NEGOTIATING THE MEGA-DEAL
PART ONE OF FOUR
Intuition not Logic
As a young lawyer, too many years ago, I had the opportunity to watch and learn from the best negotiators, engineers, pricing specialists, and business people as part of a team negotiating complex, multi-million dollar US Government and commercial high tech contracts. To say the least, going through this process over and over again was a tremendous learning experience but not from an intellectual standpoint. As I became capable of taking the lead in those negotiations, it became clear that knowing and manipulating the facts regarding the matter at hand was only a small part of “winning” the deal, that is, obtaining price, terms, and conditions satisfactory to the client company.
What I learned is that, aside from the factual based technical negotiations related to specs, product use, capability, and functionality, the balance and majority of the negotiations, up to the point of execution of the contract, were influenced more by intuition and an understanding of human nature than facts. Sounds crazy but it’s true.
Negotiating the big deal, the big contract that could help make a record breaking revenue quarter for a company has very little to do with facts and very much to do with the innate ability of the negotiator to use his or her intuition and understanding about how humans react to words. Words and the demeanor of the chief negotiator on a team can make or break a deal. The chief negotiator’s role is to gently nudge the opponent to the price target and terms set by the business leaders of a client company.
The best negotiator is not the smartest person in the room during the negotiations but the person who best understands human nature especially when the people negotiating the contract are held captive in a very high pressure, confined office environment, as is the usual case for high ticket negotiations.
Sense of the Room
What is “intuition” as it relates to negotiating the “big deal” on behalf of a company? You walk into the conference room where the negotiation will take place and based on the appearance; the first few words said, the handshake, and demeanor of the opposing team; you start to get a feel for how you will handle the negotiations. Notice I used the word feel, not thought.
What do you feel from each opposing participant: anxiety, over-confidence, calmness, apprehension, excitement, suspicion, skepticism? Whatever you feel determines how you should handle each opponent in the room to maximize the benefit, that is, get the best price and terms, for your company/client.
Disarm, Calm, then Move Forward
You need to be able to feel the different emotions spewed by each person in the room. Focus on the opponents that seem anxious, apprehensive, suspicious and skeptical first. They must be disarmed and helped to feel comfortable before a productive discussion can begin. If you cannot distinguish between these feelings, you should not be the lead negotiator for this transaction. Sorry to be so blunt but I have seen this problem over and over again during “big deal” contract negotiations and no one on the team has the desire or courage to speak up to have the lead negotiator replaced. It happens too often thereby hurting the client company in the long run.
The lead negotiator for large transactions must be the most intuitive person in the room. He or she must not only size up each participant quickly and accurately but also must know how to manipulate the opponent first to ensure a sense of trust and calm, and then use words to move the opponent to an acceptable price point.
Disarm and Calm
As attorneys, our first instinct might be to approach a high-pressure negotiation in an adversarial manner. Each new deal has a fresh set of facts, a new opponent, a desired outcome and, hopefully, favorable ramifications related to the outcome. No different than litigation, so our first instinct might be to argue to win; to show strength, intelligence, and to be clever. Wrong.
Our first instinct must be to determine how to disarm the opponent negotiators, create a sense of calm in the room based on trust. How do we do that?
As odd as it might sound, though there are exceptions, calmness and trust are felt by an opponent when the chief negotiator shows steadiness and vulnerability. Steadiness is obvious but why vulnerability? The opponent chief negotiator must believe that he or she can have the upper hand during the negotiations, whether that’s true or not. Most chief negotiators on a deal show an enormous amount of self-confidence, sometimes to the point of arrogance. The loud, arrogant, flashy opponent is usually the weakest, least confident person in the room. Attitude is usually a cover up for insecurity. Show vulnerability and the insecure person will feel superior, confident and calm—exactly what you want. Why?
That question will be answered in the next part of this series, the next Minutillo Newsletter.