The Naked Negotiator

You are ambling down the street and you spot a dime on the pavement. You bend over, pick it up, just as a $10 bill flies by. Because you concentrated on picking up the dime, someone else grabs and pockets the $10 bill.

The opportunity cost of pocketing the dime is $9.90.

Profitable deal making invariably involves opportunity costs — the costs of not landing an alternative deal.

In deal-making, before you even start negotiating, you need to assure yourself you are talking with the right party. If you want to achieve your Best Possible Agreement (BPA) you must talk to the right people.

Too many deal-makers pursue sub-optimal deals with the wrong party. So, instead of ending up with the Best Possible Agreement (BPA) they end up with a Barely Acceptable Deal (BAD).

In a recent webcast I ran with over 200 C level executives, over 60% in an online poll reported over half of their deals could be classified as Barely Acceptable Deals. If you have a high proportion of BAD deals you need to review your dealmaking process now!

Popularity: 7% [?]

As negotiations drag out, the practical responses you have to solve a problem run out.

As your options shrink, time pressure increases, you concede more and the deal turns from your Best Possible Agreement (BPA) to at best Barely Acceptable Deal (BAD).

The triangle of doom warns us:

1. We need to spend more time, investigating and strengthening our alternatives.
2. We need to monitor, capture and analyze problems in real time if possible.
3. For large, complex negotiations projects you need a real time reporting and response process. Some times the best deals you make are the ones you walk away from.The more time we invest in a deal, the more committed we become to sealing a deal – regardless of its consequences.

Popularity: 24% [?]

In our supposedly globalized economy, businesses are advised to charge across borders as if the whole world were one.

But the world isn’t so flat after all. Businesses that don’t take into account specific political, cultural, and economic differences are set up to fail. Redefining Global Strategy, by professor and strategy consultant Pankaj Ghemawat, offers a reality based view of globalization - and practical tools to help your business cross borders profitably.

His book is full of insightful, useful information. I love his tools especially his CAGE distance framework which helps you identify barriers that your global marketing strategy will have to overcome.

Here is a summary of the CAGE Framework.

• Cultural distance
  • different languages
  • different ethnicities
  • different values
• Administrative distance
  • closed economy
  • extent of home bias
  • corruption
• Geographic distance
  • physical distance
  • time zones
  • geographic remoteness
• Economic distance
  • rich and poor differences
  • differences in cost/quality in infrastructure
  • economic size

Ghemawat proves differences do matter when you market outside your homeland. Redefining Global Strategy is a must read for anyone with ambition for profits from the international economy.

Popularity: 22% [?]

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!

Popularity: 80% [?]

An Aesop Fable on Fairness
Several animals find treasure and must decide how to divide it fairly. The lion speaks up and says, “First, we must carefully divide the treasure into four parts. The first part goes to me, since I am king of the beasts. The second part is mine, owing to my strength. The third part is mine because of my courage. As to the fourth part, anyone who cares to dispute it with me can do so, at his own risk.”

A Bitter Divorce
In 1997 Gary Wendt, the chief executive of GE Capital, divorced his fifty-four-year-old wife of thirty-two years, Lorna Wendt. Gary’s net worth was about $100 million. Lorna wanted a 50-50 split. In court, Gary argued that since it was his talents that accumulated virtually all of the wealth he was entitled to the bulk of the assets. The judge awarded Lorna $20 million. Divorce law in Connecticut calls for equitable not equal distribution of assets.

Principles of Fairness
Our notions of fairness are guided by three, often conflicting principles:

1. The principle of equality says that regardless of contribution, everyone is entitled to an equal share.
2. The principle of equity prescribes that rewards should be based on each person’s contribution.
3. The principle of need prescribes that benefits should be based on need.

Tips and Tactics

• When slicing up the cake, always ask to whom will the recipient(s) compare themselves. People often care more about how their slice compares to others than they do about the absolute size of the pie.

• Make sure the process is seen to be fair and equitable. Commitment to a deal increases when the process is viewed as just and transparent.

• Aim for simplicity, clarity, and justifiability. Perceptions of fairness increase when agreements are simple to follow, deliver clear outcomes and can be easily explained.

• Remember, our egos clash with our notions of fairness. People pay themselves far more than they are willing to pay others for the same job.

Popularity: 71% [?]