Transcript of: Four Key Things You Need to Get Heard in the Market featuring Martin Medeiros
Today’s webinar is brought to you by ScienceDocs, Martin Medeiros. Mr. Medeiros focuses on providing value to clients by solving their biggest problems and helps them avoid losses. At ScienceDocs, he helps entrepreneurs and startup companies with their most high stakes and risky negotiations, and counsels clients on the science of persuasion, influence, and negotiation. He also helps them get their company off to the right trajectory and helps with course corrections. Martin, thank you so much for being here today. I’m going to turn the presentation over to you, without further ado.
Okay. Thank you so much, Karin, and thank you all who chimed in today. I’m really glad you’re watching this. It’s, I think, our biggest crowd ever, so I think some of the content is resonating that University Lab Partners and ScienceDocs is creating. Today, we’re going to go over the strategic side of negotiation. I’m going to open up with two basic rules that apply very generally, and then we’re going to go into detail into eight different steps you can do that research shows will greatly improve your negotiation performance. So, let’s get into the first two rules about negotiation.
One, human behavior is predictable and, therefore, negotiations being a human behavior is also predictable. If you read The Negotiation Press, you know that there are ways to do things and ways people behave when they’re trying to persuade, influence, and negotiate. I like to say that we communicate our needs to the world passed on persuasion, influence, and negotiation, and how effective we are at using those three techniques determines if, in fact, our needs are met. It can be your needs as the CEO of a company, as a technician, as a parent, and as a significant other. Our needs have a means of communication, we call that persuasion, influence, and negotiation. The first rule, human behavior is predictable, we will talk about how we can predict some outcomes in negotiation.
Next, I want to talk about this idea of leadership. This is from a study at U-Cal Berkeley and U-Penn, a paper based on negotiation, and this is a great quote, I use it all the time, “One of the most important attributes of a successful leader is the ability to negotiate effectively.” So, negotiating is one thing, negotiating effectively is certainly something we want to be on board about. So, we want to be effective negotiators if we want to be in the leadership role, and that’s why it’s absolutely critical to get this part down.
To my way of thinking, negotiation science is built on three different systems, and they do overlap, and what better to show overlapping than a Venn diagram. The first system is strategy, this is things you do before the negotiation, and our topic today. That won’t get you everything; in fact, in some of my other courses, I briefly cover tactics and operations. Tactics are things you do at the negotiation, at the negotiation. And there is overlap, and we’ll talk about a little bit of how they overlap. Operational negotiations, of course, are things external to the negotiation that can affect its outcome. Once you figure out these three systems, you are a better negotiator.
But, before you get into tactics and operations, you want to put your money where it matters. Northwestern University, negotiation researchers say you should spend 80%, 8-0 percent of the time you do in negotiation prep on your plan, 80% on your plan. So, how do we do that? Do I just show up? Do I do the hardline guy? We talked about that, I think, last week. The answer is: you can negotiate like a boss just by being yourself, you don’t have to be a certain personality type, you don’t have to say, “I saw this” or “I read this book and they did this.” A lot of the books I’ll talk about today are great science, they will help you, and great technique, but, at the end of the day, you don’t have to be someone else. If you follow this eight step process, I can almost guarantee your outcomes will be much better than if you just show up flat-footed and think you can dominate in the conference room or the call.
So, let’s get into it. Here are the elements we’re going to review today. Number one is to get knowledge. There’s different subtypes of knowledge, we’ll be drilling down to each one of those. We’re going to talk about communications protocol, how that impacts and how our brains work with communications, it’s really critical that we get that right. We’re going to talk about how communicating our current state is important and our future state, our goal, where we want to be, why are we even at the table negotiating, or on the call or on the Zoom call. Then, I want to assess ability to perform; this speaks to due diligence matters: how do I make sure the parties, me included, can perform that deal adequately? Can we do it?
I also want to talk about writing it down. Memorialization of my thoughts in a tangible form is absolutely critical and a lot of problems exist when people can’t remember what the writing was, what the deal was at the end of the day, especially after long periods of non-compliance. Finally, we’re going to talk about some research on what deals actually fall apart, what deals end up in litigation, what deals are [inaudible 00:07:02] cannot really perform and the parties have to drift off? Finally, we’ll talk about ethics: is negotiation a trick? Is it about holding my cards? Is it about misrepresentation or hiding facts, popular perception about this tricksterism in negotiation? To my way of thinking, it’s not, and we’ll talk about ethics and how that can get you into trouble if you don’t have an ethical mind when you’re engaging in the marketplace.
