Wins Using Artful Negotiating

Hong Kong Bank Writes Down Its Loan! - Understanding Their Pain and Our Own Fears
Finding the Pain Point
Flanagan's Dilemma - an excerpt from the book

Hong Kong Bank Writes Down Its Loan!
Understanding Their Pain and Our Own Fears

A negotiator, a San Francisco-based venture capitalist who attended our program in April 1995 reports that his negotiation with a Hong Kong bank has at last succeeded. For months the bank had been demurring on writing down its loan to one of the player's struggling portfolio companies.

The player writes that the key to his success in this negotiation was his understanding of the bank officer's true pain, combined with a careful analysis of his character using PIPS (Player Integrity Profile).

The player's report concludes with this interesting observation: "Whenever I start to feel fear, I now ask myself, 'Why do I want to feel fear in this situation' and the question so startles me that my fear now begins to dissipate."

Finding the Pain Point

Training commenced for this 1 day in-house program at 9:00A.M. sharp, in an atmosphere (as is often the case) filled with apprehension and fear.It seems the Japanese distributor of electronic components of this Silicon Valley- based semiconductor company had called for "technical data" to meet the specifications of one of its key customers. For over a year the American company had supplied (spilled) this information, some of it highly sensitive, but with no tangibile results. There was this awful sense of something imminent about to happen-like a floor collapsing, but who could be really sure? And so we began.

By 11:00 A. M. the predicament of the American company had become evident.Under the spell of their illusory dreams and expectations, the company's top management had not once stopped to listen and to ask themselves: "What is really going on here? Who is this "customer?" Why has our distributor not yet introduced us?

By noon no one had an appetite for lunch.

However, the company's top management was trainable, which means they possessed the critical qualities of character that allowed them to recognize their errors and to adjust their ways. This was indeed fortunate, for around 2:00 P.M. the distributor called to inform the company that in fact there was no customer at all!!On Friday they would fly in from Japan and "explain."

Needless to say, this comunication provided new impetus and a sense of urgency for our work. By the evening the company had in place the basics of the integrity system, an organized team, and a tactical plan of action.

I did not hear from them for several weeks.( This is not uncommon in this business.) But then one day, casually, I asked one of the board members, who himself was well versed in the system." How are you doing, after that initial flurry of excitement?"

"We couldn't be happier!" he replied."The Japanese distributor has opened the whole kimono, and now we are going direct with all their key customers!"It's worth millions to us."

"I'm missing some pieces here.What caused the turn around?" I said, trying to get some hold on my curiosity.

"Look, we had been horsing around for months.The Japanese distributor knew us to be a well run company with suberb technology, which they wanted.The timing was crucial.Had we not gone through your program, we would undoubtedly have continued on our path, merrily dumping information into oblivion. But the workshop shook us into consciousness, just in the knick of time. We realized what was going on, and got a real firm grip on our right to say 'no', as you put it.When the Japanese executives arrived that Friday, our team was prepared. We focused not on what we wanted (as we had been doing), but rather, on their pain-on their ambitions of becoming a leader in this part of the market.We helped them reach an intelligent decision that it made more sense to collaborate with us than to abuse us.Although we may still may have our differences, I believe we now have the makings of a viable, mutually respectful relationship."

Ó 1997 Logos Networks Corporation, Inc. All rights reserved.

Flanagan's Dilemma - an excerpt from the book

The following is excerpted from Julian Gresser, Piloting Through Chaos: Wise Leadership * Effective Negotiation for the 21st Century.

I met him for the first time in his office on Route 128 near Boston. Let's call him Flanagan. He was the president of a small, struggling electronics company. Although he was a brilliant physicist and an engineer, he found himself over his head in a negotiation with one of the giant Japanese conglomerates. For months he had gotten nowhere, and he had this awful sense that his company's precious know-how - its only asset of real value -through unwitting disclosures by him and his staff, was leaking from his company like a sieve.

Soon after, Flanagan joined a "pool" of executives who were training with me over months to become more effective in their Japanese negotiations. He approached the training with the same dedication - the same curiosity of mind - with which he approached the design and engineering of a new integrated circuit. But then I lost touch with him for about a year after the program ended.

"How is Flanagan doing?" I asked an acquaintance one day who knew him well. "Haven't you heard?" he responded. "He's had a sensational success. The Japanese have invested over ten million dollars in his company, and the venture capitalists on his board can't believe it. "How did he do it?" I asked. "The last I heard he was floundering."

"You should call him and find out yourself," my friend replied.

So I did. Flanagan and I met for dinner at a Japanese restaurant in Boston. He looked years younger. He had a hard, life-tested quality that was very pleasing. This was the story Flanagan told me with a twinkle in his eye.

Flanagan's Story

"I arrived in Tokyo foolishly unaccompanied by my chief lieutenant or even a reliable translator (I don't think I'll do that again). Anyway on the way to our meeting - I had come for the signing ceremony for our 'technology joint venture' - my host, who was sitting in the taxi beside me, passed me an envelope. 'It's the final draft,' he said, smiling, and then returned to looking blankly out the window at the coffee shops, sushi bars, pachinko parlors, and crowds that were already bustling to their jobs at 8:30 on this Monday morning. I scarcely bothered to look at what was inside the envelope, as I and my lawyers had already reviewed every word and every nuance in the text of this agreement a hundred times.

