Leveraging Against a Greater Power

The Communist takeover in China in 1949 affected American foreign policy interests in the Far East. Trade embargoes were put into place, and countries that traded with the expanding Communist bloc became ineligible for American foreign aid.

Indonesia was of primary concern. It considered itself neutral and had many radical elements within that sympathized with Communist China. The Indonesian government’s primary interests were stabilizing rubber and tin prices and developing its infrastructure. Yet, they remained unwilling to accept economic assistance from America if it meant conceding to American policies and interests.

By maintaining this resolve in their negotiations, the Indonesians forfeited lucrative American military grants. However, they satisfied the nationalistic sentiments of its people and managed to substantially water down American demands in their final agreement. For America, money was power, but Indonesia’s indifference to the influence of foreign aid was a key factor in their successful negotiation from a weaker position.

We’ve been discussing how to identify, gain and sustain leverage when your counterpart is in a more powerful position. To summarize, here are four simple tips to help you remember what to do:

1. Project and maintain confidence. The strength of your position lies in what your counterpart perceives, so lead them in the direction you want them to go.

2. Leverage time to your advantage. If you know your counterpart is negotiating on a deadline, save trading off concessions until the deadline approaches.

3. Highlight your strengths. It’s rare to enter negotiations with no strengths at all. Like the Indonesians, if you can identify your power points, you can use them to your greatest advantage.

And finally…

4. Highlight their weaknesses. Every negotiator has an Achilles’ heel -- a spot of vulnerability. When you find it, take advantage of it.

Achieving a successful outcome in any negotiation is not all about power. The strength of your position is relative. It’s your ability to leverage your strengths that determines your outcome.

Leverage is Rooted in Perception

Among the thousands of insects on display at the butterfly park in Kuala Lumpur’s Lake Gardens, one specimen stands out – the Atlas moth. The Atlas moth’s wing span reaches as much as 20cm, making it the largest in the collection. The Cantonese name for this giant is the ‘snake’s head moth’, because if you look closely, the pattern of a snake’s head – the eyes, the mouth, the scales – are there in detail on each of the moth’s wing tips.

Here’s why: In the wild, this moth is obvious prey. It’s fat, it’s juicy and it’s slow compared to predator birds. In negotiating terms, this moth is in the weaker position. So it has evolved a defense mechanism creating a perception that it’s more powerful than the birds. And as long as the birds think the moth is more powerful, it is.

This is creating leverage.

Leverage in negotiation is rooted in perception. That’s why it’s useful for you to enter your negotiations with self-confidence. You need to believe that you have leverage and options, because as soon as you let on that you feel vulnerable, you become vulnerable.

Your ability to project confidence is an indispensable negotiating skill, but it’s not always easy to acquire. One of the main reasons why is that the stress of competition may sometimes cause you to overrate the strengths of your counterparts while underrating your own. As master negotiator Herb Cohen once observed, we judge others based on what they have accomplished while we judge ourselves based on how far we’ve fallen short .

Creating leverage in your negotiations, therefore, begins with focusing on your potentials. Power can be subverted. Remember the strategy of the Atlas moth. If your negotiating counterparts think you have options, savvy and potency (even if you don’t), then you do.

Five Tips for Leveraging Time

When I worked in the parts department of an automobile dealership many years ago, one of the sales guys from the showroom let on to me that the easiest customers were those who came in during the day. That’s because, he explained, he would have the rest of the day to work with them and get a good price. The ones he didn’t like were those who came in at night, especially near closing time. Those customers, he confessed, were at an advantage because he’d be quicker to cut a deal in order to get home.

Imagine the extra leverage car buyers would have if they all knew this.

Time pressure is one of your best points for leverage if you are negotiating from a weaker position and your counterpart has an obvious deadline. Your advantage increases as the deadline approaches. Time can be your best negotiating partner if you've got more of it than they do. So here are five tips for leveraging time to your advantage in negotiations:

1. If you know your counterpart has a deadline, don’t let on that you know. Disclosing this knowledge may warn your counterpart that you may use the deadline to your advantage and push for last minute concessions.

2. Be an active participant in the negotiation right up to the end. Although you are leveraging time to your advantage, you do not want to appear as if you are deliberately dragging things out.

