The Negotiation Society Magazine - Issue 5

ISSUE 5
The Negotiation Society
BRINGING THE ART AND SCIENCE OF NEGOTIATION TO LIFE
FINDING UTOPIA
How to reach commercial nirvana
by creating a negotiation culture
BANKING
ON IT
FAITH, HOPE
AND CHARITY
BATTLE OF
THE GIANTS
How banks are
responding to
increased scrutiny
Portrait of a woman
on a mission
The negotiation angle of
the U.S.-China trade war

THE NEGOTIATION SOCIETY
INSIDE THIS ISSUE
OUR CONTRIBUTORS
04 06
Inside My
Head
The CEO of Capri Sun
shares his thoughts on
leadership, negotiation and
how to get to the top.
14 16
Negotiating In
A Regulatory
Landscape
A report into how the
banking and finance
industries are responding
to increased scrutiny of
their conduct.
20 28
Battle Of
The Giants
Analysis of the negotiation
angle of the U.S.-China
trade war and the strategies
and tactics used by
both sides.
Finding
Utopia
Our global head of
consulting issues a rallying
cry for the commercial
benefits of creating a
negotiation culture.
Faith, Hope
And Charity
An illuminating portrait
of consultant Darci T.
Horne, a woman on a
mission with a strong
set of beliefs.
Get What
You Want
Behind the scenes of an
inspirational masterclass
designed to empower
women, and why
it’s important.
WELCOME FROM GRAHAM
Welcome back to The Negotiation Society
magazine. My first nine months as CEO of The
Gap Partnership have coincided with the topic of
negotiation being at the forefront of global news
headlines. As such our solutions are rapidly evolving
to meet our clients’ demands. It is a fabulously
exciting time to be leading the thinking and
application of these new approaches, whether around
embedding capability, building strategies for
long-term relationships, mitigating risk and
overcoming shifts in the balance of power – or
even transforming business culture.
This edition’s cover story introduces the concept
that a negotiation culture creates a commercial
utopia – that having negotiation at the heart of an
organization leads to greater business success.
Chris Atkins eloquently brings this to life on page 6.
Having conducted research into regulatory
changes in banking, Michael Lally offers some
fascinating insight on page 14 into how the sector
has responded.
And with many of our clients asking us to provide
support for women in negotiation, Dürrin Ergün
writes about a masterclass she ran in the Netherlands
on page 28. It’s important and inspiring stuff.
You’ll also find many negotiation perspectives
from our guest writers that I hope might just
provoke you to consider your business partnerships
slightly differently.
I’ll sign off with a thought for the day: if
negotiation is the art of letting them have your
way, maybe some of our world leaders could
demonstrate a little more humility to bring our
global society together.
Graham Botwright
CEO, The Gap Partnership
Edward Alden
Ted got his start as a reporter
covering the NAFTA negotiations
and creation of the World Trade
Organization. He later became
Washington bureau chief for the
Financial Times, and a senior
fellow at the Council on Foreign
Relations. Ted has written widely
on trade and now teaches as a
visiting professor in
Bellingham, WA.
Aylin Bumin
Aylin joined UPS in 2010 and is
currently responsible for driving
the commercial and marketing
strategy across western Europe.
She is multilingual, speaking
fluent French, English, Italian
and Turkish, and beginner Dutch.
Aylin is a passionate advocate for
diversity and inclusion and the
empowerment of women.
Tim Milne
During his seven years working
in financial services, Tim
negotiated agreements and
resolved commercial issues across
the Asia-Pacific in industries
including marketing, HR, loyalty,
credit/debit cards, and a range of
IT services. His depth and breadth
of experience now serve him well
as senior consultant at
The Gap Partnership.
Dürrin Ergün Ka Zeng Simon
Cope-Thompson
Prior to joining The Gap
Partnership in 2017, Dürrin was
responsible for sourcing IT globally
for FrieslandCampina. She now
uses her extensive negotiation
experience to deliver solutions and
consultancy to clients including
Ahold, Nestlé and Coca-Cola,
helping them achieve sustained
behavioral change and quantifiable
commercial impact.
Ka is Professor of Political
Science and Director of Asian
Studies at the University of
Arkansas, researching China’s role
in the global economy. She is author
or co-author of Trade Threats,
Trade Wars, Greening China, and
Global Value Chains and the Politics
of Preferential Trade Liberalization,
all published by The University of
Michigan Press.
Simon has spent 25 years at
Livingstone Partners, the middle
market M&A and debt advisory
firm. As partner he has led over
150 deals, many of which have
involved private equity. Simon
has responsibility for the firm’s
management advisory practice,
helping teams negotiate terms as
part of a management buyout.
2 3

INSIDE
MY HEAD
ROLAND WEENING
THE CEO OF CAPRI SUN SHARES HIS PHILOSOPHY
ON LEADERSHIP, NEGOTIATION AND LIFE.
THE NEGOTIATION SOCIETY
THINGS I WISH
I’D KNOWN
Very few people are naturally good at negotiation
without any training, as it’s a skill that is often
counterintuitive. With that in mind, we asked
some seasoned negotiators what advice they wish
they’d known at the start of their careers.
How did you come to work in FMCG?
A year before graduating from my
economics degree, I thought I should
think about jobs! I was lucky to be
accepted onto a wonderful international
traineeship for Unilever and found
myself in the Philippines. I got
hooked on working for brands that
are household names.
What’s the best thing about being
a CEO?
Making a number bigger and winning
are nice, but that’s not what drives me.
What I love is working with talented
and diverse people and challenging
each other to become better. They
might see things differently, but that
challenge is inspiring and leads to
better outcomes.
And the most challenging?
Sort of the opposite – the people who
are can't dos, who complain about
not having a choice, or voice, but
choose not to take responsibility.
I find that difficult, but it is my job
to lead those people through change
and empower them.
How important is the skill of
negotiation in your life?
For me it’s a bit like the Olympics –
there are lots of little daily negotiations
but you don’t need to plan and practice
for those. But when it really matters
for the few big negotiations per year
or in life, you need to be match fit.
For both the big and everyday, I use
the Clockface to assess what type of
situation it is and adapt my
behavior accordingly.
Your career has spanned continents
and countries. Do you negotiate
differently depending on the culture
or nationality of your counterparty?
Very much so. Culture impacts how
the negotiation’s conducted. A recent
example was a partnership negotiation
in China. Their leader walked and
we were left with people we didn’t
know. In China, the leader does not
get involved, only decides; whereas in
WE or the U.S., the leader certainly is
involved in striking new partnerships
or doing a big acquisition. This wasn’t
a tactic; simply a reflection of a cultural
business norm that could derail you if
you’re not aware of it.
What’s been your greatest negotiation
achievement?
It has to be one of my earliest. I was
selling my outdated 32KB computer I’d
used all my savings to buy as a teenager.
I was offered a too-low price but knew
the guy had driven some distance and
had special use for it. The thing was
worth nothing, but I applied tactics
I’ve since learned but somehow used
instinctively – and he accepted my offer.
It taught me so much, until I went on
The Complete Skilled Negotiator and
learned some more!
What’s the most important lesson
you’ve learned as a negotiator?
Preparation – not for day-to-day
negotiations necessarily, but when it
really counts. Also, intelligence on the
other party: their motives, background,
what else is going on. You’ll discover
you have more power than you think.
You’ve had an incredibly successful
career. What advice would you
give to someone aspiring to a
similar trajectory?
I’ve always seen my career as a
marathon not a sprint. It’s not just
about job moves and what you know,
it’s about how well you work with other
people to deliver results. The other
thing I’ve always done for myself and
when coaching others is to push out
of comfort zones. The marathon is
more than an analogy – I'm actually
a long distance runner. When I was
comfortably running 20k, I wanted
to run further and faster. You learn
more and grow more if you put
yourself in new challenging
environments and situations.
That you do not always know the pressures the
other side of the table is facing.
Lindsay Hoglund
Negotiation is not about arguing.
John Clements
“If you…, then we…” If I'd had this simple yet brilliant
piece of information at the very start of my negotiating
career I could have saved myself and the other
party so much!
Tamara Hodgson
“If you..., then we...” NOT “If we..., then you…”!
I found myself repeating the request of the other
person at the beginning of the proposal, rather
than stating what we needed first.
Chris McNally
I wish I knew that power was governed by
time and circumstance, not ego, tactics
and competitiveness.
Campbell Graham
That, as a young woman, it is okay to negotiate your salary.
Diane Jeanblanc
That I have more power than I think I have.
Mickel Ouweneel
That negotiation is silence and listening – and how
useful it can be to shut up!
Diana Jusepeitis
It doesn’t matter that you are right.
Jordan Steinohrt
To never use a salary range, as they will take the
lowest amount you are looking for!
Keilee Sperinck
That competitive behavior breeds competitive
behavior, which ultimately leads to loss of value.
Ryan Gray
I wish I’d understood the balance of power that exists
in a negotiation, and to not credit the other party with
more power than they have.
Marcos Mendez
Everything is negotiable, find comfort in your
discomfort and open extreme to give satisfaction.
Mark Morrison
Opening extreme and flinching.
Justin Francisco
I think people often spend too much time or money
trying to be liked by their counterparts. Do not worry
about being liked; it is more important to be respected.
Chris Mercer
The impact of separating my feelings from my behavior.
Darci Horne
Negotiation is a dance; a ritual that allows us to gain
agreement. So turn the music up and enjoy!
Graham Stimpson
4 5

THE NEGOTIATION SOCIETY
I’d like you to metaphorically close your eyes and
join me on a journey. To use your imagination to
visualize a startling alternative reality. A reality
in which your professional and organizational
goals are achieved consistently time after time
after time, and you are utterly in command of all
possible outcomes. Sounds good? Then here goes.
Close your eyes and read on…
Imagine an organization in which teams are
primarily commercial in outlook – recognizing the
true value of relationships but not using relationship
as a rationale for suboptimizing contracts and deals.
Imagine that those teams are clear about their
goals, escalation procedures and internal processes.
implementation processes. But when examined
more closely, it becomes clear that negotiation
should be viewed as a critical part of the business
process – one that can influence the success or
otherwise of all commercial strategy. So, I urge
anyone who is in the camp of viewing negotiation
as a standalone, distinct activity, to read on and
rethink that perception.
Because the fact is that during mine and my
team’s engagements, I have so often seen the
planning of a negotiation omit elements which
are crucial to optimal success. When they are
considered it can be too late to do anything about
them. The consequent impact on time spent,
money lost and limitation of options can be huge.
Imagine they have confidence in knowing that the
decisions they take are within a supportive framework
in which their leadership "have their backs."
Imagine that it’s easy and immediately possible to
value the impact of organization decisions, risks and
external factors.
THINGS THAT CAN HAPPEN
AS A RESULT OF INADEQUATE
NEGOTIATION PLANNING
FINDING
UTOPIA
Chris Atkins argues for a
radical new way of looking at
the role of negotiation in your
business that he promises
will deliver transformative,
long-term results.
ILLUSTRATIONS: ALEKSANDAR SAVIĆ
Imagine everyone who negotiates using similar
language, whether it is with unions, customers, M&A
partners, banks or suppliers.
Imagine you could recruit to a profile and reward,
using a system that encourages objective commerciality
in the choices that our teams make.
Is this some sort of commercial utopia,
imaginary and impractical? I don’t think so.
Why? Well, day in and day out in my role as
head of global consulting at The Gap Partnership,
we are working with our clients to develop
solutions that look far beyond the cut-and-thrust
of the negotiation table to where the root
cause of problems arise, in order to find
pragmatic resolution. We call this amalgam of
commercial solutions negotiation culture.
I want to start by picking apart this notion of
culture. It may seem a little presumptuous, even
bold. After all, it’s a big, strong, all-encompassing
word suggesting scale and universality. And
in contrast to that I understand that it’s not
unreasonable to consider negotiation as a discrete
activity, unrelated to the business planning or
• Lack of alignment among major
stakeholders over the ideal outcome
• Inability to measure the success of
the negotiated agreement during the
implementation phase or contract
• Escalation of issues too early, too late and
without adequate warning or information
for the decision maker
• Inappropriate communication to
counterparties which unduly influences
the outcome of the negotiation
• Underprepared or inexperienced
individuals entering the negotiation with
no game plan
• Limited assessment or management of the
possible risks, or worse, unwillingness to
address real risks
• Incomplete understanding of the value and
cost of the variables at play – leading to
misvaluation of the deal on the table
6
7

