Monday, January 10, 2011

Acts of War

Contract Negotiations is a misnomer

Don't be fooled with the word negotiate. In our modern times, we have come to believe the word means: meeting in equality to arrive at a beneficial agreement. In fact, look at what your contemporaries define it as at Wikipedia:

Negotiation is a dialogue intended to resolve disputes, to produce an agreement upon courses of action, to bargain for individual or collective advantage, or to craft outcomes to satisfy various interests. It is the primary method of alternative dispute resolution.1


Notice that most of this definition is about resolution and solving issues. While let's take a look at the physical definition of the word, that is the definition that originally was created around the action, not over some vague intellectual concept, but the actual movement that was required onto which the word is applied:

To succeed in passing through, around, or over.2


Of course, this definition has lost its position and become a secondary meaning. But the underlying truth still remains. A negotiation is an act of overcoming, it is not, as it has recently been defined, an end point, on which the battle is resolved, but is instead a different arm of the war in which the last shots are fired. Where Clausewitz said, "war is politics by another means", negotiations, is the final act of war into which all of the politics comes to a head and, hopefully, solved for in the victory.

In business this should be no different. In a sense, the teams that do the negotiations should look at this as a battle to achieve their goal first and foremost.

I have been to many of these and find that at times neither sides seems to fully understand the fact that this is a war between two organizations, pitting themselves against each other to basically screw the other side out of something valuable. If they weren't there to ensure a better position for themselves, there would be no reason for the process.

Here in lie some of my observations:

Take the higher ground

This is the most common mistake that people in all walks of life take. They simply don't understand that you want to be king of the hill. You gain advantage by being at the top of the hill, from vantage point, to defending it, to advancing in multiple directions. The higher ground is a pinnacle in battle in to which fortune gives the advantage. This physical higher ground is obvious in armies advancing across battlefields, but it might not be as obvious to individuals in other arenas. For example, when playing chess the center of the board is 'the higher ground'. When playing basketball the Key is the higher ground, etc. Even in personal combat, in a one one match, there is a higher ground to strive for. Why then wouldn't there be a higher ground here too?

In business, the higher ground is where the negotiations will take place. If the manufacturer insists on having the negotiations on sight then they are digging in, setting up fortifications on a hill, pointing everything down into the valley where the supplier has to climb up, through the guns to get into the fort. They may not do this physically, but they set up so many emotional, social, mental obstacles that only a utter buffoon wouldn't be directly affected by the attack. I've been in on negotiations where they didn't allow us to use the bathroom, to have cell phones, to leave the room. They tell us it is about security, but that's poppycock, they are using every device they can to intimidate and belittle our position. In one case they made us wait two hours between sessions and then kept us so late that we are all annoyed and starving, meanwhile they had had dinner. They try and isolate you from your supply line, this is a very common thing to do in war. To isolate the forward troops from the supplies behind lines and thus, cut them off from help and starve them out.

It's very simple: If in the process of setting up the negotiations the opponent does not want to come to you, then it should be so desired that you meet on neutral ground. Do not go to them. Instead meet at a hotel or pre-arranged off site location. In this way you will be allowed to have all of your tools and necessary freedoms so that you can focus on your strategy. And that they too have this will ensure that both sides find some unsaid mutual neutrality and indirectly equal respect.

Evaluate your Strategy

Before you even agree to the meeting, you need to evaluate your Grand Strategy. That is; what is the purpose of your company and how are you going to enact this Strategy through well designed stratagems and tactics. The biggest failure I've seen is this vague notion that these negotiations must happen. That one company assumes that they must have this contract. This might be a weak strategy to rest your head on. Perhaps better competitive pricing would be more useful? Perhaps limited partnerships with particular manufacturers that work in conjunction with your design desires to ensure both parties manifest similar strategies. Most of these negotiations do not even need to occur, especially since the two parties are at arms and have only their own intentions to achieve. That should be remembered when you set out to create a strategy involving contracts: if the supplier is at terms with your organization then perhaps they are not allied with your position, and those not in allegiance are the enemy and should be reflected as such.

Have a Battle Plan

Imagine you and your army arrive on an unfamiliar battlefield, you troops are mulling around, no one seems to have any idea what to do, where to go. No one has scouted out the terrain. No one has counted the enemy, looked at their armament, evaluated their strength. Would anyone reading this expect that such an army would stand a chance in battle? Hardly. In fact, it is exactly this that we have seen decides decisive victories over and over again. Where one army is just better trained, better equipped, better prepared than the other. If anything has been more important in battle, it is this: Have a plan. Write those plans at home. Train them into your troops. So that when the enemy does arrive it won't matter how much surprise or how out numbered you are.

The same can be said for business. Know your enemy, obviously, but don't take much credit in the fact that you know him. Instead, know yourself. Know your team. Plan for potty-breaks, for lunch, for when you arrive, for when you plan to leave. Make it clear to the enemy that you set the rules, the standards for your team and that you aren't just there to satiate their desires. Doing so will come back to haunt you when you make concessions to their team that might or might not show up in the signed contract (yes this has happened to me where we made huge price cuts to win other business and they ended up giving it to someone else)

Use Spies

Anyone familiar with the art of war, should realize that I'm not saying anything that isn't in there. Sun Tzu makes it very clear that Spies are of the up most importance and could help to bring the end of conflict before conflict even begins (which Sun considered the best of victory). This same principle can be assigned to business. This doesn't mean illegal espionage. Don't forget you live in a society that frowns on many things. Instead it could simply mean, use your time through out the whole negotiations to see how the enemy is formed. Review the trades before you go, watch their actions while there (why do they keep going back to a ten cent widget? What is their purpose?) Watch what they work on in the pre-negotiation, and what they send back as the final award.

Nothing is set in stone until the ink dries

How sad it is that we have become such a complacent people in that we accept every detail of a contract as if it's the last good thing that will come our way. The truth is, we still have final say on the exact language, the line items, the terms, etc. No is often more powerful than yes.

1. en.wikipedia.org/wiki/Negotiate
2.
wordnetweb.princeton.edu/perl/webwn

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