3. As the deadline approaches, get your counterpart to make a final offer. Then refuse it and make a counter-offer that is more beneficial to you. Differences between offers at this point should not be extreme, however, unless your counterpart's final offer is unreasonable.

4. If your counterpart refuses your counter-offer, wait for them to make the next move. You are under less pressure to change your offer than they are. If your offer is not unreasonable, they will either concede or make another offer.

And finally…

5. Leverage time skillfully, not forcefully. Get your best deal without squeezing loads of last minute concessions at the deadline. You may be doing business with your counterpart another time in the future, and your collaborative approach will be better received.

Creating Leverage in Negotiations

What does it really mean to be a ‘power negotiator’?

Perhaps you think of the Hollywood image -- Wall Street types in Armani suits pounding on tables in back rooms thick with cigar smoke. Or maybe you think of the strong and unmovable silent type sitting hands folded at the table with a no-nonsense, take-it-or-leave-it expression on her face.

You know who I think of? My four-year-old daughter, Jessie. Jessie is the most successful negotiator I know. She gets me to stop work and play with her for twenty minutes. She gets a piece of chocolate even though she hasn’t finished her dinner. She gets a ride to Mid Valley even after I’ve told her she has to stay home. How does she do this? Is this 42-inch little girl a ‘power negotiator’?

Well, maybe not in the Wall Street sense (after all, I don’t let her smoke cigars), but she is powerful in that she knows where she’s got leverage. She knows that if I don’t play with her, she’ll shuffle sadly from my office and sigh, “All right," and that will melt my heart. She knows that if asking for chocolate didn’t work the first time, she’ll ask a second time -- and a third, and a fourth, and a fifth… She senses that I was bluffing when I told her she had to stay at home while I went off to Mid Valley, so she’ll put on her shoes as I put on mine.

Power negotiating, you see, doesn’t mean bullying or stonewalling your counterpart into submission. It means applying the right influence in the right amount at the right time. In many situations, I have more power, but Jessie has more leverage.

In business negotiations as well, one side may be more powerful. The other side, however, may know how to leverage their few strengths better. They may also know how to leverage the other side’s weaknesses better. They may also know how to leverage time better.

In short, the side that knows how to leverage best can come out ahead despite being in a less powerful position.

Cultural Perspectives on Business Ethics

Success or failure in international business depends on your ability to shift your mindset from ethnocentrism towards multiculturalism. Awareness and monitoring of this process can help you remain open to information about your host culture and facilitate your adaptation, either as a company or as an individual.

In addition to observing how behaviors between your culture and theirs compare and contrast, you need to understand the reasons behind their behaviors. When you do, you become less judgmental, more appreciative and more equipped to do business overseas.

Some behavior is obvious, for example, the value your host culture places on punctuality. Some behavior is less obvious, for example, differences in perspectives on business ethics. This, however, although the least obvious, is one of the most important aspects of your host culture that you must understand.

Let me tell you a story. I once worked for an international publisher based in London. Like many multinationals, strict regulations regarding giving and accepting gifts were in place. Any gifts received were to be turned over to the company and used as door prizes for company events, such as dinners and family gatherings.

The manager of the company’s Taiwan branch had received an expensive Rolex watch as a gift from a major buyer. Rather than turning it over, however, she kept it. When confronted by management in London, she explained, “If I were to show up at this buyer’s office not wearing that watch, he’d never buy from me again.” She violated company policy, but was she being ethical?

Business practices can be evaluated based on ethics and legality. Accepting the watch was illegal under company policy, but a necessary part of doing business in Taiwan. As a result, keeping the watch and pleasing the buyer was, in the manager’s eyes, the right thing to do.

What about other practices? Take, for example, gender issues and sexual harassment. How does your culture view the role of women in your workplace? What about your host culture? Consider hiring relatives to occupy key positions. Is this nepotism or is this looking after your primary responsibility – your family?

What’s most important for you to understand is that another culture’s perspectives on business ethics are neither right nor wrong, they are simply different. With a multicultural mindset, you understand that ethics are relative. Conflict over business ethics, therefore, can be managed through thorough understanding of your host culture’s business practices and clear communication in solving your differences.