THE NEGOTIATION SOCIETY
Let’s consider another way. A world in which negotiation
isn’t something that we have to endure at the end of a
business planning process, but rather is an integral part of the
planning and solution development. And instead of being
viewed as a combative win-lose process involving negative
tactics and brinkmanship, it’s seen as an opportunity to
develop, build and sustain strategic partnerships through
negotiation. Something we recognize and embrace with all
the skill, strategy and tactics of a finely tuned and expertly
conducted military operation.
Back to this emotive, powerful word – culture. As
commercial people, we attribute a lot of importance to our
business’s culture. We are familiar with it as a concept and we
likely talk easily about it. For example, when we recruit we
look for "fit" to our culture; likewise the talent that we talk
to will ask us what the culture is like, to assess whether it will
be the right one for them. We strive for a world of work in
which the culture is definable, distinctive and augments our
vision, values and purpose.
All well and good, but look for a common-or-garden
definition of what a business’s culture is, and there are rather
a lot to choose between, both conflicting and complementary.
Allow me to offer my own pragmatic, workable definition –
after all, as practitioners, we need to find a
way to assimilate and then cut through
conceptual and academic ways in to a concept, to get to a
place that, well, we and our clients can understand.
With that in mind, my definition for culture is how we do
things round here.
Now we’ve established what it is, let’s look at what makes
up a negotiation culture. My belief is that it is neither
nebulous nor impossible to measure. What’s more, making
a proactive choice to understand the negotiation culture
inside your business allows you to look more systemically at
the capacity your organization has to deliver value through
everything it does. The alternative, of course, is to try to
work continually on supporting this week’s/month’s/quarter’s
(delete as appropriate) immediate initiatives. The risk of this
approach is that your long-term outcome is merely the sum
of a series of short-term actions.
At The Gap Partnership, we find it helpful to define
negotiation through the lens of three main areas: people,
process and organization. Each area overlaps with each
other, to the extent that working on one area alone is close
to impossible. And this combined, holistic approach which
considers how the three support and enable a mature
negotiation culture to exist in your organization can help
leaders take an active step to work on improving their
business, rather than being repeatedly drawn back into
activities that their teams should be accomplishing.
SKILLS
MINDSET
EXPERIENCE
PEOPLE
ORGANIZATION
TOOLS & PROCESSES
PROCESS
DATA & SYSTEMS
RISK & POWER
PEOPLE
People measures in negotiation culture
encompass the subsets of skill, mindset,
and experience. Many of our clients
invest heavily in developing the skills of
their team members; it’s a natural place
to start and the payback is undoubted.
However, without consideration of the
mindset and attitude the individual
will bring to these skills, it would be
hard to be sure we are optimizing
our negotiations. Similarly, avoiding
considerations of the experience levels
of the individual and team could
result in failure to recognize
opportunities to share and
apply relevant experience
to those who need it.
PROCESS
Our second
area of focus is
that of process.
To what end are
the tools and processes of your business
enhancing the team members’ ability
to do their jobs? If the tools provided
to manage the day-to-day processes
also support the efficient preparation
and planning of negotiation, then it’s
more credible that the opportunities to
gain value will be grasped. If the tools
of running and reporting your business
are separate to those that support the
negotiation, then it’s more likely that
only the major, set-piece negotiations
will receive the planning attention
they deserve. Likewise with data and
systems: if information is accessible,
accurate and easily used by your teams
to process with the appropriate tools,
so the greater the chance of spotting
the enhanced value available through
negotiation. With appropriate tools
and data, a mature negotiation culture
can more effectively understand and
manage both its power state as well
as providing more proactive ways to
assess, mitigate or avoid risk.
ORGANIZATION
The final area for consideration is that
of the impact of the organization as a
whole on our negotiation culture.
To what extent do our leadership
behaviors and decisions create
engagement around the importance
and impact of negotiation? Do we
actively role-model a world where the
opportunity to negotiate is embraced?
Do we reward and recognize those that
prepare and deliver excellence through
their negotiation? How effectively do we
communicate our plans, our successes
and our learning from the negotiations
we conduct? Do we align so that
the might of the organization gives
strength to the individual negotiator?
Or could we be piling pressure to
perform onto individuals at the very
moment we are most reliant on them?
To what extent does the organization
consider the alignment of the various
teams’ objectives and the interactions
between their various strategies?
ENGAGEMENT
Now, it’s possible you already have a view on where you
think your business’s relative strengths might lie in this
model of negotiation culture. I hope this may also start you
thinking about what you might want to prioritize next as you
seek to gain advantage through developing your negotiation
culture. However, it’s also worth considering a learning all
readers of this magazine will have heard before: negotiation
happens not in your head, but in the head of your counterparty.
Now here’s a question for you: how would you rate the
negotiation culture of those you negotiate with? And what
opportunities does that provide for you?
After you’ve mulled that one over – and I trust you will
conclude that there could be some significant opportunities –
I want to emphasize something really important: developing
a negotiation culture requires many different elements to
align. In fact, all of the aspects that we have explored in this
article. A true negotiation culture recognizes negotiation
not as an adversarial process to be endured at the tail end
of a business process, but as an influential and collaborative
process to be embraced throughout. My team need your help
with negotiation – they don’t have the skill levels to succeed…
a commonly heard phrase when we talk to clients. But this
may be fixing the symptoms, not tackling the disease. First,
ask the question, is the culture in place from top to bottom
in the organization and is management/leadership behavior
COMMUNICATION
ALIGNMENT
appropriately driving the culture of success?
I’ll make no bones about it: instilling negotiation culture
is no small task. It requires an understanding from all major
sponsors or stakeholders of what it means and commitment
to the outcome. And on top of that, a thorough diagnosis
of the critical areas of change, prioritizing by scale and
urgency. It may be some or all of the topics I’ve mentioned
in this article or it may uncover other areas of opportunity to
improve. But once an action plan has been developed, then
we can set off on this exciting journey, changing the way we
approach negotiation from the center outwards.
I’ve laid out my vision: The Gap Partnership’s vision.
A vision that is, though I say it myself, bold, radical and
challenging. And I would suggest that there is almost
certainly someone in your business shouting about the need
to address these issues, either individually or holistically.
So what is it to be? Where do you stand? Should
negotiation remain a tactical activity at the periphery
of commercial life? Or should it be a core, strategic
organizational competence, driving thinking, planning,
communication, efficiency and profit?
For you to decide. TNS
We’d love to hear what you think. Get in touch at
chris.atkins@thegappartnership.com
8 9

THE NEGOTIATION SOCIETY
BE CLEAR ON YOUR OWN OBJECTIVES
(AND AGREE YOUR "RED LINES")
BE WELL PREPARED…AND THEN
DELIVER THE RESULTS
HOW TO NEGOTIATE
SUCCESSFULLY WITH A
PRIVATE EQUITY INVESTOR
Simon Cope-Thompson
draws on a wealth of
experience to share a
practical guide to
best-practice negotiation
with private equity firms.
Like any other form of
negotiation, you have
to know what you’re
looking to achieve out of
a deal with a PE investor
before commencing
negotiations. It’s not
always straightforward as
the shape of a transaction
and what you are looking
to get out of it can vary
enormously, and may evolve
as the process progresses.
Sellers who are looking to
cash out 100% may have
different objectives from
a transaction than those
looking to stay involved
and partner alongside a PE
firm going forward. This
will impact how both sides
approach the negotiation.
If you’re looking for a
clean break, then achieving
the highest price from the
sale is likely to be your
number one priority. The
PE firm is a buyer, you are
a seller and the lines are
drawn. Sellers need to agree
what their walk-away price
is (along with any other
commercial terms) and be
prepared to stick to it.
If you’re staying on
as a shareholder, and
particularly if you are
part of the ongoing
management team they are
backing, this will have some
bearing on how both sides
manage the negotiation, as
ensuring that the ongoing
relationship between the
parties is preserved will
be important.
PE firms are extremely
demanding in terms of the
information they expect
to receive on a company
before they finally conclude
whether or not to invest.
They also rely upon a broad
range of diligence experts
(financial, legal, commercial,
political, IT etc) to scrutinize
the data and report back.
Being well prepared up
front is a key element to
delivering a successful sale
process. Although it doesn’t
happen on every deal, there
has been a growing trend
for sellers to prepare their
own diligence (Vendor
Due Diligence or VDD)
ahead of starting a sale
process, and to make sure
this is supportive of the
key commercial messages
and financial information
contained within any
marketing materials or the
financial model/business
plan. VDD protects against
hidden surprises that could
otherwise come out at the
last minute and give the
investor the opportunity to
renegotiate. As a process
unfolds and negotiations
develop, it’s critically
important to try and deliver
strong results and positive
trading information,
building momentum
and delivering good
news to investors.
Having worked in the world of M&A and
private equity (PE) for over 25 years,
I’ve dealt with hundreds of different
firms from around the world, and met,
worked with and negotiated against (and
sometimes for) thousands of individuals working
within these institutions. Most of my career has
been spent acting for entrepreneurs and business
owners (both private shareholders and larger
corporations) and it’s fair to say that most of them
start off with a relatively negative view about PE
investors and a general distrust about how they
will behave both during and after a deal. They
have heard war stories passed down directly from
friends or other business owners about unjustified
chips to the price or other changes to the key
commercial structure of a deal that emerge at the
last minute.
It would be wrong for me to pretend this
doesn’t happen today and I’m not here to defend
the indefensible. There are firms (and individuals
working within those firms) who have a
well-earned reputation for some pretty poor
negotiation behavior and deal antics. However,
this is not as commonplace as it was a decade or so
ago. In my experience, the PE market has (largely)
changed – it's had to.
Against this backdrop and with the caveat
that every PE deal and process is different, I have
compiled a key list of "must dos" to help you
prepare for and execute any negotiation with
a PE counterparty.
CHOOSE THE RIGHT ADVISERS
Clearly I can’t be expected
to be completely unbiased
here with this first piece
of advice, but the sale of
a company or stake to
a PE firm is a complex
process. Having the right
set of experienced advisers
alongside you who know the
tricks of the trade, possess
the skills to deal with some
uniquely technical financial
issues, and have dealt with
the firms and individuals
you are negotiating with,
will ultimately enhance
your chances of getting
the best deal.
Over the last five years
it has become increasingly
rare for successful business
owners not to be advised on
a deal by both a financial
adviser and a corporate
lawyer. Both have a range
of invaluable experience
and insight into the way
PE counterparties might
operate during a process.
It’s important to choose the
right advisers to sit alongside
your team. Make sure they
have good knowledge of your
sector and the investors that
are most interested in it.
Although some PE firms
might try and encourage a
seller to agree a deal without
speaking to a financial
adviser, you have to ask
yourself why they would be
doing this – more often than
not it’s with an eye to getting
a better deal for themselves
or ensuring that the adviser
doesn’t broaden the process.
However, most appreciate
the role that an experienced
adviser plays, and the help
and guidance they bring to
the table, and frequently
encourage a vendor to
appoint someone to help.
CHOOSING THE RIGHT PE FIRM – DO YOUR DILIGENCE ON THEM
PE firms operate within a highly
sophisticated multi-trillion dollar
global industry, where they’re not only
competing for the very best deals but
also for access to the best investors for
their next funds.
PE investors are financial buyers that
purchase businesses as an investment
and are primarily concerned about
their anticipated investment returns:
this has several consequences. The final
purchase price they are prepared to pay
will be largely driven by the anticipated
financial performance that they model
from the investment and how this
impacts the key ratios that their fund
performance (and individual rewards)
are measured by.
A track record of strong absolute
and relative financial returns is a
critical benchmark as PE investors try
to differentiate themselves from their
peers. However, it is worth bearing in
mind that in order to raise their next
fund, they have to invest (and then
successfully realize) their current one.
PE funds typically have a ten-year
duration and the fund’s life cycle has a
powerful effect on the motivations of
the PE firm. The investment rationale
or expectations behind the first deal in
a fund can often be different to the
one which triggers the threshold for
their next fundraising to start; the
pressure for returns in a fund that has
already realized market leading
returns are different to one that
is underperforming.
Alongside financial performance,
PE firms’ reputations have also become
an increasingly important differentiator
for both sellers looking to choose who
to transact with, and funders deciding
which firms to invest behind. Many
PE firms have established a reputation
for a specific style of institutionalized
DNA which depict their brand in the
market. However, just like every other
business in the world, each PE firm
is made up of a group of individuals.
They bring their own negotiation styles
and experiences (and often a pressure
to perform relative to their colleagues)
each time they try and do a deal.
As part of your diligence, it’s
important to understand who is
involved in the final decision-making
process within a PE fund. While the
individuals leading the transaction
(and negotiation) will be your day to
day counterparties, PE firms normally
operate with an Investment Committee
(IC) comprising the most senior
executives within the fund. They have
the final say. As a result, our advice
is to get exposure to one or more
members of the IC at an earlier stage
in the process to ensure buy-in to your
business (and also avoid any surprises
or the risk that the deal team hide
behind the IC veil when trying to move
on points that you thought had been
agreed.) If the deal team has senior
sponsors who are excited and also
feel ownership of the opportunity, this
can really make a difference when
you are in the final stages of
negotiating terms.
10 11

