The Naked Negotiator

Harry Mills has been selected to join Negotiators International - an international network of expert deal-makers and negotiators.

Founded by Israeli negotiator and author, Daniel Weiser, Negotiators International offers business and government clients access to an international network of top dealmakers based in Israel, the USA, Germany, Canada, China, Germany, Japan, Korea - and now in New Zealand!

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The year: 1912. Teddy Roosevelt was nearing the climax of a hard fought presidential campaign. The final push was a whistlestop tour through middle America. At each stop Roosevelt planned to deliver an inspiring address and hand out thousands of pamphlets. On the cover of each pamphlet was an imposing Presidential portrait; inside was a rousing speech. Hopefully, these would win over vital undecided voters.

The final tour was about to begin when a campaign worker noticed a small printed notice on each photo: Moffett Studios - Chicago. The photograph was copyright and no one had obtained a clearance from Moffett.

Unauthorized use of the photo could cost a dollar for each pamphlet distributed. The prospect of a three million dollar bill sent a chill through campaign workers. They simply couldn’t afford it. The pamphlets were a crucial part of the re-election strategy. If they went ahead without Moffett’s permission and were caught out, they’d be branded lawbreakers and be liable for a small fortune.

The campaign workers concluded they had no choice; they had to negotiate with Moffett, and there was no time to lose.

You can imagine how they felt, Moffett seemingly had them over a barrel.

Dejected, they sought campaign manager George Perkins’s help. Perkins immediately instructed his typist to cable Moffett.

“We are planning to distribute many pamphlets with Roosevelt’s picture on the cover. It will be great publicity for the studio whose photograph we use. How much will you pay us to use yours?”

The reply came back soon:

“We’ve never done this before, but under the circumstances, we’d be pleased to offer you $250.”

Legend has it Perkins accepted without asking for more. Perkins understood the power of information; the critical role it plays in shaping a negotiation. By selectively controlling the flow of information to Moffett, Perkins created the illusion that he held the upper hand.

Information power lies at the heart of the bargaining process. In even the simplest of negotiations, both parties take a position, then present facts, arguments, data and other information to support that position. Both sides then use information to get the other side to modify their position until there is enough common ground to reach a mutually satisfactory settlement.

To guard against information being manipulated or concealed, you must do your homework. The more information you have, the more power you have. It’s that simple.

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Between 1969 and 1973 Henry Kissinger conducted secret negotiations with North Vietnamese diplomats in an effort to negotiate a face-saving end to the Vietnam War for President Nixon.

Kissinger was undoubtedly very bright, he had three degrees from Harvard and had written a raft of papers and books on international diplomacy and arms control. Kissinger also rated himself as a formidable negotiator. When a journalist asked him what personal qualities it took to be a diplomat Henry replied,

“Knowledge of what I am trying to do. Knowledge of the subject. Knowledge of the history and psychology of the people I am dealing with. And some human rapport…To have some human relations with the people I am negotiating with. This takes some rough edges off. They will make concessions they wouldn’t otherwise make.”

In his first secret meeting with North Vietnamese diplomats in Paris he believed he had made progress. He reported back to Nixon the North Vietnamese had signaled possible concession.

Later Kissinger had to admit, the North Vietnamese had agreed to “nothing more than a willingness to hold future secret discussions at unspecified future dates.”

Xuan Thuy Hanois’s representative “had no authority to negotiate. His job was psychological warfare,” Kissinger later concluded.

Kissinger had made the elementary error of confusing “the monkey with the organgrinder.”

The dangers of negotiating with someone who has no authority is something we all need to guard against.

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“Sequencing in negotiation involves lining up deals so that each deal raises the odds of knocking over the next one.”

When President Nixon and Henry Kissinger were planning their historic visit to restore diplomatic relations with Communist China in the early 1970’s, they were mindful of an even bigger need to get the Russians to agree to a summit, to discuss placing limits on nuclear weapons production.

For 14 months, the Americans had talked to the Russians about holding a summit - with little concrete progress. The Russians kept stalling and stalling.

However, the announcement from Washington that Nixon was planning a visit to China, put increased pressure on the Russians. The Russians were worried the Americans would ally with China into an anti-Russian Sino-America alliance. The Russians quickly shifted ground.

At a meeting with Henry Kissinger on June 8, the Soviet Ambassador Anatoly Dobrynin, became in Kissinger’s words, “…totally insecure.” The Soviet Ambassador stopped being “grudgingly” and “petty” and spoke in a spirit of “goodwill”. Moscow was now very keen for a summit, but asked the Americans to “come to Moscow before going to Beijing.”

Kissinger said no. Meeting with the Chinese would create further leverage for the U.S. when they had talks in Moscow.

Whenever you’re planning to negotiate with a critical but difficult party, ask yourself which prior deals or agreements with another party will tip the balance towards agreement with the most important player you ultimately need to do business with.

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In a South Park sketch, the gnomes steal underpants as part of a three-phase business plan. The business plan reads:

1. Collect underpants
2. ?
3. Profits

Pixieland dealmakers buy companies or assets with no proven profits or business models in the vain hope that they can make money where no one has before, and big dealmakers are not exempt from this madness.

Meg Whitman, CEO of eBay, bought Skype from it’s inventors for $2.6 billion in the illusory hope it could find a way to turn Skype clients who were attracted by Skype’s free services into profitable fee-paying customers.

eBay hasn’t succeeded so it has written down the Skype purchase by over 50%.

Forbe’s software columnist, Daniel Lyons writes Sun Microsystem’s purchase of MySQL for $1 billion looks to be another Pixieland deal.

MySQL has sales of only $70 million and doesn’t according to Lyons seem to be making much money from selling its open source software.

The MySQL Chief Executive Marten Mickos believes Sun’s ownership will leverage it’s sales to $1 billion.

I suspect it won’t be long before the purchase is written off as a moment of madness.

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