In our knowledge level right now, these are five main areas I want to talk about. Now, deal structure, this is important. I’m a member of the Federal Bar Association and just attended a class on business models and how they impact deal structure. For example, your contracts, the deals you’re negotiating have got to dovetail with your business model. Why? Because it requires performance, it probably requires performance on your side and their side. If I don’t have the systems in place to comply with that part of the deal, I just wasted my time negotiating that clause in it, and I may be in breach if the other party is relying on my performance because I negotiated a great deal but I had no ability to optimize it.
Also, if you negotiate for things that you don’t really need and throw away just to … and this happens, that can also undermine trust. So, we want to really have a good structured deal that dovetails with the business, and knowing what my business model is is important, and I actually ask that question at the table, and you’d be surprised how many people are like, “How do we get paid?” You got to know that. What need are you filling in the world? How are you able to deliver that? And how are you getting paid or compensated for this type of benefit you bring? If you can’t answer those questions, you probably want to go back to the strategic planning session on a business level.
I also want to have knowledge of my goal. And I want to talk about two different tortured acronyms. One comes from, in Malhotra’s book here, Negotiation Genius, it may be reversed on camera, I don’t know, and Bazerman, basically, he talks about the zone of potential agreement. And this is a bracket that I look at the numbers or the type of terms I want that’s acceptable to me. I have a client, they are very tenacious on intellectual property, for example, they do not want to give away their intellectual property. They do not want to license it because it’s a crowded marketplace, a lot of competition; the people they do business with, they want to closely control that, so they will not give out licenses.
Other people, different model, their zone of possible agreement is much wider. This can be financial, as well; for example, I’m selling a house, I need to buy a new house, I’m qualified for so much money, the house I’m living in has got to close for a certain number of money because I have to take those funds and apply them to my new house, and if the price I get on my old house is not within my zone of potential agreement, I can’t close on that second house, it just is not within my zone.
The other tortured acronym, which is from Fisher and Ury’s Getting to Yes. Fisher and Ury, two researchers, early 1980, ’78, ’80 is the publication date, their method is the foundation for the Harvard Project of Negotiation, and they talk about this BATNA, Best Alternative To a Negotiated Agreement; in other words, what is your walkaway point? Now, you may know what your walkaway point is, but almost as important, when you’re pushing up against boundaries, you have to think about, get some intel, or know what their walkaway is, if you need that deal because there’s always rules of thumb we hear.
“Aim high,” well, you can destroy a deal by aiming high or lowballing if people say they don’t know the market, they’re just not serious, and I’m walking away because one of my requirements was I want people who are in the ballpark, whereas if they are so low, I’m just going to walk away because it’s almost not worth investing time in because they’re so off the mark. So, you’re anticipating what your walkaway … So, rules of thumb have to be tempered by this BATNA idea: what’s their walkaway, what’s your walkaway?
On the graphic, you may know that to get to this information … remember, I said intel. You remember the four things we covered in one of my other classes? I don’t know if you saw it. But you want to make them feel good about themselves, empathic negotiation, empathic statements to get them to let you figure out what their walkway is, what are their requirements, what are their needs, when will it be too far, and that’s by communicating with them on a human level, really working with getting them to feel easy about engaging this negotiation with you.
Third subelement of knowledge is this idea of psychology. Now, when I started practicing law, I was in-house at a Fortune 500 insurance company, and, at negotiations, we actually had cards. We had cards with a four quadrant Myers-Briggs diagram and, at the table, we would actually put people in different quadrants and figure out, “Well, we probably should ask this person this because they had these proclivities.” And this is like 20 years ago, so I’m sure it’s much more advanced. But knowing a little bit about the psychology, and I’m not advertising for Myers-Briggs; whether or not you think it’s legitimate, psychological tools to work with or it’s like a horoscope for people with a LinkedIn profile, whatever psychological methods you use to learn more about the people so you don’t waylay the negotiation, that’s important.
