Negotiating with Giants

Get what you want against the odds

Peter D. Johnston

• Publisher: Negotiation Press
• Year: 2012
• ISBN:
  9780980942125
• Topic: Personal Development
• Subtopic: Negotiation

HOW DO YOU NEGOTIATE with Wal-Mart? With America's President over going to war? A pay raise from an intimidating boss? More money for a struggling start-up? Sweeping social change? Your own survival when you're taken hostage by an armed killer? In this award-winning bestseller, you will travel across time through riveting, real-life David & Goliath stories?uncovering the secrets and strategies of successful smaller players so you, too, can get what you want against the odds.The chapter headers clearly outline stategies and tactics while making it easy to refer back to in the future, such as: • Apply the Right Habits
• Execute the Right Strategies
• Preserve Your Reputation
• Shield Your Core Activities
• Change How the Game Is Played
• Plan to Walk Away
• Use Shared Interests to Create Value "Very valuable...What you need to know to get a good deal on just about anything." -- CNN News, Issue #1 "Whereas Getting to Yes provided the broad strokes of negotiation strategy, Mr. Johnston uses a finer brush to fill in an important corner of the canvas...Fans of Robert Greene's use of historical anecdotes in his best-selling 48 Laws of Power will recognize and enjoy a similarly informative and engaging storytelling style in Negotiating with Giants." -- Jeff Davis, Embassy Magazine "If you feel like David looking up at Goliath, this insightful and entertaining book is now your best weapon--for individuals, entrepreneurs, smaller organizations and smaller nations." -- Mark Edwards, Founder and President, Spectrum Limited

1

SECRETS OF THE SIZE WIZARDS

Draw on the habits, helpers and strategies used by successful smaller players.

IT’S 1912. A CHICAGO-BASED PHOTOGRAPHER NAMED MOFFETT is struggling to make ends meet.

Out of the blue, the photographer is sent a telegram by Teddy Roosevelt’s presidential campaign manager, George Perkins, who tells him that the American President plans to distribute three million election pamphlets. On the cover of each one, Perkins says Roosevelt might use a photo he once commissioned Moffett to take, if Moffett is interested in the opportunity. Finally, my lucky break! Moffett thinks. In the telegram, Perkins asks how much he’d be willing to pay the Roosevelt campaign for nationwide exposure of his work and his studio, indicating that he’ll need an answer quickly. Other studios will no doubt snare the opportunity if Moffett doesn’t.¹

Moffett needs to think fast. What’s the right amount to be paid here? he wonders. $100? $250? $500? And where can I get my hands on that kind of money?

Before we find out what Moffett does with his good fortune, we’ll explore the habits, helpers and strategies of the Size Wizards, all those successful smaller players who overcome the odds against them in negotiations with giants. And by the way, we shouldn’t care if some of our Size Wizards are not fully aware of the steps they’ve taken to achieve their own success, so long as we can knowingly follow in their footsteps.

Together, we’ll unravel the vibrant threads that bind these wizards of influence to one another. By the time we loop back to Mr. Moffett, with the secrets of the Size Wizards fresh in our minds, we’ll have a clear idea of what to do if placed in his shoes.

SECRETS OF SUCCESS: APPLY THE RIGHT HABITS

The Size Wizards think differently about what it means to negotiate, staying away from the “negotiation table” as long as possible. Over the course of five decades, Nelson Mandela negotiated away from the table, even while imprisoned, to influence the outcome he wanted: a multi-racial democracy in South Africa.

If Mandela had tried to enter into face-to-face negotiations with South Africa’s pro-apartheid government in the 1950s in hopes of achieving the same outcome, he would have been jailed sooner, or killed. So he negotiated from afar, and actively prepared for more formal negotiations one day in the future. When he and his group, the African National Congress—the ANC—at last negotiated their way to the table in the 1990s, Mandela would send a union leader on his behalf. Other Size Wizards sometimes decide there is no need for anyone on their side to ever speak with a giant, and no need for any written agreements, relying on oral deals or actions instead. In these ways, the Size Wizards redefine what many people think of as “negotiation,” while also leading us to revisit the traits we might expect of great negotiators.

