Announcement! Recently, I have formed a new team together with Vijay and Jun to roll out a new site, “Sages of Negotiation” in the near future. Watch this space! If you know of anyone you believe deserve the title “Sages of Negotiation”, please contact me with more information.
I had the opportunity to hear Raymond Land’s keynote speech at the Temple University. Was really impressed with the vast negotiation experience he had in China and here in the US.
Ray’s varied experience in financial leadership positions, from public Fortune 500 enterprises to emerging life sciences companies, complements Safeguard’s rich history and ensures a strong, disciplined financial infrastructure that drives excellence and accountability from our partner companies, and brings value to Safeguard and its shareholders.
He has more than 30 years of experience has spanned various CFO roles. He has been responsible for tax, treasury, insurance, risk management, facilities, strategic planning and M&A. His most recent position was Executive Vice President and Chief Financial Officer of Medcenter Solutions, Inc., a global pharmaceutical marketing company that specializes in providing online solutions for physicians, patients and sales representatives.
1. What in your opinion is the most important attribute of a master negotiator and why?
I believe that the most important attribute of a master negotiator is the quality of being an effective listener. By listening effectively, it will help you in understanding the opposing side’s motivation, strengths and weaknesses. Effective listening includes observing body language which might give clues as to the other person’s true feelings about an issue.
2. How do you nurture trust in a negotiation?
Trust has been defined as the congruence of goals. To nurture trust, a negotiator needs to understand what the other side is truly seeking so as to be able to position oneself as a contributor to the achievement of the other side’s goals.
3. In your keynote speech at Temple University, you emphasized the importance of planning. How do you plan for your negotiation?
A negotiator should put his desired outcomes on paper and conduct a brainstorming session with his resource providers. The planning session should discuss the boundary conditions beyond which the negotiator will not venture. Negotiating starting points and timelines should be reviewed and discussed. “Deal killing” provisions should be identified. Ways of neutralizing the other sides strengths should also be discussed as well as your strengths and weaknesses.
4. Do you have a negotiation hero? If so, who and why?
Benjamin Franklin comes to mind. As the representative to the French court for the American Revolutionary forces who were fighting a war against Britain, he was able to convince the French to join with the Americans and defeat the British. When you realize that Mr. Franklin had little if any leverage and he was trying to convince the French monarchy to assist the Americans in throwing off the tyranny of the British monarch, it represents an amazing feat of negotiation. He obviously spent quite a bit of time in building trust and discussing goal congruence.
5. What advice would you give to someone who wants to improve their negotiation skills?
Basic training courses are useful but then one should seek to gain experience by observing acts of negotiation.
6. What is your biggest win as a negotiator?
In 1983, I was the CFO of West Pharmaceutical Services Company which was located in Phoenixville, Pennsylvania. Our corporate headquarters and business operations were in an empty dilapidated cinderblock plant and our marketing and research operations were located two miles away in an old facility. The CEO and I were of the opinion that a significant barrier to the future success of the company was the separation between business operations and marketing and research. The 2 mile distance between plants might as well have been 3,000 miles since neither group visited the other very often. We felt that if the groups were all in the same building that the communications would significantly improve and this would be reflected in our financial results. However, no one was interested in buying an abandoned plant property that was over 40 years old. While we continued to try and interest buyers in the old property, we began our search for a new combined facility. Eventually, we found one in Lionville, Pennsylvania. It was a 300,000 square foot building built by Exxon to house its new electronic typewriter business. It was about five years old and of superb construction and it was completely empty. The last tenant had left about a year before and the owner, who was a private individual, was burning $5,000 every day on keeping it maintained and insured. In our first meeting, I told him that we would be interested but that we would only be interested if we could do a Section 1031 “like-kind” exchange. This would help us avoid a tax on the sale of our existing facility which tax basis was now down to zero so any proceeds would be taxed. He said that he didn’t have any interest in our property and the negotiations ended. Over the next six months, we have five meetings and they all ended in the same way. I was unwilling to budge because I knew that he was burning $5,000 every day and that the number of buyers for such a large amount of space was very limited. On the other hand, we owned our property and it was fully depreciated so our costs were minimal by adopting a strategy of insisting upon our terms. The next meeting, he agreed to acquire our buildings and give us $7 million for tenant improvements in the new building. We accepted and moved the following year. West is still located in the building. The key to winning was not putting ourselves under any pressure to get a deal done and recognizing that his options were limited.
7. What was the biggest mistake you made and what lesson did you learn from it?
The biggest mistake was when I worked for Campbell Soup Company in the Mergers and Acquisitions group in the 1980’s. The goal of the CEO was to grow the company’s revenues as fast as possible. He was of the mistaken opinion that revenue growth alone would drive share price. To facilitate this goal, he structured the VP of Business Development’s short term incentive plan so that the M&A department had to acquire a fixed number of companies every year — and that is what the VP of Business Development did. Unfortunately, this led to the acquisition of companies like a small chip steak manufacturer in Reading, Pennsylvania. His facilities were much larger than a restaurant kitchen and all they did was freeze blocks of meat, shave them into slices and put them in boxes. We were acquiring about one company a month from all around the globe. In later years, most of those companies were sold off or abandoned since they didn’t have any strategic fit with Campbell’s other operations. The lesson I learned is that companies must be very careful about how they structure their incentive plans to make sure it isn’t driving unintended consequences.
8. Tell us more about the negotiation experience which you had in China. What have you learned from it?
In 1999, as CFO of Genencor International, I assisted our Business Development VP in designing a strategy for acquiring an enzyme company in Wuxi, China. It was an 85% cash acquisition with 15% remaining in the hands of the Wuxi city government. In preparing for the negotiation, we researched the negotiation style of the Chinese and we learned that the Chinese understood that most Western negotiators had two significant weaknesses:
1. Western negotiators are usually bound to a timeline for the negotiation to be completed
2. Western negotiators are impatient and want to finish negotiations and get home as soon as possible.
Since the Chinese negotiators had neither limitation, they had an advantage. As a result, the Chinese negotiators would appear to agree and settle on points one day only to reopen the same points the next day. When we presented to Genencor’s Board of Directors, we advised them of this issue and asked that they not set a timeline and that our negotiators would plan to stay for as long as it takes to get the deal. We allowed them to take spouses if they wished. In fact, this is exactly what occurred in our negotiations with the Chinese and they were surprised when we did not lodge any complaints when they reopened the issues and proceed to renegotiate them again and again. Eventually, they figured out that we were on to them and we closed the deal successfully.
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Jens Thang
Negotiation Skills for Everyone
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Related Links
1. 8 Best Ways to Get Power: Master Them to Negotiate Everything You Want
2. How to Persuade More Effectively: 6 Principles to Help You Be More Persuasive Immediately
3. How to Win in Negotiation: 4 Key Steps to Help You Prepare
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April 22nd, 2008 at 1:40 am
Jens - I suspect that you’ll find hundreds of academics who are happy to put their best foot forward as being ‘Sages of Negotiation’. I agree with you that Ray is likely the type of master who most readers respect - as he has the scars on his back of working in business and government (if this is what you’re looking for) to back up his sage word of advice. I salute you for having provided us with this information. Your interviewing sages/gurus is about the most valuable thing you can do for readers. You’ll also make powerful and important contacts. You’re onto a good thing, keep going!