'Enough,' I said. 'If I can't trust these people now, I never will.'

"But then I got this feeling - call it intuition - that I ought at least to have a look. I opened the envelope and began to scan the text. What a surprise! A different deal. I couldn't believe my eyes. 'What is this?' I began to stammer to my Japanese host. But by this time we had arrived at our meeting place, somewhere on the 13th floor of a large grey building in the Marunouchi area of Tokyo. We got off at the 21st floor and I was escorted past lines of pretty bowing girls and attendants to a waiting room with immaculate white doilies on the arm rests of leather chairs, and from there into a large conference room where thirteen Japanese executives rose in unison exactly in attention as I entered the room. My ordeal had begun."

(If you were advising Flanagan, at this point what would you tell him to do in this situation? What would you yourself do?)

"What did you do?" I asked.

"What could I do?" he continued. "The first thing I did was panic. What does one say or do in such a situation? I felt like bounding right out of the room shrieking. Now that might have been an interesting tactic! But instead I got a grip and remembered our training, settled down, and decided to have some fun.

"I needed time to regain my bearings, so I resolved not to understand anything. Even if I did understand, not to let on, and to let them do all the talking, all the explaining, while I struggled to grasp their meaning. I wanted them to expend some of their time and effort, and get involved in trying to help me understand, while I figured out what to do. Actually having no translator along helped my strategy.

"So that's how we spent the whole day, the thirteen executives earnestly explaining, I earnestly trying to understand and never quite catching on. Then we adjourned. Everyone was tired, but they were more exhausted than I. I was beginning to find my second wind.

"The next morning we reconvened. I was greeted with a slight nod and a grunt or two - a glimmer of recognition by some of the thirteen executives, who sat exactly in the same positions as they had the day before. An attendant brought in some black coffee. Otherwise no one moved. There was only silence." Flanagan poured himself a cup of sake and watched for my reaction.

"Silence?" I repeated. (I have seen such situations before, and they usually take odd turns.)

"Utter silence."

"For how long?"

"First five minutes, then ten, fifteen maybe. No one said a word." Flanagan's eyes were sparkling in delight. "I got up, poured myself some coffee, because I'd be damned if I would be the first to speak. I just planted my feet and held on.

"About 20 minutes later, they couldn't stand it any longer. 'Dr. Flanagan, what did you think of our proposal?' their spokesman blurted out. 'We spent all day yesterday discussing it with you. Surely you must have an opinion.'

"'Frankly, I'm very disappointed,' I said. 'I appreciate very much all the time you have spent in explaining your ideas to me, but actually this is not why I came to Tokyo. This is not the deal we have been discussing for months, on which we agreed three weeks ago in Boston. I'm going home. Please call a taxi.'

''Dr. Flanagan,' the lead man rose from his seat. 'This is a great mistake, a cultural misunderstanding.'

"'I must,' I said. 'Please ask your assistant to call me a taxi. I have checked and there is a United Airlines flight leaving Narita at 5:30 p.m. I don't want to be late.'

"'You can't go! There's a misunderstanding!'

"'Kindly call me a taxi. I'm going home,' I said in a level voice."

"So that's what I did." He took a long swig of sake and smiled at me.

"Very good, very good," I exclaimed, sensing the momentum building in his story. "But what did you do next?"

"Nothing. I did absolutely nothing. They sent me a stream of faxes that week and the next, but I did not respond to them. I waited to think things over, get my bearings, and sort out what I really wanted from them."

"What happened then?"

"Finally, I replied to their faxes and told them I was prepared to discuss the original transaction, but no more games. Do you know, they canceled their vacations and came to visit us, and then things got back on track. There were a few other ups and downs, right up to the end. They tried to squeeze a few additional concessions by telling me that the president of their parent company, a multibillion dollar conglomerate, had committed to come to the signing ceremony, and unless I signed on the terms they wanted, the meeting would have to be canceled. This would be embarrassing since everything had been arranged. But I saw no reason to give in, and I told them so. And then they dropped these last conditions."

"How have things worked out?"

"Marvelously. They gave us everything we asked for and more. Under our arrangement we have committed to train several of their people and we have honored every promise we made. I have taken a personal interest in seeing that the engineers and their families are well cared for. They have learned from us and we are learning from them. And now we are discussing the next phase of the project. Somehow our silent confrontation in Tokyo put things back on track. It's as if we gave them a sense of who we are - of boundaries - which actually was comforting to them. We both gained room to breathe and to respect each other a little better."

The case illustrates the art of integrity in action. The complete method is set forth clearly in the book along with a vision of the enterprise. The Artful Navigator and LogosNet provide additional tools for you to refine and to sharpen your skill.

Excerpted from Julian Gresser, Piloting Through Chaos: Wise Leadership * Effective Negotiation for the 21st Century.,
© 1997 Julian Gresser, Inc. All rights reserved.

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