We once assisted a Japanese client company (we can call them “Friendly”) in negotiating a strategic alliance with an American company (whom we will call “Abrasive”) that had a reputation for being challenging. Prior to our meeting, we contacted a colleague who had done business with Abrasive. Our friend warned us that the lead negotiator would be very confrontational.
Understanding that our clients at Friendly were inclined to maintain harmony, we discussed the potential problem with them beforehand. We asked them to let us handle any adversarial moments.
Not long after negotiations began, the lead negotiator for Adversarial announced, “We are going to use our contract, and if you don’t like it, you can leave!”
The Friendly team leader became visibly uncomfortable, but deferred to us, according to our preparation. We told the Adversarial negotiator that we wanted to meet in a separate room while we considered whether or not to get back on the plane. During our 45 minutes in the room, the lead negotiator for Adversarial interrupted us several times, looking more nervous with each visit. It was a difficult decision for us, and it took time. We wanted to send the message that his arrogant and threatening behavior could have serious consequences.
We returned to the meeting with a suggestion for a joint contract. While difficult to implement, it was workable. Nearly as importantly, our method elicited more reasonable behavior from Adversarial for the rest of the process. Taking the time to understand the culture of our client and researching the habits of the other side had paid off. We were not surprised by the aggression, and could react appropriately, even though we did not know in advance the exact form it would take.
Many deals succeed or fail just on the strength of a team’s level of preparation. How much you know about your market position. How well you understand your pressure points and business challenges. How well you understand your business culture—plus a mirroring set of information about the company represented on the other side of the table.
The first and most critical step in negotiation is information gathering. Negotiators who take shortcuts on this step are jeopardizing their deal and a long-term respectful relationship.
Before you can make a credible value argument that will resonate with a potential client, you have to get the facts about:
- The national or regional culture where each team lives or does business
- Each company’s organizational structure
- Decision makers within each company
- The lines of business: where will the impacts of your proposed solution be felt?
- Stakeholders (investors, for example) and anybody in the equation who has potential influence on the deal’s outcome (e.g., close advisors or independent consultants)
- Clients and end users: who will ultimately use the product or service
Remember, you’re not making one deal; you’re setting up a relationship. The more you know about your clients’ people, culture, and business challenges, the better. Of course, not all information has the same value, but every bit of information you gather is important in its own way. Having information helps you reduce the other side’s alternatives; not processing information reduces your own. As you prepare to negotiate, you need to discover:
- The customer’s weaknesses in the business and industry
- How decisions are going to be made in each company; not only should you know about the people and structure, but about how their culture may impact their decision making and negotiation style
- External factors; among other things, these could be regional economic pressures or regulations unique to the country
Knowing how each team is evaluated (how they get bonuses or commissions), the company’s financial status and stability, purchase timetables and company history will also help make you an informed, credible international negotiator.
Is there any information you don’t want? Other than information which, if disclosed may violate laws or agreements, all information is fair game—whether you think it’s immediately relevant or not. We’ll discuss ways to gather and manage information in our next post.