The Power of No!

    The two most powerful words in negotiation are not “yes” and “no” but  “What if . . .” Deliberating on “what if” is the key to successful negotiation. A framework for such deliberations is presented in the subpage of that name on the menu.

    The second two most powerful words in negotiation are indeed “yes” and “no.”  “Yes” is easy, in fact, too easy. A lot of us trip over ourselves with a too fast “yes.” Very seldom, for instance, is a deadline really fixed.  

    “No” is much more difficult, for two reasons. The first is that it may be perceived as a challenge to a belief system. A true-believer negotiator will not respond rationally to direct challenges to his beliefs. In fact, confronted with hard evidence, such as that from double blind tests, which disproves the belief system, e.g. the efficacy of prayer to cure cancer, that the lethality of smoking is exaggerated, the true believer becomes even more convinced of his position. He may even pray harder and smoke more as a consequence! The classic psychological study of this effect is by Leon Festinger in A Theory of Cognitive Dissonance, Row, Peterson & Co., 1957.

    The second reason is that those of us with low ferocity quotients (FQs) are bad at using "no," no matter how smart we really are, or like to think we are. In fact, there is a negotiating book specifically on this subject by one of the foremost authors on negotiation, William Ury. He has written The Power of a Positive No, How to Say No and Still Get to Yes, Bantam Books, 2007 with a supplementary audiotape from Random House (as listed in the section “Unannotated Bibliography” of “Negotiation Resources” at “Papers”).

    Still, at one time or another we have all said “no” spontaneously, even if that were against our nature. The spontaneous, often emotionally charged “NO!” is one matter. Quite another is preparing oneself to say, when necessary, “no” in a negotiation politely, quietly, to mean it, and to make it stick. The most interesting aspect of “no” is that the sky does not fall down, the world does not stop turning and you are not stood up against a wall and shot. The best kind of no is the quiet “iron fist in a velvet glove.” 

    Three “no” anecdotes follow: (1)” No, I don’t think I want to empty the cash register.” (2) “Well in that case, no, I don’t think I want this job.” (3) "No, I don’t think I want an arms build-up for possible litigation."

The first incident below was reported in the Florida press, and is amusingly related by Ed Brodow, a star negotiations trainer in the U.S.¹

1) The Meatball Sandwich Robber

or

“No, I don’t think I really want to empty the cash register.”

    A man walks into a sandwich shop in California and asks for a meatball sandwich. As the owner is making it, the man pulls out a gun. "This is a stick-up.  Give me all the money in the cash register!" 

    Ed Brodow pauses and asks the audience, a group of 1200 soldiers at the Pentagon, what they would do. "Give him the money," answer a couple. Brodow agrees that that is certainly what he would do. However, he continues, the newspaper reported that this is not what happened. The owner put down the sandwich and turned to the robber: "Look, pal, this has been a really bad month. Business has been just terrible. Would you settle for the meatball sandwich and ten dollars?"

    The robber looks at him: "What, are you crazy? I’ve got a gun here. I’m not settling for anything less than the meatball sandwich and twenty dollars."

    The owner says: "You’ve got a deal." The newspaper concludes the story with the comment: "and the robber left satisfied."

    Moral: have the courage to negotiate

2) A softly, politely stated, yet HUGE, incredible Japanese No

or

“Well, in that case, no, I don’t think I really want this job.”

    At graduate school in the U.S. the author had a roommate from the University of Tokyo, a brilliant mechanical engineer who had been working for Toyota Motors – guaranteed lifetime employment. The employer in Japan has much more authority over the employees than in the U.S. For instance another Japanese classmate, in his 30s, had received a leave of absence from his employer, a Japanese bank. The bank had not wanted to pay for his continuing education. However he, with his wife, had decided it was worth investing essentially all of their savings into his getting a prestigious U.S. university degree. 

    Even though he was on an unpaid leave of absence, he still reported regularly to his bosses in Japan. Over Christmas he asked permission (!) of them to see his wife, who had stayed in Japan. On the one hand, he badly wanted to go home for Christmas. On the other hand, his wife wanted to see the U.S. Which did his bosses think he should do? (Why is he asking his bosses this question anyway, any American would wonder.)

    The bosses´ answer was immediate – and adamant. Under no circumstances was he to see his wife. That would distract him from his studies. He represented the bank while he was at the university. So as not to embarrass the bank, he must perform well. That meant he should spend all of Christmas studying. However, his bosses added, he was allowed to telephone his wife during the holidays. Wow! He is actually allowed to talk to her! 

    The Japanese roommate, J.R. for short, related that his countryman had been almost in tears as he told him what had happened. Now J.R. was much smarter than the banker. He had both an extraordinarily high IQ – and FQ (Ferocity Quotient). He also had asked Toyota Motors to pay for his U.S. education. The answer had been no. Second attempt: he asked for a leave of absence. The answer again was no. So J.R. took the unprecedented step of informing the firm that he greatly regretted the decision and respectfully submitted his resignation in order to go to the U.S.

    His father and mother were professionals, and, as samurai descendents, solid members of the upper class. They reluctantly provided him the necessary funds. However they were terrified for him. Toyota Motors would prevent his obtaining a passport. If he did receive a passport, Toyota would wield its influence to prevent him from obtaining a U.S. visa. If he managed, through some miracle, to obtain a U.S. visa, Toyota Motors would blacklist him in Japan. He would never, ever be able to get a real job as an engineer or manager with any company in Japan. He’d be lucky to find a job as a waiter. He was making a tragic mistake, one that would ruin his life. He must submit and obey. 