Success in most cases, at least 80% of the cases I’ve seen, can be traced to moves made away from the table, not at it. Before any serious discussions in person or on the phone, the Size Wizards wait until they’ve altered the basic size and strength dynamics in play, increasing their odds of getting what they want and avoiding the common smaller player fate of being crushed at the table, if they get that far.

Given their big resources and clout, giants would love us to cling to the widely-held view that negotiation is mainly about what happens at the table, because this mistaken belief benefits them. The Size Wizards are always aware that they are negotiating whenever they try to influence their giants in any way. This allows them to prepare and exert influence away from the negotiation table, much earlier than their giants might think.

The Size Wizards are grounded dreamers—they figure out what they want and focus on getting it. While backpacking in Bolivia one morning, a client of mine named Bruno came across an old woman by the side of the road. She was selling plump oranges. Since Bruno was heading off for several days in the countryside, he decided to buy a few. He paid the woman the equivalent of 75 cents each for three oranges, thanked her and continued on his trek.

Minutes later, after trying one of her tasty oranges, he returned to buy more from the woman, offering to purchase her 30 remaining oranges for 50 cents each. She said no. He then offered 75 cents as he’d done before. She refused. Bruno could not believe it. He kept raising his offers, finally reaching $1.50 an orange, $45 in total. The woman pulled back the scarf protecting her leathered face from the dusty road and shouted, “I said no!” She pointed at her head, indicating he must be loco—crazy. He walked away in a huff.

After 20 minutes, Bruno’s confusion lured him back to the fruit stand one last time. He noted the woman still had 30 oranges, but made it clear he no longer wanted any of them. He only wanted to understand why she wouldn’t sell him all her oranges for the small fortune he had offered in return. She relaxed, smiling slightly. “It’s still morning,” she said. “If I sold all my oranges to you, I’d have nothing else to do for the rest of the day.”

This old woman knew what she really cared about, despite what others thought of her and despite having Bruno offer her so much money. This, quite simply, was her gift. I’ve seen sophisticated small-business owners turn down giant deals for similar reasons. They didn’t want to lose the joy and meaning in their lives by selling out too early. So many smaller players never figure out their own core interests—their driving goals, needs and concerns—before dealing with their giants. As a result, they get nothing, or they get what they asked for, but it’s not what they really wanted or needed.

The Size Wizards focus their imaginations, thoughts, time and resources on satisfying their most meaningful interests, not straying to try and “win” against their giants, because this lowers their odds of success. They’re not just dreamers, they’re grounded dreamers, pursuing realistic dreams that are tested, re-evaluated and adjusted. They’re persistent, optimistic problem-solvers on the way to their dreams, looking first at how to do things rather than what they should do. And don’t think they never doubt themselves and their dreams, because they do. That’s part of staying grounded.

Surprisingly, given some of their big dreams, our Size Wizards are not huge risk-takers in going after what they want. Their risks are usually well-calculated, and well-managed if they fail. For example, most of the entrepreneurs in our stories don’t gamble their way into new opportunities, they evolve into them based on previous work, and they often risk other people’s money to fulfill their dreams, not their own money.²

The Size Wizards seamlessly weave together their negotiation activities and their core activities. In 1859, a pioneer named Edwin Drake trekked to western Pennsylvania and drilled the world’s first oil well, attracting thousands of oil baron wannabes. Years later, when Standard Oil was still a small player in the industry, John D. Rockefeller faced a major decision. He could build his refineries in Pittsburgh, Pennsylvania, which was closest to the oil fields with easy access via the Allegheny River, or he could center his operations farther away in Cleveland, Ohio and send the crude oil there.