On my podcast, the number one viewed or listened to episode has to do with how to negotiate with narcissists. Why? Because narcissists are a lot in C-level suite, they’re a lot of doctors, they’re a lot of lawyers, they’re a lot of people, politicians, who have a little bit of this personality trait, and you have got to negotiate with those, how to do that, it’s important for you to know a little bit about the psychology. I have, actually, the DSM-5 on my shelf behind me, but you don’t have to go that far, you just have to have some common sense and maybe do a little Myers-Briggs. “This is an INTJ, maybe I should make a decision, be more decisive rather than leaving it open with that open-ended question,” something else we talked about last session.
Game theory, if you know the possibilities, probabilities, and payoffs, I would suggest you look into game theory. Here’s a great resource. This guy has a YouTube channel, I actually bought his book, his advertising work. This is really good, it’s generalized game theory, but you can apply it to negotiation. I use this all the time, depending on what game you’re in, and if you know a little bit of math, it can really help you predict that human behavior, or rule one. So, game theory is something I use. Just knowing the statistics and outcomes, if you’re in a dispute. Well, the Department of Justice actually publishes causes of action; first, they breach a contract, likely damages, likely prevailing party on trial, likely prevailing party on appeal. So, if you get into big-time disputes, you can actually figure out what your outcome is.
Finally, I’m going to talk about this concept of dynamic knowledge. You may have the best plan in the world, but something comes up that you didn’t plan on. Here is a parking ticket from San Francisco, it’s a $72 ticket that I negotiated out of. I didn’t plan on this. So, how do you have a plan when you don’t know? You ask questions. In your strategic plan, things will happen that you didn’t count on, so ask questions. How did I get out of this? And I always do this at my live seminars. I say, “How did you get out of your ticket?” And I’ll tell you the number one tactic used.
But I didn’t know what was going on. I had quarters, I had left my car, I had kids full in the minivan, we were parked in the financial district, walking over to Chinatown, and I basically said, “Hey, I have my quarters, I just had to run in and get my cash,” this was in the days before they had cards, this was 2012. So, I went ahead and talked to the person who wrote the ticket, he said, “I can’t do it.” I said, “Are you sure?” He said, “Yes.” I said, “Well, how is it reported to the court?” Generally, tickets go to circuit court and they issue the fine that way.
He said, “Well, I download it on my machine from my handheld, and then it’s uploaded to the court and that’s when you get in the system and they find out where your address is and they start enforcement.” I said, “Okay. Well, can you delete it before it goes into that?” He said, “Yes, but I have to be at the base station.” So, he goes, “Why don’t we walk over there?” We walked over to his little three-wheeled vehicle and deleted the ticket, and I never got a fine. Either that or there was a mistake and there’s a warrant out for my arrest. I use this because how I got out of that system, I didn’t plan on. The takeaway is: dynamic knowledge, ask questions to overcome something in a strategic plan that you didn’t plan on. By the way, side note, number one technique for getting out of a ticket: crying.
Next slide. Let’s go into communications protocol. Communications protocol, there are two elements, what I’d call preference match. This is when you ask the person, “Hey, how do you want to prosecute this negotiation? How do you want to interact? Is it live? Is it email? Is it phone? Text? Something else?” Preference matching is very important because it determines whether or not the person hears us, whether or not they can even have a precursor of being receptive to what we’re asking for in the negotiation.
If my plan is to obtain that protocol, sending an email, saying, “Hey, how should we do this?” I am much better off at making that accord, closing that deal, at persuading that person because you can just equally what I call cross-communicate, that’s when I know they prefer telephone and they only do batch email processing at the end of the day, so I’m going to just dump all my email in the morning because I need time to work on this, so you can cross [inaudible 00:19:26] and play those games. I’m not saying you do that, I’m saying that’s how it’s played sometimes, I think we’ve all done that.
Preference matching is to facilitate and shorten the negotiation time because negotiations are expensive. I was doing a deal for a big company once, tens of millions of dollars, six months of negotiation, all the experts, all the people involved in that negotiation was about a quarter of a million dollars. We ended up saving 20 million, so it was worth it, but the whole issue is negotiations are expensive; if you’re always not communicating on the same level or the same medium, you’re going to run the clock, attorneys are expensive, accountants are expensive, management time is really expensive, you’ve got to really think about how do I want to efficiently accelerate or, in some cases, decelerate the negotiation. Deceleration would happen when you don’t have information and you need a little more time to gather your folks.