THE NEGOTIATION SOCIETY
COMPETITIVE TENSION
If they can engineer it, PE firms will always prefer
to negotiate one-on-one with a seller outside of
a sale process. They understandably feel that not
only does this enhance their chance of success
if they aren’t competing with another firm, but
also that outside an auction they have more
opportunity to negotiate better terms.
Over the past 18 months we have seen an
increased number of preemptive deals with PE
investors that are making unsolicited approaches
to targets. In some cases, firms hear that a seller
is looking to kick off a broader auction process
and move quickly to close down the process by
making them an offer they find hard to refuse.
Sellers are often seduced by the headline price and
the promise that they can get an accelerated deal
closed. However, the sellers are often not ready
for the subsequent diligence process and end up
exposed when a PE firm tries to change agreed
terms late in the day. Our advice to sellers is that
if they are looking to negotiate a preemptive deal,
you have to be willing to walk away, regroup and
talk to others. The threat of this alone (if real) can
be enough to create the competitive tension you
need to keep the buyer honest.
However, more often than not, sellers decide
to test the market and run a process which
involves approaching more than one investor (as
well as potentially strategic buyers). Running
a competitive process does not automatically
give a seller a stronger hand in the negotiations;
ultimately this will depend on how a process
unfolds. Over the past few years there has been
a strong demand for the very best assets, and
this has definitely led to it being much more of a
sellers’ market. Although PE investors
will compete hard for something they really want,
sellers and their advisers need to find the right
balance as there are definite risks from
"over-selling." Working out which participants
are genuinely interested and will last the distance
is critical as the last thing you want to find is that
bidders drop away and you are left with a broken
process where you have to go back to underbidders
with your tail between your legs.
“NORMAL AND CUSTOMARY”
PE firms need to understand that the party on
the other side of the table may never have done a
deal with an investor before, and even if they have
they are unlikely to be as familiar with some of the
financial and legal jargon which is commonplace
in PE deal negotiation. It is critically important
that you fully understand what you are being
asked to negotiate before sitting across the table –
again, advisers will help.
One of the most common complaints from
sellers is that it is far too easy for a PE firm to
hide behind the claim that a particular legal point
is “the market norm” or “entirely customary.” The
fact that a particular term has been negotiated on
each of an investor’s last five deals doesn’t mean
that you have to accept it (or that it’s fair!) Make
sure your advisers are able to fully explain why the
terms are there, what they mean and why they
might be acceptable.
PE investors represent a growing proportion of
the global M&A marketplace. They are very likely
to represent one of the strategic options for you as
you consider your optimum exit strategy. PE firms
want to invest the money they have raised, backing
strong management teams and achieving an excellent
financial return. To do this they have to complete
deals. If you are well prepared with strong advisers
around you, a clear set of objectives, thorough
homework on suitable investors, and crucially an
asset that investors are going to want to compete
for, there is nothing to fear. TNS
Did the
can’t get no satisfaction,”
sang Mick Jagger, the
lead singer of one of
the world’s most iconic
rock bands, of whom I
happen to be a lifelong
fan. Why am I bringing this up in
a magazine purporting to be about
negotiation? Well, if you have worked
with The Gap Partnership in any
capacity, then you’re no stranger to the
concept of satisfaction as a benchmark
in negotiation. Because, as in our own
lives, in negotiation there should be a
steely focus on satisfaction. But for me
Jagger’s famous lyric begs the question,
who is responsible for that satisfaction?
And how do we generate, evaluate, and
measure it?
The Oxford English Dictionary
defines satisfaction as “the fulfilment
of one’s wishes, expectations, or needs,
or the pleasure derived from this.”
This strikes an incomplete chord with
me. Satisfaction is a word that I had
never especially analyzed, but seeing
the definition written out feels too
simplistic; as if it fails to encompass
the feeling behind satisfaction. Because
after all, isn’t that what satisfaction
truly is: a feeling? Irrespective of the
type of negotiation you find yourself in,
delivering satisfaction to the other party
is crucial to the completion of a deal.
Yet how that satisfaction is delivered
can be as vast as the imagination.
But let’s get back to the key question
of who is responsible for satisfaction.
Every self-help book, blog or manifesto
will tell you that lasting satisfaction
comes from within, yet in a negotiation
waiting for the other party to come
to satisfaction on their own would be
arduous and potentially impossible.
So, it comes down to us as skilled
negotiators to deliver satisfaction for the
other party, ultimately creating our own
satisfaction in the process.
Delivering satisfaction to the other
party does not mean giving them carte
blanche for whatever their heart desires.
Quite the contrary, as the more work
someone puts into an endeavor, the
more they reap from it. This concept
“Delivering satisfaction
to the other party does not
mean giving them carte
blanche for whatever their
heart desires.
has been studied in many applications
outside of negotiation and was dubbed
the IKEA effect based on a set of
studies conducted by Norton, Mochon
and Ariely. Consumers were studied
while they built sets of Lego, folded
origami, and, as you may have guessed,
assembled furniture from IKEA. In
short, the research demonstrated that
upon successful completion of the task,
participants placed a disproportionately
higher value on their finished product
than they assigned to the preassembled
products. Referring back to our
dictionary definition of satisfaction,
isn’t the creation of disproportionately
get it wrong?
Serena Tittl analyzes why the famous rock band’s gripe about
satisfaction isn’t quite on the money as negotiation advice.
higher value the embodiment of
fulfilment of one’s wishes, expectations,
or needs?
Examples of people achieving
satisfaction through the input of their
own work has led to the foundation of
multiple business models, from make
your own teddy bear workshops to
painting your own masterpiece (natural
artistic ability optional), and of course
the aforementioned IKEA example.
But there’s a key dimension to the
IKEA effect study that’s worth
highlighting: the
disproportionately
high value was only
obtained upon the
successful completion
of the project. This
too has a parallel
impact in the realm
of negotiations. The
satisfaction delivered
to the other party is
only delivered upon the
successful completion of the deal; failure
to come to an agreement can lead to an
opposite, lasting effect. While certainly
there are times when it is appropriate
to not come to a deal, we have to be
mindful of the risks we run in not
delivering satisfaction, particularly
when associated with failure and the
dissatisfaction that can result.
While my adoration for The Rolling
Stones will not diminish, their advice
on satisfaction sits, well, like a rolling
stone. When it comes to negotiations
I’ll continue to place my satisfaction in
myself while delivering it to the party
across the negotiation table. TNS
12 13

THE NEGOTIATION SOCIETY
B A N K I N G S P E C I A L
NEGOTIATING
IN A
CONDUCT-FOCUSED
REGULATORY
LANDSCAPE
Regulators of banks and financial services
providers around the world are increasingly
focusing on the conduct of those institutions
and their employees in ensuring fair customer
outcomes. The areas of scrutiny have included
culture, senior management accountability,
and selling and product governance. Could
negotiation be the next to go under the
regulatory microscope?
It’s been seven years since The Financial
Services Act 2012 was passed, implementing a
new regulatory framework for the financial system
in the UK. This far-reaching Act was in response
to the global financial crisis and resulted in the
demise of the Financial Services Authority and
introduction of two new regulators, the Financial
Conduct Authority (FCA) and the Prudential
Regulation Authority.
While the FCA was given significant
powers, its explicit and specific focus on conduct
represented the biggest change for the banks and
financial services providers that it supervises.
Previously, conduct was implicit and assumed, but
the new regulatory body was tasked with explicitly
defining conduct risk, including demanding a
more evidence-based approach to how banks
manage conduct risk.
Michael Lally puts the negotiation
capability of banks under the spotlight
and explains just how critical it is in the
new world of heightened regulation.
Conduct can be defined as ensuring banks treat
customers fairly and that they don’t interfere in the
fair functioning of markets. This was in response
to the banks’ role in the global financial crisis
including the misselling of products and rigging of
foreign exchange markets that hit the headlines of
the business pages in too regular a fashion.
The new regulatory approach has led to
sweeping changes. The Financial Services
Authority’s Retail Distribution Review (RDR),
for example, forced all financial advisers to disclose
fees and charge customers separately for services.
Initially the design, delivery and selling of
products and services and their suitability for the
customers to which they were being sold was a big
priority for the FCA. This included any customer
remediation that banks needed to undertake for
the misselling of products. A sharper focus on
product governance, including how products are
designed, managed, marketed and sold – and to
whom – all became a laser-like focus for banks.
More recently culture, adequacy of systems
and controls, ensuring senior management act in
accordance with the firm’s policies and procedures
through the Senior Managers Regime (SMR),
and the use of management information (MI) in
managing conduct risk have been scrutinized.
We have already seen the
implications of non-compliance,
with the FCA issuing significant
fines to offending parties with clear
expectations on what needs to be done
to remediate process and procedures as
well as client restitution.
The EU took this a step further,
defining strict criteria around client
classification within the MiFID 2
regulation framework that limited the
types of product and services that could
be sold to different client categories.
The U.S. regulatory landscape
is a little more complicated given
the breadth and remit of different
regulators. However, the focus on
conduct remains no less resolute, with
both formal regulations and informal
policy guidance on conduct coming
from the Federal Reserve Bank of New
York, the Department of Justice, the
Securities and Exchange Commission,
Financial Industry Regulatory Authority
(FINRA) and the Consumer Financial
Protection Bureau (CFPB).
More recently in Australia, The
Royal Commission into Misconduct
in the Banking, Superannuation and
Financial Services Industry, also known
as the Banking Royal Commission,
shone a stark light on the misconduct
in the sector through a series of
brutal public hearings that resulted in
significant reputational and financial
damage for Australia’s leading
financial institutions.
The final report published in
February 2019 resulted in a number
of recommendations similar to those
that the FCA
implemented,
including a focus
on ensuring senior
executives are more
accountable for
what is going on in
69
negotiated at least
every week with a client
their organization
through the
Banking Executive
Accountability
Regime (BEAR),
clarity around the process for the
design, delivery and maintenance of
products, culture and governance, and
the impact of remuneration policies on
fair customer outcomes.
We surveyed a selection of banking
professionals to provide a snapshot into
how banks are looking at negotiation
in the conduct focused regulatory
landscape. The results are enlightening.
Within banking, negotiation
remains a critical part of how business
is done, with 69% of respondents
saying they negotiated at
least every week with a
client. Yet, there is little
evidence to suggest that
banks have specific and
consistent policies and
procedures in place for how
they negotiate, with 68%
revealing their business had
no clear policy or procedure
for negotiation.
Often negotiation is
a skill that it is assumed that every
banker, whether a salesperson, lawyer,
relationship manager, product owner
or procurement manager, excels at,
often without any formal training or
assessment of their competency in this
area when they are hired. It was still
somewhat startling to see that 27%
of respondents have had no formal
negotiation training.
What’s more surprising is that
within organizations, often commercial
matters are escalated to senior
executives, who have little or no
internal alignment on the negotiation
strategy or desired outcome and
who may give up more value than
is necessary in order to get the deal
done. In our survey less than 5% of
respondents include managing director
level executives in their
negotiation planning.
Interestingly 64% of
respondents have seen
significant changes made
to sales process as a
result of the regulatory
environment, yet only
31% have seen significant
changes to their
negotiation processes
and 14% have seen no
changes at all to the way they negotiate.
In designing policies and processes
for negotiation, banks have plenty they
need to consider. Firstly, ensuring they
set up an approach that is consistent
with the strategy and culture of the
organization. If a bank is looking to
position itself as client-centric with a
focus on fair outcomes for customer
needs, yet is approaching negotiation in
a competitive manner that seeks to take
value from their clients, then long term
value and satisfaction will be eroded.
What is also
important is the
variables they are
willing to trade.
Often a client
will have a view
on what can
27
have had no formal
negotiation training
be exchanged
as they see a
bank as a single
entity, whereas
banks will
often have different business units
with accountability across certain
products and services, or there will
be "business-wide" policies that will
restrict the amount of variables that
can be negotiated. Where possible,
reviewing the variables in scope for a
negotiation, within what is possible
from a regulatory or legal standpoint,
has the potential to maximize the value
of any negotiation for both parties.
There is inherent risk within any
negotiation, especially given there is
a likelihood for some level of conflict.
A thorough policy and procedure
should help asses a bank’s negotiation
risk appetite. From our respondents
32% always assess risk within their
negotiation planning. Every negotiation
will come with its own set of risks that
should be assessed in terms of how
likely and how serious they are, along
with any preventative and contingent
actions. Internal alignment on what
those risks are and the appetite for a
bank to continue with a negotiation
within that risk framework is critical.
An explicit, evidence-based
approach to managing conduct risk is
the new norm – "don’t tell me, show
me" is the new mantra. If negotiation
is an implicit skill that is assumed and
that staff are not being regularly trained
on, are you really set up to prove to
regulators that your negotiation
policy and procedures are being
adhered to? TNS
14 15