    Furthermore, he continued, his parents´ fears were not as farfetched, in the Japanese context, as an American or European might think. He knew for a fact that his defying his bosses – and what to do about that – had taken up a major part of a board of directors meeting at Toyota Motors. His understanding was that he was the first young engineer to resign in the company’s history! (At General Motors, 10 or 20 junior engineers, or middle managers for that matter, could all leave in a huff the same day. Even if any members of the board became aware of the incident at all, it would hardly be considered an item to go on the agenda. And one individual leaves, a junior engineer at that, and the board discusses it at length? Inconceivable.)

The aftermath

     So what awful things happened to J.R.? Toyota Motors told him that his conduct was inexcusable. Under no circumstances whatsoever would he be welcomed back. Furthermore, by way of apolgy for his extreme, totally unacceptable, bizarre behavior, the least he could do was to test drive their newest models for the difficult U.S. driving conditions in wintry New England. He was to write detailed performance reports on the cars assigned to him, and no, he was not going to be paid anything for doing that either. In other words Toyota "punished" him by giving him a series of brand new cars to drive while he was in the U.S.!

He completed his U.S. degree and obtained an offer from McKinsey & Co., the preeminent U.S. management consulting firm, to work in its Tokyo office. And how did he do? Just fine- he became a partner. 

Explanation

    Why was he able to say no? There are two classes of people who are good at saying "no," because the rules do not really apply to them: those at the very bottom, and those at the very top of the pyramid. Those at the bottom are driven by the need to survive. Focused on their next meal, for some of them the social norms fade into insignificance.

    Some of those at the top have the attitude that they make the rules. Therefore they observe them selectively, i.e. when it is convenient. J.R. came from a 2,000 year old samurai family. Over the course of history members of his family, as warriors, had from time to time supported the wrong side, and as a consequence lost their heads, literally. Toyota Motors was unlikely to engage anyone to decapitate him. The risk of a violent negative response therefore did not cow him into obedience.

    Moral: carefully plan your BATNA, and act on it accordingly.

3) The Interminable License and the Triple Threat Attorney

or

“No, I don’t think I really want an arms build-up to prepare for possible litigation.”

    Negotiation is implicit to achieving consensus during the formation of strategy – and for the tactics to implement it.² Yet reaching agreement can be dismayingly difficult. A case in point is the negotiation of a licensing contract in 2006.  Granted, it was a little more complicated than the demand for a meatball sandwich and cash. It entailed contribution, anti-shelving³ and arbitration clauses, as well as agreement on a marketing strategy. However, intentions were good on both sides. No one played “hard ball.” Nevertheless, there was a mild culture clash. The U.S. side was looking for win/win with ratcheted revenue participation based on experience curve effects. These effects would drive the strategy to enter new markets.

    The German side, having initially offered a perfectly legitimate deal, was taken aback and not at all inclined to look for exotic “fine tuning” and sophisticated long term strategic planning. Both parties had other priorities and the negotiations stalled, re-started, and stalled yet again, lingering on and on. 

    After almost a year, I decided that the side I represented needed coaching, beginning with myself. Therefore I sought out a coach! In this case that was the managing partner of a prestigious law firm. She was exceptionally well qualified, licensed to practice in three different jurisdictions, a true triple threat. A “mover and shaker,” she was accustomed to dealing with the highest echelons of business. Her team had an enviable track record of successful litigation. She promptly began discussing contingency plans, “a massive arms buildup to defeat the enemy,” should conflict arise. Strength, when it becomes excessive, can turn into a weakness.

    She was thanked for her services, and promptly disengaged from. In other words, the legal coach was fired, albeit with extreme caution, i.e. with subservient politeness including much bowing and scraping. Then the other party, the German CEO, who was in China at the time, was telephoned and told of the encounter and its outcome. The story was concluded with the statement that the time had come to kill the deal and stop wasting everyone’s time, or to close it. After forty minutes on the telephone, verbal agreement was reached on all points at 3:00 a.m. February 15, 2006. 

    The contract eventually signed three weeks later had no changes, not one single attempt at a last minute “nibble” by either side. One wishes one had gotten the “legal coach” involved much sooner, even though she was given short thrift. Her different (adversarial) perspective had served to remind the parties of the truth of the adage: “Perfect is the enemy of good.” A reasonable, albeit by no means perfect, deal was negotiated in good faith. The flexibility to improve it would be there as revenues were generated over time.

    Moral: be willing to walk away.

Of course the above paragraph sounds suspiciously self-serving. “Hire even a bad coach! You will still profit from it!” A better interpretation is: “Fire the coach who is not working out for you – immediately!” After all, which comment do you hear more often, (a) or (b)?

            a) “He should have been fired long ago.”

            b) “A shame that useless fellow was fired so soon!”

1 See the negotiation bibliography for further information about Ed Brodow and a link to his websites.  

2 A simple example is that a new business model emphasizing prompt delivery means the shipping of rush orders will no longer be outsourced. They will be handled internally, and therefore a shift in operations is required. Specifically, more labor hours are needed to handle rush orders from a department that has always had a strict “9:00 to 5:00” schedule. Consensus is achieved by introducing a flexible work schedule, where everyone is committed to be present at the peak period of 11:00 to 15:00, but may otherwise start or leave at will to fulfill the total hours of the working week.