Secondly, on communications protocol, is control. Basically, in complex negotiations, you want to know who carries the information to the parties, and this is called the single point of contact. When I want to control negotiations, I’m going to use the SPOC, I’m going to stop the end-arounds because if people don’t know who to talk to, they will talk to anyone, and sometimes that’s bad. Now, if you have a strategic negotiation plan, a hazard is that someone knows the CEO really well and they’ll try to do an end-around, they’ll have a negotiation team at a low level and they’re not getting their way, and they’ll do an end-around. Single point of contact stops the end-around. The one issue and the one caveat and precursor is: you’ve got to get management to say, “Delegate to me.”
In fact, C-level execs who negotiate everything don’t know the power of the C-level and they should really rethink it because having an escalation path in any negotiation helps bring accord; if it’s escalated to the next level and the next level, that is a great way, a great tactic and process to know the severity is going up, do we want to take on this extra risk? And when you have the C-level suite doubting everyone in their organization, probably not optimal, then what that means, two things: they don’t have confidence in people negotiating the deal and, two, they don’t know leadership 101 stuff, or probably have to take a refresher course. So, those are some things to avoid that end-around.
Now, I want to get back to the preference match, and here’s why it’s so critical. People’s different communication means deal with a totally different area of their brain. Have you ever felt like you weren’t heard? Well, because you used, say, someone who communicates best by spoken word and you gave them a full-screen text, which I do get.
To certain people who don’t know me, I don’t read full-screen texts; if it’s something that long, I want it in an email, I don’t want to see screens of texts. That’s not effective. I probably won’t look at it, I probably won’t read it deeply. An email, I’ll read much more deeply. So, that’s an example of how critical this preference match is when you’re communicating in a negotiation context. I don’t know any studies, but I guarantee you, effective communication and matching protocol helps reduce the time and create durable deals. That’s my gut feeling. I invite anyone to actually do a research project on that.
Step number three in our negotiation plan is to know our current state. This is pretty critical because you need to know your current state to communicate it so you can get the benefit of the bargain to which you are negotiating. Let me give you an example. Let’s say I want to do telemedicine and I sell really great, real-time diagnostic equipment, and the clinic I want to sell to, they have five clinics over the inter-mountain region in the western side of American, and I want to roll out this technology to all my remote locations.
So, I say, “Great,” I sell the buyer, I love it, the technology is awesome, I buy all of the equipment, they install it in all my clinics in these remote locations, and then we try to fire it up and these locations don’t have the bandwidth. So, I really didn’t know my current state in that example. Had I known that, I would’ve maybe had a different solution, maybe the vendor would have offered a different solution. But me just saying, “Hey, I want this, let’s buy it,” you want to really drill down your current state.
True story, I was doing a telecom contract that was in 103 countries, 220-some points of presence, we didn’t know our current state of the network, so we actually did an audit. We found out we were provisioning bandwidth to buildings that had been razed. We were paying monthly data services to piles of rubble. And, of course, the [inaudible 00:25:30] provider was very happy to collect our checks to provision rubble. So, without knowing your current state, you really don’t know what your negotiation field is, you don’t know what you can accept. At the end of the day, you want to be able to accept the benefit of the bargain you’re investing time into efficiently: efficient in time, efficient in dollars, efficient in do I care about this, or that current state, we no longer have that product even though it’s on our website. So, you want to really know where do you stand now because your image into the world and what people see in the world is what they will respond to. Knowing your current state, critical part of that negotiation plan.
And, of course, second is what’s my future state? Where do I want to be after the negotiation? What do I want to do after the negotiation? Why is this so critically important? Because people want to help you; in the marketplace, people want to give you what you want. If you don’t know where you’re going, you will open your wallet, in this metaphor, and they’ll take your money, but if you still don’t know what your mission is, where you’re going with the technology, with going after this market segment, going after this technology, telling your engineering team, “Hey, here’s our goal,” this is critically important.