THE NEGOTIATION SOCIETY
FAITH,
HOPE
& CHARITY
Alistair White discovers
that a unique blend of
belief system, purpose
and style drives one of
our top consultants.
Darci T. Horne. The name
has quite a ring to it,
doesn’t it? It sounds
imposing, substantial,
distinguished. I can
imagine an announcer booming out,
“Ladies and gentlemen, will you
purleeease welcome on stage the next
President of the Yooonited States of
Americaaaa, Darciiiii T. Hoooorne!”
But let’s not get ahead of ourselves.
I hadn’t met Darci before our
scheduled Skype interview between
me in our office in Berkhamsted, UK
and her at home in Charlotte, North
Carolina, so I thought I should at
the very least look up her LinkedIn
page to glean a few facts. Scrolling
down I discover that prior to The
Gap Partnership, Darci worked for
various biotechnology companies
and completed a Masters in Genetics
after a Bachelor’s degree in Biology.
Okay, so Darci’s a scientist. She also
leads Missionary Partnerships at First
Baptist Church Charlotte and is a
board member involved in the local
Republican party. So, she’s a churchgoer
and a political activist. This could be fun.
And guess what? It was fun. In fact,
more than fun, it was fascinating. Let
me tell you why.
Darci grew up in the Central
American country of Guatemala as the
daughter of a missionary, with her three
sisters and two adopted Guatemalan
brothers. She returned to the States,
completed her studies, left college,
married her freshman sweetheart Chris,
and then together the two of them
moved to Washington DC
area where Darci started work at a
biotechnology company.
“The best move we made as a
couple,” she tells me. “We didn’t know
a soul and we had to rely completely
on each other. That really brought us
together and cemented our relationship.
We draw a lot on that experience when
we talk to young married couples about
our 20 plus years of marriage.”
Wait a minute. Negotiation
consultant, geneticist, biologist,
missionary, political activist and now
16 17

THE NEGOTIATION SOCIETY
she’s a marriage counselor? But I miss my chance
to ask about that because Darci has moved on.
“My upbringing in Guatemala is a major
influence on my life. My mom was a missionary
there. She is my absolute hero, my inspiration. She
died unexpectedly six years ago…” Darci’s voice
cracks for just a second and I can see and hear her
compose herself before continuing. “We are still
actively involved in the missionary work there –
teaching, building houses and working to supply
water. I get a huge sense of reward from helping
others and knowing I have made a difference to
their lives.”
Charity.
In all she and Chris spent eight years in the
Washington DC area with Darci working for
different biotech companies, moving up the
corporate ladder and taking on roles of increasing
responsibility. “After a while, we began to ask
ourselves what we were doing this for.” She
leans into the screen with a look of intensity –
no, conviction – that I would come to recognize
during our conversation. “Why were we running
round and round this endless hamster wheel?
What was our purpose? I had never abandoned
my beliefs entirely but I had to admit that I had
drifted away from some of the core values I had
grown up with. I knew exactly how to fulfill my
purpose – by reaffirming my faith and giving back,
helping others.”
A moment of epiphany? “No. Epiphany implies
something different for me. It was not sudden and
dramatic, but a feeling that grew over a couple of
years until we both arrived at the same decision
with the same degree of conviction. It was time to
move on.”
And move on they did, back to Charlotte to
be precise, where they have been for the last 13
years. Chris took over the family heating and air
conditioning business and Darci continued in
biotech, then moved to management consulting
before a spell as an independent consultant, and
then with The Gap Partnership. But the move
back to Charlotte was a watershed for Darci
personally, not just professionally. “We joined our
local church. I rededicated myself to God and
committed to live my life in a way that would
be a testimony to others about what it is to be a
Christian. I want to help others in any way I can.
I feel I have a responsibility, a duty to use the
strengths and talents that God has given me
to do good.
"I am not a “pushy” Christian. I don’t pressure
others to convert to my Christian faith. I want the
way I conduct myself, the things I do, to act as an
example to others. I want my actions to live out
the fact that God has changed me.”
Does her scientific background and education
ever make her question her faith?
“Oh no, just the opposite. As a scientist, when I
look at the intricacy and complexity of the human
body, of nature, it just convinces me even more of
God’s hand in creation.”
Faith.
You might be surprised that this article features
Darci’s Christian faith so prominently. It is not
something that is normally discussed in magazines
with a business angle. You may well not share
Darci’s beliefs. You might even find them a little
bit old-fashioned, not very 21st century. And you
are entitled to that opinion.
But to write a portrait of Darci without
mentioning them at all would be to fundamentally
misrepresent her as a person. What I realized
during our conversation is that her faith is not
something she takes out of a cupboard on a
Sunday morning. It is an essential part of her, and
it informs and guides the way she lives.
I’ll stick my hand up and volunteer that I don’t
share Darci’s beliefs. But what I cannot deny is
the sincerity and conviction with which she holds
them. I am even slightly envious of how someone
can be so certain, so convinced. How comforting
such certainty must be. But then I suppose that’s
what faith is – certainty without proof. The leap
of faith.
I draw her back to her deep desire to give back
to the world, to help others better themselves.
“That is a huge motivational factor in my life,”
she affirms. “It is one of the reasons I get so much
fulfillment from the negotiation consultancy work
I do. The sense of reward I experience when I
guide a client through a negotiation and inspire
them to achieve results that they thought were out
of reach is exactly the same reward I experience
when I see the impact on families in Guatemala
of access to food, water, shelter – things we take
for granted.”
And is that also what draws her to her political
activism for the Republican Party?
“You know, I guess it is. I’ve often thought that
I might run for political office at some point in
the future, if God calls me to that. Politics in the
U.S. has become very partisan and divided, and
our political debate is conducted with increasing
vitriol and acrimony. Politics should be about
making people’s lives better. If I were to hold
political office, my social care philosophy would
be helping people to better themselves, offering
them the hope that their lives can be better. I am
not a believer in constant handouts that create
unhealthy dependency. But I do believe in giving
people the resources and help to improve their
lives, and that would be my focus.”
Hope.
We are already over our scheduled time but
neither of us seems to have noticed. Anything else
I should know that Darci thinks I should include
in this article?
“Yes, I wear lots of hats.”
Well, we know that. I mean, scientist, negotiation
consultant, missionary, political activist…
“No! I mean I really do wear lots of hats. On
my head. Fedoras, cloches, trilbies, pill boxes,
baseball caps, pageboy hats. I must have about 40
different hats. Years ago I went to church with my
grandparents one Christmas with a red fedora that
kind of shocked some people. My hats are part of
my personality. It’s kinda what I am known for.”
OK, so I got the wrong end of the stick. But as
a metaphor for Darci, it couldn’t be more apt: lots
of hats, lots of facets to her life, lots of interests,
lots of activities.
I have one final question. What does the “T” in
Darci T. Horne stand for?
“Tackels.”
I am immediately taken with the phonetic
meaning. It sounds go-getting, positive and on
the front foot. Darci goes on to explain, “It’s my
maiden name. When I worked in a laboratory I
always used to label my equipment as DT. When I
married, I couldn’t get used to DH so I just added
on the H and kept the T.”
“I knew exactly how to fulfill my
purpose – by reaffirming my faith
and giving back, helping others.
A plausible response, but I am not totally
convinced. I think there is a big part of Darci
that believes she can achieve significant things,
that she can leave something behind as a legacy
– and she wants the world to sit up and take
notice of her. Not in an egotistical or narcissistic
way, just a desire to contribute. The “T” marks
her out as someone of distinction, someone not
to be forgotten and, whether consciously or
subconsciously, I think Darci likes that.
Maybe I am wrong but, whatever way you
look at it, I can’t help but conclude that Darci
is a woman on a mission. TNS
18
19

THE NEGOTIATION SOCIETY
Tim Milne reports on the negotiation
angle of the trade war raging between
the United States and China.
ow many lenses are there through which
to view and analyze the current U.S.
-China trade war? As with any complex
global situation you can take your pick
– economic, political, geopolitical, or
perhaps from the standpoint of international
relations or defense. But whichever lens is
chosen, the truth is that ultimately these complex,
multifaceted and interdependent issues will be
debated, argued and finally settled by negotiators.
Their work is done in private, with the world’s
media knocking at the negotiation room’s locked
door, hungry to hear what has been agreed.
This keen interest is not surprising. The
agreements that are made will not only reshape
the future of international relations, but also
global economics, regional economies in the
Asia-Pacific, and corporate supply chains.
Indeed, countries such as Vietnam are already
benefiting from the fallout, with manufacturers
shifting production and boosting transshipment
activities to avoid the tariffs. Equally, the
current unpredictability is forcing corporations
to review their strategies and operations,
reorientate their manufacturing
and supply chains, develop new relationships,
and negotiate new contracts to deal with the
broad ramifications.
Viewing the trade war from the perspective of
a negotiator provides a wealth of insight into the
world of hard-nosed interstate negotiation and
realpolitik. So let’s start at the beginning: where
did the trade war come from and what are the
negotiation objectives of the U.S.?
The genesis of the dispute is complex and
appears to outsiders as sometimes incoherent.
For the U.S. there are three primary dimensions,
all of which are domestically and internationally
focused, tangible and intangible, and intimately
related to the election of Donald Trump as
president of the U.S.
Trump’s first negotiation objective is to
restore the strength of U.S. manufacturing,
and as a consequence he has focused heavily on
persuading and shaming corporations to return
their operations to the U.S. from countries such
as China. He has skillfully leveraged his electoral
base for support. These are ordinary workers who
have seen manufacturing jobs outsourced to low
cost countries. The initiation of the trade war
and the imposition of tariffs are Trump’s most
powerful forms of leverage in this dual-focused
negotiation, designed to penalize non-conforming
U.S. corporations and China alike.
The second objective for Trump is to deal
with the trade imbalance with China, in which
the U.S. imports more goods from China than
they import from the U.S., which he sees as a
fundamentally bad deal. China’s trade practices are
viewed as highly restrictive and anticompetitive,
exporting globally while keeping tight control
over the ability of foreign companies to sell
goods and services in their domestic market. You
only have to look at the rise and protection of
China’s own ecommerce giants in comparison
to the globally dominant U.S. corporations who
are banned from participating in their market.
Added to this imbalance is the desire of the U.S.
to see China abide by the rules of the World
Trade Organisation (WTO), and in particular
those governing state subsidies of industry. Those
familiar with their history will realize that this
mirrors the challenges the British Empire faced
in the 19th Century with its large trade imbalance
“Viewing the trade war from
the perspective of a negotiator
provides a wealth of insight into
the world of hard-nosed interstate
negotiation and realpolitik.
with China, owing to its significant importation
of tea and limited exports to China. The British
came to realize that the shipping of opium offered
an export opportunity which eventually led to
conflict and the Opium Wars with China.
The third negotiation objective, as noted by
many observers, sees the trade war as a direct
response to the Made in China 2025 strategy.
This is designed to move China up the
manufacturing value chain by making its
corporations more competitive, transcending
20
21

