Episode #68: Negotiations, What Is Your Process?

Negotiating is one of the dark arts isn’t it. The problem for most of us is that we usually spend very little of our time actually doing any serious negotiations in business. The majority of the time, people agree to what we are proposing or they ask us for relatively minor modifications to our offer and we accommodate them. Hard core negotiations are few and far between in everyday business for most people. Certain industries and occupations like procurement officers and litigation lawyers will certainly have a higher preoccupation with negotiating than others, but generally speaking most of us are not in that category. So we have a large group of rank amateurs negotiating with their equally unskilled counterparts. Let’s pull the velvet curtain back on this dark art and see if we can’t shine a bit of light on what we can be doing, to be better prepared. Makes sense doesn’t it.

The Japanese Association For Sex Education says that Japan’s current university student dating experience statistic of seventy percent is the lowest since surveys began more than forty years ago. That by the way, was when I got here as a student, so my timing was obviously good. Anyway, today, over thirty percent of male and female students said they don’t want to go out with anyone at present. Male students with sexual experience stood at forty seven percent, while the number for female students was thirty seven percent. The number of junior high school students with dating experience hit a record high of twenty seven percent for males and twenty nine percent for females. Among high school students, less than twenty percent said they had sexual experience. In other news, In the 2018 survey by the Institute for management Development, Japan came in twenty ninth place among sixty three countries, as a preferred work destination for foreign highly skilled workers. This was up two places from the previous year. South Korea was thirty third and China was thirty ninth. Japan ranked almost at the bottom, at sixty second place for the international experience of its senior corporate officials. Switzerland topped the list followed by Denmark and Norway. Finally, Japanese prefer to spend more time with their families and less time in office meetings and working late compared to thirty years ago. The Citizen Watch Company survey found forty minutes for a meeting was considered just about right. This meeting length was around eighty minutes, when the survey was conducted in nineteen eighty nine. Today people prefer spending less time wining and wining clients. Average monthly overtime has decreased to twelve hours and thirty nine minutes from nearly sixteen hours. Also daily family time has grown from eleven minutes a day to one hour and forty nine minutes. Eleven minutes a day!!!

“Winning is not a sometime thing. You don’t do things right once in a while…you do them right all of the time”. This is a great quote from the famous American football coach Vince Lombardi and we can apply this idea directly to negotiations. Any business undertaking does better when there is a structure, a process that is capable of creating consistent outcomes. As negotiators, if we don’t manage the process, we risk becoming passive, reactive spectators to events as they randomly unfold. Purposeful behavior is the key to influencing win-win outcomes.

There are many tactics, strategies, feints, bombast, illusions, delusions, egomania, tricks and skullduggery associated with negotiating. Our recommendation is to play the long game. Don’t win the battle to only lose the final outcome. We are looking for a sustained business career and that means our reputation in the market is like gold. We should never throw that tremendous trust asset away, for a few bucks more. Especially when operating here in Japan. Trust is hard to build and easy to squander in this country.

We will sometimes be involved in one off transactional deals, where the likelihood of ever dealing with that organisation again is probably going to be rare to remote. The temptation is to suspend our usual behaviour, normally based on a long-term view, and go for the jugular, to squeeze every last penny out of the other side. Yes, we may never deal with them again but we will deal again in the market. Our good name is too valuable to drag it into the mud. Be fair, be consistent and be aware of how the rest of the market will perceive you.

A businessman I know here is very sharp, razor sharp. He has no hesitation to win over others in deals and at any cost. He negotiates hard until he has squeezed every last drop out of the deal in his favour. In the process he has created a lot of disgruntled enemies. Potential business partners are now wary of him, because Google levels out the playing field through its search functions and his name is mud on-line. Remember, word travels fast in Japan and companies are skeptical enough about foreigners anyway, so be even more vigilant about protecting your good name.

Always fair is always fair, whether a transactional one night stand or otherwise. Being a known entity gives others confidence to deal with you – we are all trying to reduce risk and look for people we can trust. Japan is a highly risk averse culture and business environment and they always prefer the devil they know to the angel they don’t. The constant switching during negotiations of the good guy/bad guy routine is not adding to any consistency of reputation. Being the good guy is a much better place to be, so don’t get sucked into bad behavior by bad people. There is always another deal and another partner.

Part of being consistent is value driven and another big component is how we organise ourselves for the negotiation. We may not do that many negotiations in a year, depending on our business. If we have a standardised routine, we don’t have to worry about what to do or forgetting what worked well in the past. We can go straight to the basics and ensure we have a better performance each time.

There are four stages of the negotiation we should prepare for:

Analysis

We need to identify possible alternatives available to us in reaching an agreement. There are many levers we can pull in negotiating an agreement and finding added value through those levers requires clarity around the full picture of what we are trying to achieve. This is an advantage in Japan because the thought processes here can be very linear. Thinking out of the box is not present anywhere in the formal or company education systems.

We need to see the negotiation from the point of view of our counterparty. For this we need information and perspective before we even get to the negotiating table. What position are they likely to take, what interests do they have, what forces are impacting them at the moment or will in the near future? Getting good information and intelligence is that bit harder in Japan, but if you have a good network that can help a lot to short circuit the research process.