Another true story, I was working with a development team, they were doing software as a service way back when. I was doing the deals, the contract for the CIO, and the CIO was telling me, “Okay, this is it.” One of the critical systems engineers, I talked to him, I said, “Well, the CIO wants this for throughput. This is a mass throughput application, they want to do a lot of transactions every minute.” And this engineer said, “That’s the first time I heard that.” So, that’s a miscommunication, obviously. You have got to communicate where you want to go. If that system is for throughput, you’ve got to communicate it.
In a negotiation, you’ve got to communicate what the future state is. I’m talking to my significant other, where I say, “Hey, I want things to be done in a timely manner,” and they may say, “That’s fine, but you know where I want to be?” They’ll tell me their future state, “I want to be listened to. I don’t want to be talked over.” [inaudible 00:28:10] last session. These are things where if you want something, you’ve got to communicate that future state, whether it’s a tech purchase, whether you’re going to marketing, whether you’re talking to your diagnosis team, whatever, you’ve got to talk about the future state because if you know [inaudible 00:28:29] game theory of Schelling, you know that solution set has to be put out there before a solution can be gained. So, I really want you to think about communicating your future state more effectively.
Next part, the fifth element of our negotiation plan has got to be ability to perform. What does this mean? Well, we know how to conduct due diligence. If you’re buying a company, buying a product line or something, you want to find out if they have any warts, any ongoing litigation. Do they have the right team? Do they have the right tech? Do they have the right patent portfolio? Once I know that, then I can better assess whether or not the deal is going to last. Due diligence is a critical phase. Let’s look at the three major buckets when I’m talking about this idea of ability to perform. Do you have, or do they have, what it takes to actually make good, consummate, close the deal, the transaction, the relationship that you seek?
When we’re assessing ability to perform, there are three major components to this. Do they have the information and credentials? If I’m looking at them, I want to see the paper, I don’t want to see resumes. If they told me that they have this type of degree, if I’m a staffing negotiation, I want to look at where they conferred that degree [inaudible 00:30:36] university, I want to look at their education records. If they have some type of equipment, technical qualification/certification, I want to make sure that that certifying body has them on their roster. Can they do this? Are they certified?
I’m working on some satcom communication for mobile aircraft right now, and we have got to really find, pretty deep into our supply chain, are those people FAA-certified because whenever you put anything on the hull of an aircraft, there is tons of regulation, and you’ve got to know that, yes, this person has all the certifications, they can do it. And there are third-party companies, that’s all they do is certification clearing, so they assess ability to perform in a very segmented due diligence capacity.
Also, you want to know if they have the energy and hustle to do it. Do they look at your work as something? And a lot of this, you control. How do you control it? By developing a relationship with them, by getting them to feel good about you, to not feel like you’re imposing your will, your negotiated goals on them. They want to know that you have a ability to hustle, get the job done, do it within a timeframe that makes sense.
Finally, do you have the resources to cover your mistakes? A big part of how we enter the marketplace and the bargain of being, say, a corporation is I will grant you this limited liability entity, called a corporation [inaudible 00:32:31], if you can cover your losses in the marketplace. How do you cover losses? You either have a huge bank account or you have insurance to insure against the losses or contingency. This is why I’m building a new facility, say I’m building a lab, I would want a performance bond on that person to make sure, “Hey, you may not have a billion dollars in the bank for this new facility, but I want you to ensure that if you go bankrupt, someone else can pick it up,” and that’s what a performance bond is. Performance bonds are expensive, but they’re a lot less than a billion dollars.
So, assessing someone’s ability to complete the transaction, resource-wise, is a very critical aspect of that deal-making. And this is part of your due diligence. There are questionnaires. There’s an ABA form I use on assessing due diligence; it’s an old form, I’ve been using it for years, but I think it’s around 35 pages of questions, and it has to do in the M&A business line purchase thing. But there are a lot of things you want to know, and depending on what industry they’re in, you want to make sure you know about them.
