The Naked Negotiator

How good are you at reading the capabilities, power and influence of the other side?

Henry Kissinger, President Nixon’s chief foreign policy adviser and winner of the Nobel Peace Prize for his part in ending the Vietnam war, always rated himself as a master practitioner of the art of diplomacy. Skilled in the arts of real politik, Kissinger’s doctoral dissertation had been on Metternich. Metternich was the mastermind behind much of the 1815 Congress of Vienna settlement that led to a century of peace (until WWI broke out in 1914).

When Henry Kissinger as President Nixon’s National Security advisor first visited China in secret in July 1971, he was wowed by the Chinese Premier Zhou Enlai then in charge of Chinese foreign policy.

For seventeen hours, Kissinger negotiated with Zhou. “Zhou ranked with Charles DeGaulle as the most impressive foreign statesman I have met,” enthused Kissinger. Kissinger was blown away by Zhou’s power and presence.

“In reality we now know,” writes historian David Reynolds, “Zhou was treated as Mao as his round the clock, groveling lackey. In 1972, Mao denied Zhou treatment for bladder cancer lest his premier outlive him, and even refused to pass on a full diagnosis. THe statesman who dazzled Kissinger, was in reality nothing more than Mao’s ‘blackmailed slave’.”

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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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