THE NEGOTIATION SOCIETY
its position as the world’s factory due to its low
cost of labor. China wants to become a leader in
specific technology intensive industries that can
meet not just domestic demands, but also compete
and dominate internationally. The Council on
Foreign Relations has described the Chinese
strategy as “subsuming the entire global hi-tech
supply chain through subsidizing domestic
industry and mercantilist industrial policies.”
In their view, China would become a peer
competitor to the U.S. and other Asian states
in terms of technology development
and manufacturing.
At this point, it needs to be remembered
that U.S. foreign policy specifically focused on
rebuilding the Japanese economy after World War
Two. The intent was to use technology transfers
to revive and transform their industry, based on
a strategy of using Japan as a buttress against the
spread of communism in Asia. The outcome of
Made in China 2025 could be a fundamental
change in both regional and global balances
of power, and a fundamental reliance upon
Chinese technology.
This situation could significantly enhance
the negotiating power of Chinese corporations
around the world, and China within the region.
The intense unease in the western world with
the Chinese telecommunications company
Huawei illustrates this point. The response of
the U.S. is to therefore use the trade war to
force U.S. and foreign corporations to diversify
their manufacturing operations across Asia, and
to dissuade foreign states from using Chinese
technology suppliers. This is a negotiation in all
but name.
Let’s highlight the negotiation principles at
play. Trump’s approach is to open with extreme
demands without a sense of fairness. He has
an almost evangelic focus on securing the best
deal for the U.S., which in many respects can be
reduced to a rebalancing of the terms of trade.
You might consider this a focus squarely on
one variable – price. If we consider where he
is negotiating from in terms of the negotiation
Clockface, this is an uncompromising hard
bargaining position, reinforced largely by the
sole focus on the disparity of the trade imbalance
that can be calculated and reduced to U.S. dollar
terms. Trump is seeking to extract maximum
concessions from China and is leveraging his
power to full effect with the imposition of tariffs.
He is employing his preference for unilateral
and direct negotiations, rather than relying
upon multilateral institutions such as the WTO
to resolve the dispute. There is little scope for
concession trading and certainly no place for
“There is little scope for
concession trading and certainly
no place for win-win or joint
problem solving.
win-win or joint problem solving. At this stage,
this is a distributive zero-sum approach to
negotiation. It is a negotiation strategy steeped in
realpolitik and the pragmatic maximization of the
interests of the U.S., despite the overwhelming
interdependencies. The reality is that there are an
enormous range of interdependencies between
both countries. China holds an estimated USD
$1 trillion in U.S. government debt and it has an
estimated USD $3 trillion in foreign currency
reserves, of which approximately two-thirds is
believed to be denominated in USD. Moreover, it
buys significant volumes of U.S. raw commodities
such as pork and soybeans.
Even with the numerous rounds of negotiation
and formal meetings between the parties, there is
very low trust in their relationship, despite their
dependencies upon one another, the complexities
of their relationship, and their long-term mutual
economic reliance. Trust in this situation is a
complex issue, and it is likely to vary depending
on what actors we are looking at within the
negotiation, whether it is the trade representatives
themselves, the various branches of government
involved on each side, or the respective presidents
of each country. Trump’s use of power statements
fuels the negotiation challenges and prolongs the
timeframes. Two statements published in August
2019 by the Wall Street Journal are illustrative
of his approach with an emphasis on using onus
transfer and guilty party tactics: “If they don’t
want to trade with us anymore, that would be fine
with me,” and “China agreed…to buy agricultural
products from the U.S. in large quantities, but did
not do so.” They are designed to boost his power
and strengthen the position of the U.S. in the
negotiations. But this approach is often seen when
one party considers itself in a weaker bargaining
position and so the question could be asked, if
Trump is as powerful as he believes himself to
be, does he need to deliver power statements and
position himself?
Trump’s statements play to several different
audiences at once. They are designed to boost
his appeal domestically in the U.S., while
also conditioning multiple international
audiences including the Chinese. Trump has
leveraged Twitter to deliver astounding policy
announcements breaking with historical norms of
international diplomacy and subtle signaling, and
not so subtle back-room conversations.
International diplomacy has traditionally
hidden itself behind a veil of carefully
crafted press releases and highly
staged media events. This breaking of
negotiation conventions has allowed
Trump to shape and control the narrative,
often placing China on the back foot
and in the position of the responder. The
first rule of negotiation is to control the
agenda and the communications in order
to condition the counterparty to your
needs and control the outcome. China has
found itself constantly reacting and responding
to Trump.
There is room for debate on whether the
cautious Chinese approach is a deliberate
negotiation strategy to avoid inadvertently
escalating the negotiations. This may be coupled
with a belief that the U.S. election cycle and the
impact of the trade war on the U.S. domestic
economy will eventually bring the negotiations to
a conclusion. Alternatively, they may be genuinely
uncertain about how to respond to such a fluid,
unpredictable situation as Trump pursues his plan
to “make America great again.”
Both the U.S. and China have their formal
negotiation teams. However, the participants
ultimately report to the presidents of each
respective country. While
China may be adept at
presenting a united front
with tightly controlled
communications, it faces
a unique counterparty
with communications and
messaging coming from a
number of sources in addition
to the U.S. news media and
specialist trade, security, and
intellectual organisations.
This is ultimately due to
the political structures of
each country, and the degree
of freedom of the press
and participation of civil
society groups in the broader
dialogue. The dominance of
the U.S. media domestically
and internationally has
allowed it to position and
interpret the trade war and
China’s responses, while the
dominant focus on Trump’s
use of Twitter has further enhanced
his power and most likely reinforced his
use of it. One of the major challenges for China
has therefore been how to listen and interpret the
meaning behind the words of the U.S. negotiation
“China wants to become
a leader in specific technology
intensive industries that can
meet not just domestic
demands, but also compete
and dominate internationally.
team, when what they say may conflict with
how the U.S. acts, and which may ultimately
be reinforced or completely rebuked by Trump
at any time.
A wealth of negotiation tactics is being
employed by both parties. Trump has sought
to leverage time, deadlines and threats to his
advantage in the negotiations, clearly signaling
when the threat of tariffs will apply to increase
pressure on China to come to the negotiation
table. The last set of tariffs was due to come
into force on 1st September 2019. By imposing
tariffs, Trump has also paradoxically created an
opportunity to conditionally trade concessions
– the U.S. will only remove tariffs on goods and
services from China, if China agrees to specific
conditions such as increasing the value of its
22 23

THE NEGOTIATION SOCIETY
purchases to reduce the trade imbalance. On the
scale that China buys from the U.S., breakpoints
on tangible items such as the purchase of
raw materials like soybeans or pork are easily
measurable, whereas intangible breakpoints on
items such as the theft of intellectual property
and enforcement of intellectual property rights in
China are opaque, difficult to measure, and will
take time to take effect if they can be enforced.
The repetitive themes that appear in Trump’s
communications like a broken record are designed
to reinforce his message and gain a certain
veracity, whether or not they are true, simply by
being frequently repeated and reported.
China has been equally adept at employing
tactics, though these appear more targeted to
leverage their full effect. China first moved to
impose tariffs that impacted iconic U.S. exports
such as Harley Davidson motorbikes and key
agricultural exports.
“How will the trade war
conclude? There are only
three possibilities: a
negotiated agreement,
deadlock, and exit.
In July 2019
China allowed
its currency, the
Yuan, to devalue
against the USD.
This change broke
a psychological
barrier in the
foreign exchange
markets of ¥7
RBM to $1 USD and had the effect of making
China’s goods cheaper to external buyers. This
action also physically disturbed U.S. financial
markets and served as a reminder of its power.
In response Trump labelled China a “currency
manipulator” – an accusation designed to
highlight how its behaviour is out of step with
expected international norms and to shape the
narrative around the Chinese decision. The
Chinese government has officially suspended
the importation of all U.S. agricultural goods,
transferring the onus back onto the U.S. and
Trump to remove the threat of tariffs and put
pressure on Trump’s supporters within the U.S.
agricultural sector. This appears to have worked,
with Trump removing or delaying the threat of
tariffs due to come into effect on USD $300
billion of consumer goods imported from China
due to the potential consumer backlash.
One of the challenges with employing
negotiation tactics is the potential response from
the counterparty, and any negative consequences
that you may experience as a result. The question
we need to ask ourselves is whether the application
of tactics by the U.S. has been successful in
supporting their negotiation objectives. The U.S.
Treasury is certainly not complaining about the
billions of dollars in tariffs that they have collected
as a result of the trade war. However, this needs
to be balanced against the amount being spent
on support programs for farmers that have
become collateral damage.
What is the likely outcome? How will the trade
war conclude? There are only three possibilities: a
negotiated agreement, deadlock, and exit.
A negotiated agreement will require China to
agree to purchase substantially more U.S. goods
and services. China will also have to open its
economy up to more foreign influence and control,
and implement measures to deal with the theft of
U.S. intellectual property and enforced technology
transfers, to abide by WTO rules.
A deadlock on
the negotiations
is possible. No
formal agreement
would be reached
between the parties
to resolve their
outstanding issues.
However, trade
would continue,
albeit with high
tariffs on their respective exports and higher costs
to their respective economies. Corporates from
each country would adjust to this new normal.
But what about the chance of an exit? As
historian Niall Ferguson discusses in his 2008
book and television series The Ascent of Money:
A Financial History of the World, the symbiotic
relationship between China and America, or
Chimerica as he coined it, accounted for around
one third of global gross domestic product
(GDP) at the time. The two states in his view are
symbiotically linked, having been the economic
engine that has powered not only their respective
economies but also global growth. While there
may be political and economic discord between
the two as exemplified by the trade war and
ongoing negotiations, exiting the relationship
is not an option.
The question negotiators should ask themselves
is whether this will be the end of tensions between
the U.S. and China, or merely the beginning
of what some speculate will be a new cold war.
Whatever the view, what’s certain is there will
be more negotiations to come between the two
countries. Corporates will need to constantly
adjust their commercial strategies, reevaluate their
existing contracts, and be prepared to negotiate
using the full suite of variables available to
them to maximize the value of their deals in an
uncertain world economy. TNS
THE TRUTH ABOUT
Internal
Negotiation
Louise Lupton uncovers the
misconceptions about internal
negotiation, and provides a
back-to-basics guide to how to excel
when deal-making with colleagues.
Commercial negotiation with counterparties
from other companies is a sophisticated
and cerebral skill, requiring a sharp intellect
and emotional resilience. But I’ve heard seasoned
negotiators from the corporate world argue
that internal negotiation – that is, negotiating
with people from their own organization – is
even more intellectually and emotionally
challenging. Wait, what? Isn’t this counterintuitive?
After all, if you’re working for the
same team, playing in the same ballpark
and operating from the same home ground,
shouldn’t that simplify things? The reality,
of course, is that it’s not that cut and dried.
The somewhat inconvenient truth is that
in order to successfully negotiate internally,
you must consider and plan your approach and
behavior just as carefully as you do in your external
deal-making.
Despite this, organizations very often place
more emphasis on – and put more budget against
– upskilling their people for external negotiations,
since they visibly drive sustainable outcomes
and maximize profitability. These are the
"rock star" deals that help to meet KPIs, drive
growth and lay the foundations for future
development. In so doing, they get people
noticed and can impact relationships, success and
promotion, both positively and negatively.
So if internal negotiation is the
under-resourced younger sibling,
living in the shadow of its
generously supported
external equivalent, this
could in part explain
why it’s perceived by
some to be tougher,
with higher stakes.
Another reason
could be linked
to a well-researched phenomenon known as
attribution bias. This refers to a human tendency
to attribute the negative performance of other
people to their inherent character, but to attribute
our own less-than-optimal performance to the
external situation. (Sound familiar? I believe we
can all recognize this, if we are honest.) Apply this
to an internal negotiation scenario in which you,
the negotiator, are potentially being judged and
assessed by those who have influence over your
career and salary prospects, and the stakes become
not only higher but rather more personal to boot.
In the workplace as elsewhere we are
surrounded by opinions, interpretation and
assumption, and the influence of this can be
disproportionate. As a result, having a strong
understanding of what these biases might be from
both your and their perspective is key to unlocking
more creative and collaborative outcomes.
Let me bring this to life with an example from
my own world. I recently had a conversation
with a client who told me about a protracted
negotiation she was having with a colleague
internally over email. The longer it went on, the
more other colleagues were brought into the email
trail. Instead of stepping back and not responding
– both approaches she may have taken with
external clients – she felt it was her right to make
her feelings known over email with the world cc’d
in. But in fact, all she was doing was fueling an
internal perception of negative behavior.
It was only when she stepped back
to analyze the lack of resolution
that she realized she had totally
omitted any consideration of
the other party’s position,
job role and KPIs. She had
also not tried to get inside
their head. The irony is
that these fundamental
24 25