For example, it’s not good enough to say, “I have five patents.” Well, if all those patents are 19-years-old, then you kind of have nothing; in other words, what that tells me is this company is looking for an exit to cashout, they sat on their laurels, they haven’t become an IP engine in this constant innovation cycle, they were a great innovative wonder early on in their trajectory, but they let everything age, didn’t do maintenance, and therefore that patent portfolio they have may be stuff, but it’s not going to live very long; that’ll give me a discount in my negotiations. So, ability to perform is something because, in this example, after those patents expired, then anyone else can get to them and then I have a bunch of competitors on my hands and I just bought a business line that may be less valuable than it was going into the transaction.
Write it down. The transactional lawyer, this is pretty important. I am sure everyone knows that you can have a form agreement you can find anywhere on the internet to do what you want to do. I would encourage you to read and I would encourage you to get your attorney to review it. Now, why is this important? This is important because when we write down our thoughts, not only ultimate deal that we send to the contract attorney for review, but the deals that help us get to that ultimate deal, what I call the baby deals, those are all these little pictures in the graphic. So, what do I mean by this?
You can say things in a negotiation; for example, we closed out a deal on time of delivery in a simple transaction. I want to write down that little baby deal; at the end of the day, say it’s a multi-day negotiation, and I settled on this idea of delivery date. Type it in my computer, “Thanks, I’m glad we agreed on the delivery date. Look forward to talk about specifications and price tomorrow. Thanks. Signed, Martin.” Send it off. This gives them a few things that they may want to do. They may want to say, “No, that issue is still open until we find these things.” They may say, “Yeah, we’re al good.” Or they may say, “Well, no, you got it wrong. The date you put down for delivery is wrong.”
Those are important functions on closing out these little baby deals because this has to do with deal efficiency. Why? Because if every term in every negotiation is up all the time, it will go on forever, that clock will run and run and run, and I will have to pay for that. So, what I want to do is close out issues as we go along. If every issue is open all the time, it makes it very difficult to efficiently prosecute that negotiation. If someone did reopen something in the past, never reopen it. What do I mean by that? I mean if someone did something bad or did something dishonest, or out-and-out lied, “I agreed to this,” and then they reneged on it later on in the [inaudible 00:38:09] negotiation, act like it didn’t happen because we don’t want to be reminded about our faults. If it was a one-time thing, that’s fine; if it’s systemic, then you have a problem.
And this is why this works in everything. If you want to accelerate alienation with your significant other, bring up the past and talk about the past all the time, that’ll do it. So, if you have to do a negotiation, you want to always move forward. How do we move forward? We close out these baby issues, get a meeting of the minds and move onto the next issue, sequentially. All those little baby issues will support the overall big contract that will be easy because all those issues will be covered out and there will be no last-minute guessing, last-minute, “We didn’t talk about this” or “We should have talked about this.”
Now, those baby contracts are important in what Cialdini talks about consistency. Here’s his book, Influence, this is a great book, you should read it. When we take a position in negotiation or in a discussion or anything, we are more likely to stay on that staircase of consistency behavior than not because, two reasons, we do not, or psychologically, humans generally do not like dealing with [inaudible 00:39:31] people, and, secondly, we like to be perceived as consistent, especially if we make a proclamation in public.
This is why people on social media, if they take some extreme, wack position and it’s undermined later by some new fact, they’ll double-down on that original wack position because consistency. Consistency is a huge psychological driver in negotiation. You want people on the right consistent accord-making, deal-forging, and we do that by getting agreement on these little bits because it makes their walkaway, their reneging on that little clause less likely. I’m not saying I’m eliminating it, people renege all the time, but they’re less likely to because of Cialdini’s consistency operation. Get it in writing. Why? Rich oral tradition agreements are evanescent, no one can remember them, I can’t even remember them. Write it down. Email is fine, even text, e-sign. Again, I don’t like text for any contractual stuff. But get some type of validation, some recording down when you’re doing your deals. That is element six on your strategic negotiation plan.
Let’s talk about deal durability. I wanted to address deal durability, and I’ll leave plenty of time for questions, I see questions racking up. When I ensure deal durability, what I’m talking about is: will it stand the test of time, or will it fall apart? What deals fall apart and what deals don’t? Well, this question was posed by researchers in Washington University in St. Louis, and what they found was if people feel enfranchised in the deal; in other words, if I feel like I negotiated, if I felt like I had agency in that agreement, even if it’s subjective; in other words, in this project, if I had an outrageous demand and it was accepted, way above the market; in other words, I took all the chips off that table, if I subjectively felt like they agreed too soon or it was unfair, it doesn’t matter, objectively, if I “won” the deal, I will still unravel that deal because the dynamic was not enfranchising, the give-and-take.