We need to reframe the conversation to avoid confrontation. This means we are looking for words and deeds that speak to a win-win outcome. We have a positive, forward looking approach to the joint solution of issues which are making it hard for the other side to agree to what we are proposing. Slamming table tops, screaming, tantrums, abusive name calling, throwing inanimate objects are not a feature in Japanese society and so has no place here during negotiations. Decorum, harmony, respect, face-saving, politeness, discipline are all valued and appreciated.

Presentation

We should rehearse the other side’s presentation, as well as our own. By actually doing a dry run of their presentation, as we imagine it, we throw up insights and ideas which are very helpful for ourselves. We tend to inhabit our own little bubble of what is important or pressing for us. A good practice is to switch perspectives before we get to the negotiating table.

For our presentation, we should frame it in the language of the interests and needs of the counterparty. Talking about what we want doesn’t move us toward an agreement. Speaking their language, contemplating solutions to their issues positions us all on the same side of the negotiating table and leads to better outcomes, much faster than otherwise.

When we present we should be looking for areas where we can provide added value to the other party, through our suggested solutions. This makes it much easier for them to agree, because the take out is better or larger than they had considered. Feeling that your negotiating partner is trying to help builds a great deal of trust. With trust established, flexibility and compromise come more speedily and much easier.

Bargaining

We must clearly fix our BATNA (best alternative to a negotiated agreement) at the start. This is our fall back or even walk away position. It should be realistic and as close to the ideal outcome as we can manage. If we feel negotiating “tactics” are being used on us, we can just respond by suggesting an alternative solution rather than getting emotional and reacting. How do we do that?

We should always be prepared to take a break from the negotiating process if we feel we are becoming too emotional. The object of the other side may be to rile us and trick us into making an error of judgment. We may take umbrage at what is being attempted, but rather than let that bile well up in our bodies, take a break and come back fully refreshed. Come back fully focused on what we are trying to achieve and re-acquainted with the game plan we want to follow.

In our presentation, we have tried to make it easy to agree to our proposal and hard to disagree. We shouldn’t make the other party work hard to reach an agreement. By being flexible and fair we can smooth their path to acceptance. If they are being grossly unfair, we just go straight to our BATNA and avoid further stress.

It is hard to make a good deal with bad guys and why would we want to work with bad guys in the first place? Life is short. If it is time sensitive, that forms pressure on us and sometimes we are rushing to do the deal because we fear future loss. Despite that, stick to the plan and never give any indication that you feel any pressure whatsoever to do this deal. Keep reminding yourself there are always other partners, probably better partners and other better deals on the horizon.

Agreement

We should make certain we specify all points that are agreed. Things which need to be fixed at the point of signing, should not be left floating around. This is the time to fix them. So that there are no disputes about the finer points later, we need to get the detail down in writing. Each side needs to be comfortable with the document and clear about what is covered and not covered. Tricky ambiguous language to re-interpret in court later is not needed.

There will be milestones for execution of the agreement and these need to be specified. There will be a schedule for fulfillment of the agreement and this needs to be detailed in scope. The execution piece is usually when problems arise, as more parties on both sides, who are affected by the agreement, become aware of the ramifications of what was agreed and may resist the agreement being completed.

A signed agreement in Japan is a lot more flexible than in the West. The Japanese view is that while there is good will on the part of each side and the conditions for success still apply, then the deal makes sense. If that is no longer the case or if the situation has changed substantially since the agreement signing, then the deal doesn’t make sense anymore and should be voluntarily terminated. In these cases, they will simply abrogate whatever was signed. In a Western legalistic system, this would be straight to court for breech of contract and the on-going relationship potential would be ended right there.

From a Japanese viewpoint the relationship is the key point and the one deal is just the one deal. They want to keep the relationship, but don’t want to suffer under the terms of the agreement, if the situation has changed so much that is no longer works for them. The deal ends, but the door is open to future deals. Your reputation in the market remains high because you were “flexible” and “sincere”. Legalistic solutions are seen as selfish, unfair and relationship ending.

Does everyone in Japan play by these quid pro quo rules? No, of course not. Stupidity, selfishness, xenophobia, short-term thinking, nastiness, bad behavior and greed know no national boundaries. You will meet evil business people in Japan, just like everywhere else in the world.

Are they as flexible with you as they expect you to be with them? Not necessarily. Being a foreigner in Japan means you are automatically outside the cultural and behavioural norms and don’t necessarily have to be treated as other partners who are Japanese. Expendable is the idea in some cases. It really depends on the people you are dealing with, as it does everywhere in the world.

One thing about Japan though, everyone is very good at keeping well maintained records about who you can’t trust and who you should never deal with. They share this information amongst their circles. You don’t want to be on that list. Being difficult, narrow, legalistic, inflexible, insincere, untrustworthy is how they see our inability to let them off the hook for what is written down in the document.

Cases do go to court here and most often are settled out of court before a judgment is handed down. The system actually prefers that the judicial system doesn’t have to make a judgment, hence the push by the judges for an out of court settlement. Japanese companies have no problem being litigious when operating in Western countries however, because they have found that their home grown approach won’t fly.

Negotiations in Japan will have their own flavor and we have to be cognisant of the different expectations which apply. Regardless, we do better when we have a framework to guide us and this simple four step process will assist us in preparing for the discussion with the counterparty. We don’t need to complicate things, but we do need to have a structure to help us break down the complications into bite size pieces we can tackle when they arise.