THE NEGOTIATION SOCIETY
negotiation planning assessments would have been absolutely
standard for my client – a highly trained and capable senior
executive – to carry out as part of any external negotiation!
Once she applied them to her internal negotiation, she
understood that the colleague’s personality was such that
negotiating by email was the issue – they had reacted
negatively to the unwelcome and uninvited gaze of the crowd
on cc. In order to get back on track and let the internal
counterparty have her (my client’s) way, it was simply a case
of my client going to see them face to face, having done
her research and preparation.
This much is clear – negotiation inside the workplace
has just as many intricacies as negotiations with clients or
suppliers. Because, whether internal or external, negotiation
takes place inside the other party’s head. What’s more,
the relationships you have with coworkers don’t
necessarily determine the type of negotiations
you have with them. To get inside their
head, think about character assessment.
What do you know about them, their
role and position? How long have
they been in the company? How
do they operate and what are they
renowned for? How have you seen
them respond to other people or
situations? Are they stimulated by
visual (what they see), kinesthetic
(what they feel) or auditory
(what they hear)? Are they
fact-orientated or do they respond
better to relationship builds?
Another approach prior to an
important internal negotiation could be
leveraging other stakeholders. Are there people
who can give you insight you may not already have?
For example, a better understanding of their job role, or
how their KPIs may differ from your own. There may
be an element of your expectations that go against
one of their KPIs or that has a detrimental
effect on another project they may be working
on. The more you know, the more prepared
you will be. Alternatively, preconditioning
the other party can be a powerful way of
setting out expectations. Alerting them
early on to your position, or keeping them
in the loop, could avoid pitfalls further
down the line.
Negotiating internally is in fact no
different to external negotiation provided we
prepare mentally and physically in exactly the
same way. It is still the process of two sides working
to achieve an outcome that satisfies both. But because
internal negotiation is home ground, a comfort zone, it may
bring lack of preparation and a diluted sense of alertness,
especially if we see and talk to these people every day.
Alternatively – or as well as – it could be accompanied by
overconfidence and ego – neither of which are desirable traits
in a skilled negotiator.
As unhelpfully, some people fail to recognize that internal
meetings can be negotiations, and so completely miss the
point when thinking about what their conflicting interests
and competing objectives might be. Or, there may be more
of a competitive mindset at play as two parties believe they
are fighting for limited resources. Internal negotiation is
also impacted by the size of the organization – the larger
the company, the higher the levels of complexity, and
cross-cultural and political perspectives.
Whatever the hurdles, what we do know is that internal
negotiations can be maximized by employing the same
approach to your external ones in terms of planning.
Prospect the situation or conversation. Do your
homework on the purpose and be clear on what it means
for both parties. Think about the information you have, but
equally the information and insight you don’t have. Who
can you talk to that might be able to help with that? Think
about the type of questions you’ll need to ask to get this
information. Consider what bias may be at play from both
sides and the impacts this may have on either position.
Predict their approach to this situation. From what angle
will they approach and what might their reactions be? How
might they start the conversation? Where would they have
gone to do their prospecting? What information will they
have and what will they be looking to gain?
If too much emphasis is placed on the Power held by the
other party then you are already on the back foot. Remember
you’re more equal than you think you are. What are their
personal/professional circumstances that may be impacting
their decisions, strategy or behavior? How might they be
impacted by stakeholders? What pressures might they be
under that haven’t been considered? Think about positions,
KPIs and strategic viewpoints. What power lies where? Most
importantly have a backup plan, and think about what theirs
might be too.
Plot ways in which you can create potential value together
and understand that you’ll be coming from
different angles with different priorities.
This will help you to gauge how they
may move throughout
the discussion.
Position your own
behaviors, analyzing impact
and managing expectations.
What will your approach
be? How much can you push
back? How much do you
need to accept?
Negotiations within
businesses are just as challenging
as those outside. But there are
differences. When negotiating with
suppliers or clients, buyers may change
roles, deals may be lost or businesses restructured; you
may also negotiate with several different people across one
organization. Internally you might just find the people you
negotiate with or against are going to be in the office again
tomorrow, next month and next year. Recognize the pressure
this will create and manage the conflict just as you would
with any other negotiation. Navigate your way through it and
apply the same levels of preparation to all. TNS
Don’t stare
at the rock!
I
used to be a keen mountain biker. Not the full body armor oh-myword-this-is-steep-hope-I-don’t-break-anything
type, but I did
enjoy the challenge of both the physical ascent and technical descent.
So it was that one summer I went on a guided ride. The instructor
was like a whippet on wheels, effortlessly ascending while the group
was left in her wake, sweating and gasping for air. At the top she said,
“Halfway down this track there’s a big rock. You can skip over it if you
look beyond it. If you stare at it, you’ll probably hit it and come off.”
We all made it down safely.
Her advice was sage and based on human psychology and behavior.
Have you ever noticed the scarred single tree standing alone beside a
bend in the road? Ever wondered why the cars hit the tree when there
was so much empty space around it to run off safely? If you stare at the
tree, somehow you end up hitting the tree, no matter how much you try
to avoid it.
I was with a client last week, supporting the execution phase of a
particularly thorny trade terms negotiation when I was reminded of this
piece of mountain-biking advice. Things had been going to plan until
discussions abruptly stalled. There was one issue that neither party was
prepared to move on. As an external observer, I could see that this one
issue had the potential to derail the whole negotiation, but my client
and their organization had become fixated on the variable.
As their counterparty became more immovable, our client’s
leadership became more stubborn. They were both “staring at the rock”
rather than looking beyond it or around it.
So we regrouped. We looked beyond the rock at how critical the deal
was to both parties. We took another look at the other options we had
to move things forward and found we still had many variables we were
prepared to concede that had not been offered, and also "asks" that had
not been introduced into the conversation. And, in fact, we could even
move on the "immovable" issue, we just hadn’t because discussions had
become so fraught.
Our client’s counterparty was offered an exploratory meeting which
they accepted and, during the course of that session which we attended
with the client as an advisor, we found that their counterparty was
under a great deal of pressure from above to close out our deal. We
found that a small move on the critical issue, allied to a small additional
concession, would break the deadlock.
The deal was done. We made it safely to the bottom of the hill with
no grazes to ego or knees.
Until next time, keep negotiating.
You can read The Traveling Consultant’s weekly diary on
www.thenegotiationsociety.com
26 27

THE NEGOTIATION SOCIETY
We asked the leaders of TurkishWIN in the Netherlands to tell us their thoughts on how
negotiation can contribute to the future of women in commerce.
GET WHAT YOU WANT:
NEGOTIATION FOR WOMEN
TGP consultant Dürrin Ergün delivered a negotiation masterclass
at an event designed to empower and inspire Turkish women in
business. She explains why it resonated with her.
MINE HECK
Business Operations Manager, HeleCloud
It is sad and slightly frustrating that we still have
ongoing discussions about gender equality in the
workplace. But encouragingly, we also regularly
see research and articles proving that more diverse
companies do better than their competitors with
monolithic structures. In that sense, I see a more
diverse present and future in commerce with
more women in the boardroom and high-level
management positions – or indeed, wherever they
want to be. On the other hand, I believe that even
in 2019 women still have to work harder and
prove themselves more than their male colleagues
to get to their desired level in their careers. Being
equipped with the right negotiation tools will
help us get where we would like to be and make
a big difference in our careers. Negotiation
teaches us the right way to ask and helps us
navigate the gender biases.
AYLIN BUMIN
District Marketing Manager, West Europe at UPS
According to McKinsey, women have the potential to
increase global annual GDP by $28 trillion by 2025.
I believe that the future of women in commerce is bright
and should be supported further by governments and
companies. One of UPS’s core beliefs is that we should
be helping to create greater opportunities for inclusive
trade. Statistics tell us that four out of five online sellers
are women, and for every 100 male exporters in the
Netherlands, 67 women export*. We need to encourage
women to participate in international trade to close
the gender gap. About a year ago, UPS and The UPS
Foundation launched the Women Exporters Program
– a global effort to enable women-owned businesses to
strengthen their skills in order to be able to export around
the globe. We provide webinars, conferences and other
training tools to educate women entrepreneurs on how to
bring their products to foreign consumers, as well as shaping
the policy environment to enable more women to succeed.
W
hen I’m asked what my job as a negotiation
consultant involves, my reply is simple – I
help my clients realize their full potential
as negotiators. I’m lucky to work with people
from diverse regions, roles, and backgrounds;
and with both men and women. While I believe
that negotiation principles and practice, rooted
in psychology as they are, transcend some of
these differences, there is no doubt that women
in business often face very different challenges to
men. I was delighted therefore to be invited to
present a negotiation masterclass to a group of
women from the Turkish Women's International
Network (TurkishWIN). Since 2010 this
organization has built a global network of nearly
10,000 professionals. And, bringing us nicely back
to my job description, its purpose is to enable
Turkish women to reach their potential.
My negotiation masterclass for the Netherlands
branch had an audience of strategists, recruiters,
finance directors – and even a dentist. For all
of these professionals, negotiation is a critical
skill. My content covered essential theoretical
elements, how these translate to a real-world
environment and the critical factors for success.
I also included experiential, interactive exercises to
allow the professionals to test-drive and discover
for themselves the trip-up points and challenges
they need to be aware of and overcome in order to
become more highly skilled negotiators.
The feedback I got was hugely positive. One of
the most telling takeaways was how our personal
values often get in the way of achieving optimum
results in negotiations – particularly those around
salary and promotions.
For women in commerce, negotiation skills are
key: good negotiations contribute significantly
to business success. However, in line with the
traditional female role, women can feel less
comfortable pushing harder for themselves than
they do for others. So preparation and a better
definition of their value proposition would
further support in generating the desired
negotiation outcome. A woman negotiates more
successfully when she feels confident, strong and
passionate about what she is doing. I believe
that those three elements are key not only for
negotiation, but also for a successful career. TNS
28
*Dutch Bureau For Statistics CBS, 2014; Dutch Ministry of Foreign Affairs Women Exporting report, 2018.
29

THE CHAMPIONS LEAGUE
OF NEGOTIATION
A
t The Gap Partnership we
sometimes describe negotiation
expertise as being like a muscle.
There will be some foundational
competence, but for optimum
performance that muscle needs to
be exercised and expertly coached
on a regular and ongoing basis. No
Olympian wins a medal and then stops
training, expecting to replicate the same
performance six months later. Rather,
they carry on practicing, consolidating
and building on their performance –
and constantly improving.
This philosophy is why, back in
September 2018, we launched The
Negotiators – a competition designed
specifically for alumni of The Complete
Skilled Negotiator that would enable
them to practice and refresh their skills.
Such was the success of the inaugural
UK event that we were delighted to
bring The Negotiators to Germany the
following year.
So it was that in September 2019 in
the spectacular setting of Schloss Velen
castle near Düsseldorf, 14 teams from
13 companies – with people travelling
across Europe and from as far afield as
Australia and Brazil – came together
to negotiate, learn and have some fun.
Challenged to negotiate nine different
cases over two intense days, the teams
employed their full range of negotiation
skills from distributive and competitive to
collaborative and joint problem solving.
With teams from some of the
world’s biggest companies, including
Mars, Mondelez, Ledvance, Coca-Cola
and Deutsche Post, it was unsurprising
that the standard was exceptionally
high and competition intense as
they battled to achieve the optimum
deals and win a place in the live final.
The pressure is deliberate; as Celina
Engelbertink, National and Key
Accounts Wholesale Manager at Coca-
Cola European Partners commented,
“You can really feel the pressure, but
because of the pressure, you learn.”
Arun Kumar, Head of Procurement
for Deutsche Post DHL Group in
Australia, highlighted the learning
potential of the event even for highly
experienced negotiators, saying,
“People from the global team with
30 years' experience are saying,
‘Wow, why didn’t I do this in my
negotiations?’” While Erol Kirilmaz,
Chief Sales and Marketing Officer at
Ledvance, explained that, “For us, it’s
a tremendous team building exercise.
I am 100% convinced that what we’ve
experienced and learned today will be
very beneficial tomorrow, in real life.”
To revisit our muscle and sporting
analogy, the last word goes to Dr.
Oliver Vogler, Vice President of
Corporate Development at Ledvance:
“In comparison to The Complete
Skilled Negotiator, this is another level
up. All the teams are very experienced
in negotiation. When we all come
together, it feels like the Champions
League of negotiation!”
We are currently planning The Negotiators
2020. For more information please contact
stefanie.schneider@thegappartnership.com
UP TO
42%
OF THE VALUE OF EVERY NEGOTIATION
IS LEFT ON THE TABLE.
MAKE SURE YOU WALK AWAY WITH IT.
Smart negotiators don’t leave value on the table.
They develop and practice their negotiation skills
before they get there. The NEW Negotiation Society
digital platform allows you to do just that, by sharing
the latest insight. instructional videos, a personal
profiler, online tools and real commercial cases.
Join today at www.thenegotiationsociety.com
30