Based on logistics, Pittsburgh was the obvious choice, the city many smaller players selected. But based on future negotiation dynamics, Cleveland won out. Why? Because it had three competing railroad companies that could carry Rockefeller’s oil, whereas Pittsburgh only had one, meaning Rockefeller could be held hostage there on freight rates. Cleveland’s access to water for shipping in the summer gave the businessman even more leverage in his negotiations with the city’s three giant railroads, ultimately resulting in low rates that would help vault him ahead of his competitors and launch his empire.³

Like Rockefeller, the Size Wizards think through the impact of their strategic operating decisions on future negotiations and how these two distinct sets of activities can complement each other. Here’s another example: a company looking to be bought out at some point by a technology giant will want to make sure today that its chosen computer systems and core competencies can easily be woven into its targeted giant, allowing the deal to go through and the acquisition to be valued as highly as possible.

The Size Wizards do nothing to needlessly alienate a giant as they structure and execute their daily operations and related contracts, while doing everything they can to grow the value and favorable impact of these operations on their giant dealings.

The Size Wizards remain firm and flexible. American statesman Ben Franklin believed in being firm with people he worked for. He said, “A little sturdiness when superiors are much in the wrong sometimes occasions consideration. And there is truth in the old saying that if you make yourself a sheep, the wolves will eat you.” ⁴

The Size Wizards, who include Ben Franklin in their ranks, stand firm in dealings with their giants, rooted in well-tested beliefs. They firmly represent their interests, promote reasonable standards to guide agreements, pursue walk-away alternatives whenever fitting, deal with difficult behaviors, and follow through on their aggressive goals. Yet they always remain flexible enough to consider other approaches that might make more sense, frequently shifting gears for unexpected opportunities or threats. Mandela himself, who finally achieved his goal of a multi-racial democratic society, firmly started out with a very different goal, as we’ll see later while digging further into his story.

When the Size Wizards find themselves firmly at odds with their giant on the substance of an issue, in keeping with Roger Fisher, Bill Ury and Bruce Patton’s wise advice in the book Getting to Yes, they’re hard on the problem but show flexibility by being “soft” on the people involved, treating them with respect.⁵ As smaller players who often aren’t seen as credible by their giants early on, the Size Wizards disagree without being predictably disagreeable, even poking fun at themselves during heated discussions.

The Prime Minister of Canada, John Diefenbaker, suffered in the 1960s for being inflexible and disagreeable toward his American giant. The economist John Kenneth Galbraith told me about a tense meeting he and President John F. Kennedy had with Diefenbaker where they deadlocked on vital issues. At one point, a smiling Kennedy passed Galbraith a note labeling the abrasive Canadian leader a “son-of-a-bitch.” As the meeting ended, Galbraith forgot to pick up the note, but Diefenbaker didn’t.⁶ The relationship and its impasses worsened. Kennedy hadn’t behaved well, but giants are giants, and if irked, they can exact revenge. Diefenbaker wasn’t reelected and blamed Kennedy for subverting his campaign. If Canada’s leader had been firm and flexible, he could have stayed true to his core interests while being more flexible in how they were met, remaining likeable throughout.

The Size Wizards take advantage of the context that most favors their interests. Russia’s Nina Rakhmanina couldn’t understand why her small home-repair business in Moscow wasn’t doing better until she looked more closely at the context around her: Russian divorce rates had soared, with three out of five marriages failing, leaving many women without husbands who traditionally did all the repair work. Nina realized that she had to influence this giant market of needy women, targeting them more directly so they’d phone her and she could dispatch one of her repairmen to their homes. She decided to call her new concept “Husband for an Hour,” and women loved it because apparently, that’s the perfect amount of time to have a man around the house. Demand surged, Nina’s rates went up and her home repair business flourished.⁷

Just as farmers always keep an eye on the weather when planting, successful smaller players remain mindful of the broader conditions affecting efforts to influence their giants. If a particular context is found to be favorable, as in Nina’s case, the Size Wizards move quickly, tailoring their approach to that context. If the context isn’t as favorable, they may decide to wait for improved overall conditions, or try to shape a new context that will favor them.

Context affects how we perceive our interests and choices, and provides clues as to how we’re expected to act in negotiations. Common drivers of context today include: local, national or international economics and politics; growing environmental challenges; ageing demographics; industry trends; consumer needs; technology innovations; and evolving social values or eth...