NEGOTIATING THE MEGA-DEAL

PART THREE OF FOUR

This article is the third part of a four part series about tactics to be used when negotiating a massive contract, a mega-deal, as the lead negotiator for a client company. For context and consistency, the prior Minutillo Newsletter on this topic, part two, ended as follows:

“Showing vulnerability to gain trust during a mega-deal negotiation can be personality oriented as shown by Sam (Ervin) during the Watergate Senate hearings, or by exposing a flaw, no matter how minor, in the product which is the subject of the negotiation. Showing vulnerability is a crucial first step which the lead negotiator must take to disarm an opponent at the start of mega-deal negotiations.”

Parts one and two of this series appear at www.minutillolaw.com.

Make Friends Not Enemies

Part three of this four part series addresses the need to create friendships, perceived or real, at the negotiating table before the negotiation process starts on the mega-deal; and the need for the lead negotiator to understand cultural differences if the opponent team is from a foreign country and of a different culture or ethnicity.

The best mega-deal negotiators create friendships in all aspects of their lives. This seems to come to them naturally. They are happy and positive when interacting with people. They honestly enjoy the company of others and like discourse even if disagreement is obvious. Most important, the best negotiators transform confrontation into productive discussion. They are usually upbeat in an adversarial or unpleasant situation. They are the type of people that you would like to befriend; that most people want to be around.

The best negotiators know how to twist and turn words and emotions to keep a heavy, intense discussion light, relaxed and friendly so as not to turn it into an adversarial proceeding resulting in a fight rather than a productive discussion. They keep their eye on the prize as the negotiations progress, the prize being the award of a US Government contract, sub-contract, or commercial contract to the client company delivered in a timely way without having offended the opponent customer.

Success of the lead negotiator is judged not only by the dollar value of the contract successfully negotiated but also by the size of a follow on order for more product or services made by the opponent after the negotiation is complete. You will accomplish this result if you make friends at the negotiating table not enemies.

If you do not consider yourself charismatic, friendly, or patient, and you want to negotiate the mega-deal, then you need to keep yourself in check during the process. Constantly ask yourself, what does my opponent think of me? How am I being perceived? Am I acting friendly, patient, likable? Constant self-check works if you don’t have the personality traits mentioned in this part of the series.

Not every person has “natural” traits to be successful at negotiating a mega-deal but any person can learn these traits and use them through self-checking during the negotiating process. It’s hard work to properly negotiate and self-check at the same time but if these “upbeat” tendencies do not come naturally, self-checking will get you to a successful conclusion on the mega-deal.

Understand Cultural Differences

Two opposite, totally contrasting negotiating models are presented below. There are many other models but the Japanese model and the military model are polar opposite in style though, if the opponent is handled correctly, the result with be the same, a favorable outcome. These two models are provided to show that adjustments in negotiating style are required depending on the participants and, at times, the adjustment required for productive discussions is radical.

The Japanese Model

The most enjoyable negotiations that I’ve had were with negotiating teams from Japan as the opponent. Yes, being American, there were huge cultural and language differences. But there were clear commonalities noticeable at the start of the negotiation, those were respect, patience, and friendliness masking a clever cunning to help our respective client companies.

Japanese negotiators present themselves as a team, usually with the oldest member of the team as the lead negotiator. They have an extreme respect for their opponent from the moment they hand you a business card which, by the way, in many cases, is considered an extension of themselves, until the conclusion of the negotiation. The Japanese opponent creates a formal but very friendly, respectful atmosphere from start to finish of the negotiation even though the negotiations may take place in your home office in the US. The best way to describe the Japanese team would be intelligent but understated in demeanor. This is a generalization but, for the most part, is accurate as those who have negotiated against a team from Japan will attest.

The Japanese teams that I’ve opposed took time to get to know me as the lead negotiator sitting on the other side of the table before the negotiation started. Understanding the personality of the opponent is important and taking time to talk about matters not related to the negotiation like family, work, hobbies, or extracurricular interests is the usual method used by a Japanese negotiating team to reach that understanding. The negotiations will not start until the Japanese opponent lead negotiator is comfortable that this “feeling out” process is complete. Patience and timing, the hallmark of the Japanese negotiator, will be evident until everyone in the conference room is disarmed and amenable to discussion.

The Military Model as a Cultural Difference

In stark contrast to the friendly and patient atmosphere created by a Japanese opponent is the atmosphere created by the typical military opponent on a mega-deal negotiation. Many times, the military mega-deal will relate to a Government defense contract, foreign military sale, or high end cyber software package.

I negotiated a mega-deal with members of the Israeli military outfitted in their dress uniforms, no weapons but, for the first few seconds during introductions, were still somewhat intimidating. This Israeli negotiating team used what I call a military model during the negotiations.

A military model is rigid and stubborn, that is, it is extremely difficult to move the lead negotiator for the opponent off their starting position though everyone in the room knows that the starting position is unreasonable and not acceptable. The going in position when negotiating against military personnel from most countries, in my experience, will usually be unrealistic and the negotiating strategy will be to hold to that unrealistic position for as long as possible. This unrealistic position must be quickly and firmly rejected, outright, without showing any concern.

During this Israeli military negotiation, the officers had no interest in getting to know anything about me, exactly the opposite of the Japanese model. The feeling in the room was restricted, formal, and the tenor of the conversation was totally fact oriented. There was no effort to get to know one another. The conversation was all business and the negotiations started as soon as brief introductions concluded.

If you have not negotiated with military personnel in the past, pivot to a fact oriented discussion. Understand the opponent’s going-in positon, reject it outright and advance your own unrealistic position, then take an aggressive posture to lead the negotiations. Take control, be aggressive and unbending, at first.

Oddly enough, negotiating against hardened military personnel is much easier than against almost any other group. Negotiators who have been in total control for most of their professional military career, as have senior military negotiators who will be chosen to negotiate the mega-deal, are stunned when they don’t have it. You merely need to level the playing field by taking temporary control of the negotiations and things will quickly move your way.

This process is much easier than the psychological machinations that you need to go through in most other negotiations.

Take Time to Negotiate the Mega-Deal

It’s cheaper and more time efficient in the long run, to work out all wrinkles about price, payment terms, product inspection, acceptance terms, warranty, indemnification etc., during the negotiations than after contract execution. Take time to work out all of the wrinkles during the negotiation. Before conclusion of the negotiations, ask each member of your team if they know of ANY issue that has not been flushed out and discussed from the present through imagined delivery of the last unit under contract. Visualize contract performance and related issues now through delivery. If it is clear that everything has been covered during the negotiations, then conclude the negotiations. It’s much easier and cheaper to fix a problem with words now than with remedial conduct later.

Negotiations on a mega-deal could last anywhere from one day to months depending on the complexity of the product and the skill of the negotiating team. Usually the better skilled team led by an experienced negotiator will conclude negotiations on a mega-deal quicker than the novice. Short, one day negotiations for a mega-deal are unusual but when they do occur they are intense because of the compressed working time frame. There is so much to accomplish in a short period of time especially if both negotiating teams are large. Short negotiations are usually only productive if the schedule and agenda is realistic and set in advance.

The longer, methodical negotiation allows time for ideas, concepts, and friendships to develop. Ideas to solve problems with the product and the contract can be vetted. Short negotiation or long, it takes a great deal of effort to break through the usual tension in a conference room during negotiations to transform the atmosphere into a friendly one, culturally respectful to all participants. Short or long, you will save your client company time and money if you follow the concepts provided in this series of articles.

Part four, which will be included in the next Minutillo Newsletter, will discuss the final step in contract negotiations for the mega-deal, how to “close the deal”.