THE NEGOTIATION SOCIETY
ET
INSIDE
Do you work in retail or consumer goods, or negotiate
with people who do? Then take advantage of Rodrigo
Malandre’s guide to what is going through their
heads as you sit opposite them at the negotiating table.
Devoted to managing and growing
one account, Key Account
Managers (KAMs) have an
excellent understanding of their
category and client. As experts in
the performance of their SKUs, they
manage analytics and insights and
make time to prepare. Since buyers
are always in a hurry and dealing with
multiple KAMs, they rely on the more
in-depth analysis of trusted KAMs.
But this is no excuse for a retailer to
avoid doing their own analytics to
support buyers.
Buyers who want to collaborate
with KAMs have two choices –
they make the time to listen to their
comprehensive presentations to
explore potential value generation or
they politely state they have limited
time and only want top-level analysis.
Buyers must also understand that
KAMs try to execute the commercial
strategy of their companies. They are
under pressure to list new products,
get more exposure of their brands
and capture market share while still
protecting margins and profit. KAMs
work closely with trade marketing to
allocate additional funding for special
purposes. It’s close to impossible for
them to shift that money towards cost
THE SELLER
INSIDE THE CONSUMER KEY ACCOUNT MANAGER’S HEAD
and in addition, most companies pursue
a pay-per-performance approach. This
doesn’t mean that buyers shouldn’t push
for lower costs, it just means they need
to understand how consumer companies
operate. A skilled KAM will be more
open to collaborate in return for specific
activities, rather than giving money
away for free.
Buyers must also appreciate
the changing dynamics of their
market. Trends like revenue growth
management are pushing KAMs to
allocate investment in retailers in a
stricter way following the principles of
route-to-market strategies that enhance
sales without compromising profits. If
that is not understood and discussed,
conflict is likely to systematically appear.
In theory, both parties should spend
a lot of time analyzing data, what has
worked and what not, but the day-today
nature of the business conspires
against equalizing and optimizing
variables and exchanges to maximize
profits for both parties. Buyers need
to rely on other internal sources for
financial data or technical support
if they struggle to find time to plan.
Otherwise buyers will have to either
rely purely on what the KAMs suggest,
or be vulnerable to making
commercial mistakes.
Another source of potential
problems is logistics and inventory
management. While buyers focus on
fill-rate and keeping low inventories
to maximize sales without
compromising capital expenditure,
KAMs are pushed to increase sell-in
levels with enough inventory spread
across different distribution centers
and stores to support sales. Since
logistics is often handled outside of
the commercial areas, buyers should
watch out for opportunities and loss of
sales based on logistics decisions that
do not consider the varying dynamics
of shoppers’ behaviors. Buyers can
intercede between KAMs and logistics
areas and use that to receive in
exchange good fill-rate performances
and promotional investment support
from KAMs when levels of stock are
becoming unhealthy.
Fundamentally, buyers need to
understand how KAMs operate and
what their KPIs are. Find time or
support to jointly discuss how to
improve the profitability of the mix and
operations, and realize what they can
do in order to generate successful and
profitable trades.
A
retail buyer is busy and has no
time to waste, and often not
enough to prepare. Unlike the
typical KAM who has one client, a
buyer deals with 10, 20, 50, 100 or
more vendors/suppliers. In smaller
countries, buyers may manage more
than one category, and/or their
categories are complex. It doesn’t take
a maths genius to figure that a KAM
generally has more time than a buyer
to prepare for negotiation. KAMs
could do buyers a favor and be direct,
avoiding long complex justifications
and putting things in simple terms.
The use of a negotiation agenda is
also part of key account management
best practices. If the buyer is busy
and the KAM wants them to think
about doing things differently, sending
an agenda before the meeting helps
not only to create trust, but also to
allow the buyer to prepare and reflect
about the effects of a new promotion,
listing or activity. When the buyer
hears something for the first time in a
meeting, their tendency may well be to
respond with something noncommital.
While KAMs’ KPIs include volume
and market share, buyers are interested
in margins, fill-rate, inventory levels
and sell-out or speed of rotation of
SKUs. The KAM must establish a
THE BUYER
GETTING INSIDE THE RETAIL BUYER’S HEAD
THEIR
common language and take care of
the buyer’s interests and KPIs. They
should put themselves in the buyer’s
shoes and ask themselves some key
questions: Why is the buyer reluctant
to list this SKU or buy more? What
are they afraid of? What is the problem
they’re trying to avoid? The answers to
these questions might lead the KAM
to offer promotional activities on point
of sale, or discounts if the SKU doesn’t
perform in exchange for listings or
volume commitments. Discovering
the interests of the party is an essential
part of conditional and creative trading,
allowing value to be generated.
Retail buyers also rely on KAMs to
provide insights into how to optimize
the mix of products to generate better
turnovers and margins. What the buyer
is not so keen on is another request
to include an extra SKU on the shelf.
They might think, "Don’t they realize
there is limited shelf space?" If the
KAM’s company has an extensive list
of SKUs, the buyer will expect to delist
something in exchange for the new
listing. KAMs should be prepared to
deal with that request. The KAMs
might try to resist, but if it is necessary,
they need to provide a solution based
on what’s possible to concede in
exchange for what they want to achieve.
Often KAMs focus too much on
their own goals and fail to understand
the pressures and nature of the
incentives that the buyer deals with.
For example, a company with an
EDLC (Everyday Low Cost) strategy
teaches their buyers to avoid complexity
of payments and incentives and pushes
vendors to shift their money towards
reducing cost and having a more
constant price to customers. While
retailers operating with a "high and
low” strategy teach their buyers to push
for aggressive promotions and to get
better costs from vendors.
A KAM should always have their
company’s best interest top of mind,
trying to get the most value in return
for what they invest in or concede
to the retailer. Nevertheless, some
adaptation is required for different
commercial strategies from their
counterparts, to steer the negotiations
toward the different motivations and
interests of the buyers they deal with.
In the end, the retail buyer’s
willingness to cooperate will be
strongly influenced by how the KAM’s
negotiation approach addresses their
interests and supports their company’s
commercial strategy. TNS
HEADS
32
33

THE NEGOTIATION SOCIETY
QUESTION
TIME
Who has the balance of power in the U.S.–China
trade war, and how in general should the party
with the upper hand leverage their power?
Linda Yueh
AUTHOR OF THE GREAT ECONOMISTS:
HOW THEIR IDEAS CAN HELP US TODAY
Neither side holds the balance of
power in the U.S.-China trade war.
Across different time periods and
sectors, one side might have more to
lose than the other.
In the short-term, both sides have
been economically damaged by higher
tariffs on their exports. The billions in
subsidies paid by the U.S. to farmers
is one gauge. For China, tax cuts and
subsidies have been implemented to
similarly cushion the impact of the
taxes on traded goods.
The economic impact on both
countries is considerable and comes at an
unfortunate time as both economies are
also experiencing a cyclical slowdown.
But the more lasting impact of the trade
war is in the other measures that might
have a greater effect on China than
the U.S.
By restricting Chinese investment
and access to American technology
companies, the U.S. is making it more
difficult for China to "catch up" if its
companies are cut off from Silicon
Valley. As a middle income country,
China’s ability to become prosperous will
require improving its innovative capacity.
By competing with and interacting with
America’s cutting-edge tech companies,
that would sharpen the competitiveness
of Chinese firms. Having less access will
make that more difficult.
Perhaps the focus of the U.S. on
the investment aspects of the trade war
which are less noted than the tariffs is
a result of the American government
leveraging their position as the more
developed economy.
But, as Chinese firms are becoming
more innovative especially in the digital
realm, the lack of access will precipitate
competing tech standards that will make
it more difficult for any firm, not just
Chinese or American, to be a global
tech player.
That means that we will all be
affected by the U.S.-China trade war,
so would hope that this tactic will
bring about its conclusion sooner
rather than later.
Edward Alden Ka Zeng Mike Giaimo
SENIOR FELLOW,
COUNCIL ON FOREIGN RELATIONS
The question of who holds the
balance of power in the U.S.-China
trading relationship shows how far
the system of global trading rules has
deteriorated over the past two years.
Trade, as any economist will argue, is
not about power – it is about mutually
beneficial exchange. But economic
policy can be weaponized, with
the goals of using tariffs, sanctions,
subsidies, investment restrictions and
other measures to harm a competitor.
When that happens, the question of
which side has the upper hand does
indeed matter.
By the crudest measures, there is
no question the United States has the
edge. The U.S. last year bought nearly
$540 billion in Chinese goods and
sold just $120 billion. In a tit-fortat
escalation of tariffs, China pays a
much higher price. China’s growth is
also more dependent on exports than
the relatively self-sufficient United
States. And the U.S. remains the
world’s technology leader; escalating
restrictions on exports of high-tech
goods, and on Chinese acquisitions of
U.S. technology companies, will harm
China’s drive for parity with the U.S.
But those advantages have yet to
buy the Trump administration any
real leverage in the negotiations, as
China has resisted U.S. demands for
significant changes in its economic
policies. The reasons are two-fold:
first, the Chinese government has
many tools – from easing credit to
boosting public works to depreciating
its currency – that can offset the harm
from U.S. sanctions. Secondly, China
simply has a longer time horizon. U.S.
presidents fight trade wars with one
eye on the substance of the dispute and
the other on the next election. Chinese
leaders can afford to wait.
That stalemate should help to
persuade both sides that the only way
to win a trade war is not to fight one.
PROFESSOR OF POLITICAL SCIENCE & DIRECTOR OF
ASIAN STUDIES AT THE UNIVERSITY OF ARKANSAS
The ongoing trade war between the
United States and China has yielded
no clear winner, but there are signs
that it’s starting to take a toll on the
Chinese economy. Media reports now
increasingly point to a slowdown and
the shifting of supply chains out of the
Chinese market. However, while the
U.S. may be less economically exposed,
this doesn’t necessarily mean that
Washington can force China to make
the desired concessions. Besides some
token gestures, Beijing has so far made
little to no concessions in areas that
bear heavily on China’s state-driven
growth model.
Politically, it’s not clear if President
Trump will be able to keep American
farmers and consumers on side if the
trade war drags on. As he faces the
campaign for reelection in 2020, the
need to show strong economic growth
and minimize the costs of the trade
war to key constituencies may also
potentially erode President Trump’s
negotiation position.
For its part, Beijing has sought to
downplay the economic costs of the
trade war and emphasize its strategic
purposes. This has had the effect of
locking Beijing into a more hardline
position and increases the political
costs for China to cave in to American
pressure. So how can each country
better leverage its power to gain a
more favorable bargaining position?
Washington may find its pressure
tactics enjoy greater legitimacy and are
more effective if it were to address its
grievances through the World Trade
Organization. It may also want to adopt
a sequential approach to negotiations
and establish more realistic expectations
of what can be achieved in the
short versus long-term.
Equally, Beijing may be able to
strengthen its hand if it were able to
strengthen those forces in favor of
continued economic cooperation in
the United States by more effectively
addressing American companies’
concerns about the difficulty of doing
business in China.
SENIOR CONSULTANT,
THE GAP PARTNERSHIP
The United States remains the
superpower in the globe and holds
more power than China, despite
China’s 6%+ economic growth vs
2%+ in the U.S. 60% of China’s GDP
comes from its own consumers, and
the economy is also fueled by trade
as a result of various reforms over the
last six decades. This socioeconomic
change includes some contentious laws
which have diminished confidence in
the Chinese people and contributed to
an economic slowdown.
Additionally, there is $36T of debt
for China, so unless it shifts its policies
to nurture their domestic supply chain,
it dims the light at the end of the
tunnel, especially if foreign debt ceased
to be collected. As such, China is more
dependent than the United States, and
the U.S. could leverage this position
of power, for example by offering low
tariffs and low interest down to a
no-interest trade loan and longer
terms to encourage U.S. import into
China. This would improve cash flow
for China.
Meanwhile the Communist leader
of China has greater autonomy than
the U.S. president, particularly now
Xi Jinping is officially in power for the
duration of his life – a recent change
in Chinese leadership policy. President
Trump’s circumstances are not so
secure, with issues to face including the
impeachment process and mounting
pressure from the G20 – the largest
American companies sourcing from
China, as well as the International
Trade Commission and the World
Trade Organization. These collective
forces all serve to disempower
President Trump.
In the end, power is perceived,
so as time goes by and there is
continuous change in circumstance
for each nation and its leader, then
so changes the perceived balance of
power. He or she who leverages the
change in circumstance will ultimately
have the power.
34 35