Negotiation itself has this odd, according to this study, psychological thing about getting people enfranchised, feeling, “Hey, this is not your deal imposed on me, this is our deal,” you want deals to be collective, and you can use that nomenclature. You can say, “We worked on this deal together. This was a negotiated deal. It’s not going to be construed against this party or that, it’s a contract-drafting issue,” but we want to feel that parties are enfranchised because if we enfranchise those people, they will want to perform those deals as per the specifications. So critical, deal enfranchisement, this has to be woven into your negotiation strategy plan. Think about it, talk about it to your team, enfranchise the negotiators.
Last step, we’re talking about ethics. I get a lot of pushback on this sometimes. People say, “Well, aren’t white lies okay, just to further my situation?” Well, if you get caught, you’re in trouble; if you don’t get caught, you may be fine. But it’s generally pattern-based things. Early on in my career, I did criminal law, but it’s always the same pattern. I will tell this little thing and it’ll go unnoticed. Next time, a little bit bigger. Eventually, it gets into misrepresentation. Misrepresentation is a civil cause of action.
I’m talking footnote, nothing I say is legal advice, you have to talk to a lawyer in your jurisdiction. Nothing I say is psychological advice either, nothing I say is medical advice. I talk a lot about these subjects, you have got to engage a professional, don’t rely on this stuff as those types of counsel because everyone’s situation is different, and I’m not a doctor and I am not a psychologist or psychiatrist.
What I want to say about this is misrepresentation is a civil cause of action, so if you misrepresent people, that can eventually be misrepresentation, you should have disclosed something I would have wanted to know that would have impacted the outcome of that deal. Had you told me that the car has a bad transmission when I bought it from you, I would not have bought that, that was material to the value of the car that you asked. Simple misrepresentation.
Fraud is a little more complex. Fraud is a multi-element, it’s kind of like misrepresentation on steroids, if you will. Fraud, in most states, has eight or nine elements you have to prove by clear and convincing evidence, which is above preponderance. Most civil contract breaches are more likely than not, clear and convincing is higher, but every fraud case relies on misrepresentation because they get away with the misrepresentation, they build it up to a fraud. And, eventually, fraud can lead to criminal sanctions, which the question isn’t: did you get a good deal? Did you trick something? The question is: do you look good in a bright orange jumpsuit? So, it’s really important to get on this yet another stairway, the lying stairway.
You’re saying, “Martin, I have to tell the truth, so I have to answer every question? I have to empty my brain of everything?” And the answer is: of course not. You have a duty to your employer to protect their trade secrets. Trade secrets, that’s a rude question to ask. What’s a trade secret? It may be a mailing list, it may be your budget, how much money you have. You should not disclose those things that, legally, you can’t; if you sign a non-disclosure, if you have a duty of loyalty as an officer, you can’t just empty your brain of corporate secrets to anyone on the street, thinking, “I really want to partner with this person strategically, I have to be loyal to them, I have to empty my brain to be truthful,” that’s not what it’s about.
The rule of thumb is: every time I open my mouth in a negotiation, that is the truth. Now, I don’t have to open my mouth for everything; in fact, I strongly advise against it. We talked about how Americans, and I’m a proud American, but we like to talk and talk; you don’t have to do that. You don’t have to talk to fill the awkward space, the gap in the negotiation. Just let the silence fall. If you ever negotiate with Norwegians, you spend a lot of time in silence, they just wait for you to talk and negotiate against yourself because we feel anxiety, we think the pause is no, it’s not. Do not think you have to empty your brain in a negotiation. What you want to do is tell the truth when you do open your mouth.
I think I’m going to take a quick question here. [Maggy 00:47:37] says, “How do you communicate your walkaway point without seeming aggressive and without giving up more that could have been on the table?” You don’t have to communicate your walkaway point at all, you just have to know it. It’s a great question. In fact, your walkaway point may be something secret, it may be something you can’t say. So, what you want to do is just know it, and you don’t owe people an elaborate reason, say, “Hey, it sounds like we’re not going to come to an agreement, which is okay, I want to keep the relationship alive, I don’t want to burn any bridges, but we just can’t do that right now,” you don’t have to give specifics. Hopefully, that answered your question.
