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Nov 30, 2006

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Walk away from a bad deal

The Lion in Love, Aesop's fables

It was so easy to negotiate with our child. We could tell from his
eyes that he wanted the Nintendo Wii so badly that he gave in
to all our demands on completion of homework assignments,
household chores and exam performance targets. The sad truth
is that in the business world, many CEOs forget the childhood
lessons when they are at the negotiation table and often land up
with really bad deals. They are often so passionate about
acquiring something and look so eager to clinch the deal that
they overlook the many onerous conditions and warranties that
lawyers always manage to weave into the contracts. When
queried by the shareholders, they start to utter excuses like they
are too 'deep' into the negotiations that they could not withdraw.
This is what we want to address here – that a good negotiator
should walk away from a bad deal at any time. The write-off for
the cost of due diligence and management time is nothing
compared to the long term cost of a lousy deal, one that will
bleed the company for many long years.

Story:

The Lion in Love

The Lion in Love

(Illus by Harrison Weir, John Tenniel, Ernest Griset)

A Lion once fell in love with a beautiful maiden and proposed
marriage to her parents. The old people did not know what to
say. They did not like to give their daughter to the Lion, yet
they did not wish to enrage the King of Beasts. At last the
father said: "We feel highly honoured by your Majesty's
proposal, but you see our daughter is a tender young thing,
and we fear that in the vehemence of your affection you might
possibly do her some injury. Might I venture to suggest that
your Majesty should have your claws removed, and your
teeth extracted, then we would gladly consider your proposal
again." The Lion was so much in love that he had his claws
trimmed and his big teeth taken out. But when he came again
to the parents of the young girl they simply laughed in his
face, and bade him do his worst.

Moral:

Love can tame the wildest.
Misfortune awaits those who love unwisely.

Kidding me:

Parents-in-law are the cunniest creatures on earth. Beware
of them; they can make or break your marriage.

Quotable Quotes:

“Do not rush into negotiations ... be careful what
you give away now.” ... Oliver Tambo

“Never make concessions.” ... Gertrude Stein

“Let us never negotiate out of fear. But let us
never fear to negotiate.” ... John F. Kennedy

“Who's going to win a negotiation: it's he who
pauses the longest.” ... Robert Holmes A Court

“Here's the rule for bargains: 'Do other men, for
they would do you.'” ... Charles Dickens

“My style of dealmaking is quite simple and
straightforward. I just keep pushing and pushing
to get what I'm after.” ... Donald J. Trump

[browse collection of quotes and quotations]

Lessons in life:

Never let your guards down. I have been through negotiations,
and meetings on mergers and acquisitions. Sometimes we are
so driven by passion that we fail to notice the obvious, or be
prepared for the worst. In the real world, people at the
negotiating table are always mindful of safeguarding their
interests first and foremost. For instance, it is understandable
for North Korea not to abandon their nuclear program.
Unless the deal is a long term benefit and solution to their
woes, why should they lose their only bargaining chip? Calls
for rebels to lay down their weapons have never met with
much success either simply because they will not want to be a
powerless lion. Often, the best negotiator is one who will not
give in to any demand to dilute his core strength. He is able
to guard his emotions, so as not to give the counter parties a
clue as to how much he desires certain propositions. If he
thinks a deal is not what he has in mind, he is able to walk
away from it. Now, do not think that this is only useful to
big-time negotiators. You and I have applied this to our
shopping strategy. A typical scenario:- we see an item we like
in a shop; we bargain for a lower price; seller quotes a price
which we still find unacceptable; we pretend to lose interest
and walk out of shop; seller calls out after us; final sale price
is what we ask for. If we had instead looked very keen to buy
the item, the seller would have stuck fast to his price, knowing
that we would buy the item whatever the price is.

Related Articles:

Conflict Resolution at Work

Trust Gut Instincts and Intuition

Books worth reading:

There is a negotiation element in almost everything we do. At
home, we negotiate with our kids to eat, and to do their
homework. In office, we negotiate with our bosses for better
benefits, or with our clients to close deals. In his book, Getting
to Yes: Negotiating Agreement Without Giving In, Roger Fisher
gives us a simple and straightforward five-step approach to
fighting the battles in negotiations.

If you are having difficulty telling your staff to “pull up their
socks”, or confronting a friend on a sensitive matter, Difficult
Conversations: How to Discuss what Matters Most, by Douglas
Stone, Bruce Patton, and Sheila Heen, offers advice for handling
these unpleasant exchanges without hurting anyone in the process.

© Business Fables and Management Lessons

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