THE NEGOTIATION SOCIETY
In 1984 a TV commercial for the Volkswagen Golf
GTi featured a suave guy in a dinner suit sauntering
out of a French casino at dawn, looking somewhat
reflective. As he walked down the street the voiceover
informed us he’d put a million on black, and it had come
up red. But it was okay because he had a Golf GTi with
which to console himself.
Unfortunately, life isn’t like a TV advert, and putting
all your eggs in one basket like our Gallic friend can leave
you exposed. This is never truer than in negotiation,
and at the time of writing there is no public figure more
aware of the risk of this approach than the UK prime
minister, Boris Johnson. His declaration that he will
deliver Brexit by October 31st 2019 with or without a
deal is the equivalent of putting all your money on black.
This bullish stance was designed to put the focus back on
the EU negotiators, but it has several inherent risks.
First, Boris does not have all domestic political
interests with him. In commercial negotiation, the more
you have stakeholder alignment, the more confident you
can be. But in this complex situation multiple factions
are working against Boris. In the face of opposition to
“His declaration is the
equivalent of putting all
your money on black.
the prospect of a no-deal Brexit, his decision to
prorogue (suspend) Parliament was bitterly criticized
by opposition MPs. Unsurprisingly, the UK government
claimed that the prorogation is constitutional and
allows them to introduce a Queen’s Speech setting out
the legislative agenda at the start of a new parliamentary
session. At least, one assumes that’s what the Queen was
told over a cup of tea and a cucumber sandwich
Tim Green
Putting all your
eggs in one basket
could leave you with
egg on your face
at Buckingham Palace when she was asked to
approve the decision…
Second, by making such a definitive commitment
Boris removed any alternatives that could have led to
a negotiated solution, if needed. As any commercial
negotiator knows, having a BATNA means you can keep
moving forwards, or sideways for a while, to then move
ahead. No BATNA risks shifting the balance of power
away from you if your only option doesn’t work. Given
Boris’s lack of options it’s perhaps not surprising he
said he’d “rather be dead in a ditch” than ask for a delay
to Brexit. What else could he say? To move from his
entrenched position would be to drastically damage
his credibility.
Third, it’s hard to think of a more emotive subject
than Brexit in recent British political history, and some
of Boris’s decisions have looked impulsive – such as
announcing rebel MPs would be expelled from the party
for voting against him. Now that the desired outcome has
not transpired, he faces the possibility of needing to offer
concessions, weakening his position to try and get them
back on board if required. In any type of negotiation,
emotive responses can indicate a loss of control over
yourself, the process and other party.
Fourth, by committing to a deadline, Boris Johnson
was applying pressure to the EU negotiators. But
deadlines can be a double-edged sword. Setting a hard
date has also given power to his opponents, who arguably
may unite not in ideology and belief in what should
happen with our relationship with Europe, but around
a point in time past which they know Boris can’t go
without losing credibility and power.
Who knows what will have happened by the time
you read this? If Volkswagen is looking to recreate that
vintage ‘80s ad, perhaps they could film Boris in reflective
mood as he exits 10 Downing Street at dawn, with a
voiceover suggesting that he put everything on black.
But then again, instead of a Golf GTi, maybe the film
will show him climbing into the back of his official
chauffeur-driven limousine having pulled off the biggest
gamble in recent British political history. TNS
The Negotiation Society: What did you do before
becoming a negotiation consultant?
Lloyd: Fresh from an engineering degree and with
the confidence of youth, I started my own IT
company. This was back in the day where as long as
you knew a bit more than everyone else, you were
okay. My natural affinity with computers and two
courses resulted in me becoming a "small business
infrastructure specialist."
TNS: Where did this entrepreneurial
spirit come from?
Lloyd: My father worked for himself and my mother
managed a temp agency, so from the age of 16 I
was thrust into a steady stream of random jobs
– trashman, car auctioneer, computer engineer,
restaurant manager. It instilled in me a
"give-it-a-go" attitude.
TNS: How challenging was it to set up a new
business on your own?
Lloyd: It was tough! The UK was entering recession,
so I moved back in with the parents and set about
finding clients. Two years later I had 20.
TNS: Sounds like things were going well.
What was your next move, and why?
Lloyd: A friend had been watching the price of gold
rise – recession was taking its toll and demand
was strong – and noticed a U.S. company called
Cash4Gold cleaning up. He asked me to start an
equivalent UK business with him. His father was a
jeweler and would process the gold while we traveled
around the country buying it.
TNS: Ah, we detect a pattern here. Did you
jump at the chance?
Lloyd: Of course! I gave my IT company to my dad
and embarked on a crazy five-year ride in the world
of gold trading.
TNS: Tell us about this gold business.
What did it involve?
Lloyd: At first the two of us drove around setting up
stands in town halls and buying gold. Demand
exploded and we ended up with permanent stands in
every shopping center in the UK. In the first year we
had 500 people on the road, 20 in head office,
and a turnover of £100m. In year two we expanded
into Europe.
Tricks of my Trade
From gold baron to negotiation guru, Lloyd Barrett reveals
his unconventional path to the top.
TNS: How much negotiating were you doing during
“the gold years”?
Lloyd: Day in, day out. For example, I conducted a
year-long negotiation with Lloyds Bank to set up a special
bank account function. I taught negotiation too, creating a
"gold school" to build capability within our retail network.
I trained our entire company how to hard bargain at
4 o’clock and how to spot a breakpoint.
TNS: Sounds like quite a ride. How did it end?
Lloyd: The inevitable day came when the gold price leveled
off and we dissolved the company.
TNS: What was your biggest lesson?
Lloyd: Get equity! I didn’t, but my friend and his dad did,
and they cashed in. On the upside, when my girlfriend
and I stayed with him recently he chucked me the keys
to his Ferrari and said, “Go and have fun!”
TNS: Then what did you do?
Lloyd: We started an investment company to fund startups,
and I learned about TGP through a recruiter. With
my bizarre CV it wasn’t an easy route in and I
got rejected three times. But I persisted until
I got an interview. I knew deep down it
would be mutually beneficial.
TNS: Bring us up to the present day.
Where are you now?
Lloyd: Three years at TGP and I was given
an opportunity I couldn’t refuse to move
to Australia. My first week I was walking
down Bondi Beach with the sun setting
over the sea and thought, “I’ll never leave.”
I now head up the retail practice. And live
on Bondi Beach.
TNS: What do you like about TGP?
Lloyd: Every day there’s a new
challenge. I work with clients to
solve real problems. We are at the
cutting edge of what’s happening
here in the retail space, often
moments away from things
being on the shelf, or not.
It’s an incredibly dynamic
market with intense pressure
on price. The negotiations are
challenging and rewarding.
There’s never a dull day.
36

Q: Boris Johnson recently presented
his latest Brexit proposals as his “final
offer.” What is your opinion of this
as a negotiating technique?
A: Editorial deadlines mean
I am writing this without
yet knowing whether Boris
Johnson’s gambit will pay off,
but I do know that it’s fraught
with risk. In most cases, the
"final offer" tactic creates more
problems than it solves, but
there are a couple of exceptions
which I will come to. The problem
it creates is that it reduces the
prospect of further movement in
the negotiation, and we know that
negotiation is all about movement.
By stating that something is my "final
offer," I have effectively painted myself
into a corner because, having made
that statement, I have put myself under
pressure to stick to it.
The tone of voice in which the offer
is made is also important.
There is a world of
difference between a
table-thumping, “that’s
our final offer, take it or
leave it,” and the more
humble, “I am sorry but
that is as far as I can go.”
The intention of the
“final offer” statement is
to attempt to convince
the other party that you
cannot move any further
– even though you might
be able to. There are other
ways of achieving the
same outcome. For example, by making
ever smaller concessions, you can
credibly suggest to the other party that
your room for movement is gradually
reducing without explicitly saying so.
ASK ALISTAIR
Negotiation expert Alistair White returns
to answer questions from our readers.
The exceptions? If you have genuinely
reached your breakpoint then there is
no reason not to say so. Or, if you are
in the final stages of negotiation and
“The intention of the "final
offer" statement is to
attempt to convince the
other party that you cannot
move any further.
you are in a position of power with a
workable BATNA, the "final offer"
tactic might just get the deal over the
line – but it comes with the health
warning outlined above.
Q: Can conflict exist in
collaborative negotiations?
A: Not only can it exist, it must
exist. The misconception here is
about the connotations around
the word "conflict." So many
people interpret the word
"conflict" to mean aggressive
confrontational exchanges
with two parties tearing
metaphorical, or even literal,
lumps out of each other.
"Conflict" in negotiation terms
simply means a difference in
positions. If you and your partner
are going out for dinner and they want
to go to an Italian restaurant but you
prefer Mexican, that is a conflict. I don’t
for one second imagine that you resort
to physical combat to settle that issue.
The reason I say that conflict must
exist is because negotiation is a process
whereby we resolve differences between
two parties. Italian or Mexican? If there
is no difference, then there
is agreement. If agreement
already exists, why do you
need to negotiate?
The reason that people
struggle to accept that
conflict can and must
exist, even in collaborative
negotiations, is because
most humans seek to
avoid conflict where
possible because we
find it uncomfortable.
Negotiators need to
accept that they will feel
uncomfortable when
negotiating. Conflict is an inherent part
of negotiation, so it follows that we
must accept the discomfort that
comes with it.
If you have a question for Alistair and
would like it to be considered for our
next issue, please email
hello@thenegotiationsociety.com
ILLUSTRATION: WWW.CARTOONSTOCK.COM
CROSSWORD
ACROSS
1 Group cavalier with second-rate tool
that’s defective (13)
9 Creative imagination from German
girl with Yankee welcoming night
in Paris (9)
10 Heads of The Negotiation Society
welcome English and Dutch
nurses (5)
12 Value creation ultimately limited by
offensive belief (5)
13 Note leaves lost principally in
Autumn (4)
14 River ordeal (4)
16 Made certain American is covered (7)
18 Here in Chamonix with head
cold (7)
20 The French leaving cleaner to
strip (7)
21 Island returned first class
fashions (2,5)
22 Kashmiri soldier keeps flag (4)
24 Tiny one with energy to
make spell (4)
26 It’s swell backing horse (5)
28 More old paintings rejected (5)
29 French town disposed to
Across
6 Reviewed some of interpretations 19
Down
Support meant chorus regularly
animals (5-4)
provided by gallery (4)
associated with passion (9)
30 Practices in a field? (13) 1 Group cavalier 7 Place with to discomfort second-rate even tool you that's 23 Breakpoint 2 Newspaper roughly one's displayed editor in the managed (9)
defective (13) reportedly (5)
beginning 3 Prisoner (5) might yearn to enjoy relaxin
DOWN
9 Creative imagination 8 Type of bargaining from German diverts but girl I with 25 Heather primarily I see absorbed by sea by in date Cannes (5) (4-6)
2 Newspaper one’s editor managed (9)
Yankee welcoming intervene night at first in surprisingly Paris (9) (12)
3 Prisoner might yearn to enjoy
27 Stand, 4 Short say, deep orders in pitch (5) (4)
11 Damages place since turned up
relaxing primarily by sea 10 in Heads of The before Negotiation party (12) Society welcome
5 King unites commission (9)
Cannes (4-6)
English and Dutch nurses (5)
15 Consular jerk given mounted For solutions email
4 Short orders (5)
6 Reviewed some of interpretations pro
12 Value creation certificate ultimately (10) limited by offensive hello@thenegotiationsociety.com
gallery (4)
belief (5)
7 Place to discomfort even you reporte
13 Note leaves lost principally in Autumn (4)
8 Type of bargaining diverts but I inter
14 River ordeal (4)
"THE SALARY IS NEGOTIABLE... TAKE IT OR LEAVE IT" first surprisingly (12)
16 Made certain American is covered (7)
11 Damages place since turned up befor
18 Here in Chamonix with head cold (7)
(12)
20 The French leaving cleaner to strip (7)
21 Island returned first class fashions (2,5)
22 Kashmiri soldier keeps flag (4)
24 Tiny one with energy to make spell (4)
26 It's swell backing horse (5)
28 More old paintings rejected (5)
29 French town disposed to animals (5-4)
30 Practices in a field? (13)
8
1 2 3 4 5 6 7
9 10 11
12 13 14
16 17 18 19
20 21
22 23 24 25 26
27
28 29
30
5 King unites commission (9)
Our fiendishly challenging British-style crossword returns.
15
17 Notice girl’s book (9)
15 Consular jerk given mounted certifica
17 Notice girl's book (9)
THE NEGOTIATION SOCIETY
19 Support meant chorus regularly assoc
with passion (9)
23 Breakpoint roughly displayed in the b
(5)
25 Heather I see absorbed by date (5)
27 Stand, say, deep in pitch (4)
38 39

© The Gap Partnership, 2019. All rights reserved.