So, let’s get into the review. Today, we talked about our strategic negotiation plan. The eight elements I talked about, by way of review, is: I want to know the deal structure, I want to know a little bit about the psychology, I want to know about the goals, I want to know as much as I can about walkaway, and game theory, if that’s in the cards, and these other things that help me assess the deal. I also have to think on my feet a little bit to dynamically adapt the plan, it’s a survival technique, adapting the plan on negotiation when things happen that I don’t expect. Don’t expect the guy to run out on my car immediately after I go to change my dollar to feed a meter.
Communications protocol, really important because we want to know the matching of the preferred communications protocol so our offer can actually be heard and understood by the dominant communication style. Also, in communications protocol, I want this idea of the single point of contact, where I can funnel communications through it so there’s no end-arounds, and I definitely want top-level management buy-in on that.
I also want to know where I am now and I want to know where I’m going to. Current state and future state, I want to communicate those requirements so that people can help me be successful. That’s so critical. Sometimes, your requirements aren’t going to go away, but if nobody knows them, then they will just end in the darkness. Due diligence, ability to perform, we talked about this. Writing it down, this has to do with both the ultimate attorney-reviewed contract, but also those little deals that create that consistency staircase, where you can actually get people on that train to get a deal that you both built on because it feeds into our next thing, and that’s deal durability.
When we enfranchise parties, when we negotiate and they feel like it was a mutual project, those deals stand the test of time. Asymmetric deals, deals that we agreed too fast or have agreed fast, we doubt more, we say, “Hey, was there any room in that? That was kind of quick.” Did I get all the information or did I make a bad deal? Those are issues on deal durability. Ethics, simple rule: when you open your mouth, make sure it’s the truth.
So, I think that’s what I have. Let’s see. I know a number of you at University Lab Partner listeners have contacted me, happy to answer your questions, it’s awesome. Sign up for my newsletter, podcast, send me an email, I really want to hear about your difficult situations and stories, if you can tell them, if they’re not confidential. But that’s the presentation. I left about five minutes for any questions we have. Karin?
Yeah. Do you have a suggestion on any additional books people can continue this topic?
Yeah. I actually have a bunch of them right here in front of me. Chris Voss, Never Split the Difference. I like this book because he’s the first author that says, “This negotiation didn’t work out and 14 people got shot.” He’s an FBI hostage negotiator and he admits when things go terribly wrong, i.e. people get killed. This is another one, this is another FBI guy, this is a psychologist who turned agents into double agents, it’s called The Like Switch. Those of you who like game theory, this is my favorite book, Analysis of Conflict, Game Theory, really good book, I highly recommend it.
If you’re into the operational side, facial reading, I actually took Paul Ekman’s course. The name of the book is Emotions Revealed, it’s about reading microexpression on people faces. I took his course, it’s great, you can do it online. They actually flash people’s facial expressions in one-25th of a second and you have to figure out if you did it, and it’s really helpful because you can always fake macro-body expression, especially if you don’t have a baseline, but microexpressions are really hard to fake because, homo sapiens, we’re hardwired, it’s across all cultures around the planet, homo sapiens make faces consistently for disgust, for happiness, for sadness, and once you do learn those, you become a much better table negotiator.
Shameless promotion, the best book ever on tactics, 161 Negotiation Tactics, by me. I’ve written a few books, this is a book that people like and people have bought, so I already vetted it. But I actually do a study, I poll 60 top professional negotiators and they told me, “Here are the tactics I use all the time,” so this is like a top 10 [inaudible 00:53:59]. Thanks for the plug, Karin. Those are the books that I read.
You are an opportunist, for sure. Well, on behalf of ScienceDocs and ULP, Martin, thank you so much for your time and presenting your information, I know a lot of our folks definitely enjoy it, your insight is invaluable.
Thanks. Anyone, please call me, it’s not on the clock. If I can help you, I want people to communicate better, I want people to get along, and that’s what I figure my job is, to help people get along.