your perceptive powers. At the negotiating table, you’re confronted with a variety of viewpoints and perspectives. When you find yourself in this situation, imagine that you’re a television director watching three monitors showing three different of the same set.
Your “cameras” should be focused on:
(1) the words and actions of the other side;
(2) your own words and actions, and
(3) the effect of your words and actions on the other side.
Like the television director, you must constantly process information from each camera before deciding what to do or say next.
6. Show Respect
Respect and deference are fundamental norms of international diplomacy. De Callieres counseled negotiators in the 18th century to “reveal an innate respect for the person whom they are addressing,” paying particular respect to the “customs of the court” and “the habits of the people.”
Lack of respect for the other side’s norms and customs has caused many modern-day negotiations to collapse. General Electric’s failure in 2001 to secure approval from the European Commission for its acquisition of Honeywell International is one such example. Considering the approval of a done deal, GE executives showed little deference to European officials from the start of their involvement.
Early in the discussions, GE CEO Jack Welch approached Mario Monti, the EU competition commissioner, as if they were in a private business negotiation: “Mr. Monti, please call me Jack,” he said.
Keenly aware that he represented European public interest and that the European Commission’s approval was anything but a private matter, Monti replied: “I’ll only call you Jack when this deal is over.” The talks went downhill from there.
Diplomacy’s rituals and formalities, which acknowledge another country’s sovereign status, can be effective in signaling respect and deference in corporate negotiations.
In 1992-1993, Northwest Airlines and KLM embarked on talks regarding a possible alliance. Northwest knew that KLM, a much smaller airline, was sensitive about its status, both during the negotiation and in any eventual alliance.
To alleviate these fears, Northwest structured all aspects of the negotiation – from the prenegotiation dinner to the formal agenda to the delegations with designated chairmen – as a summit between two equal states.
As a former Northwest executive vice president told me, “We used every symbol we could think of to recognize their sovereignty.”
As you go about the task of making and managing your deals, take these six time-tested rules of diplomacy to heart. For centuries, they have successfully guided nations through conflicts that seemed unsolvable. They will doubtless help you build strong and lasting relationships with your external clients and customers.
What are your favorite lessons learned from successful business negotiators? Share your story in the comments.
Adapted from “The Art of Deal Diplomacy” by Jeswald Salacuse for the March 2004 issue of the Negotiation newsletter.
Originally re-published in 2013.
Wow wonderful but i was looking for the art of diplomacy.
As Co-editor of Callieres classic The Art of Diplomacy(1983)I too was looking for more penetration into the fabric -the essence-of what diplomacy is all about, applied to civic /interpersonal affairs.
I had a law professor who said that, when she’s in court, she always wants to be “most reasonable person in the room.” When I approach contract negotiations and relationships (business or personal) in general, I always keep that in mind. Not only does the goal of being the most reasonable person in the room reduce the chance of conflict, it makes it more likely that I will get agreement on the terms from which I just can’t budge (they’ll have seen my flexibility on other terms and believe me when I say a specific provision is a “must have”). The fact that the positions I take would be defensible, if I ever had to defend them, adds to their persuasiveness. Also, it makes me very clear about the facts that need to be communicated, as the reasonability of my position may not be obvious to those who don’t have knowledge of those facts. “For greater clarification” is a very powerful phrase.
Section 6 (Show Respect) is particularly apt, but respect is not always reciprocated, perhaps depending on the self-importance of the person to whom the respect is directed in the first place.