9 Rules of Negotiating from the High Ground

9 Rules of Negotiating

After enlisting in the Marines Ken Marlin worked his way up to become a captain and infantry commander. After the Marines, Ken has led a technology company and finally an investment bank on Wall Street.

What I really appreciate about Ken is that he has taken his variety of experiences from the battlefield to the corporate boardroom and distilled his leadership principles in a way that can help all of us. His new book, The Marine Corps Way to Win on Wall Street: 11 Key Principles from Battlefield to Boardroom, is full of his candid advice on leadership.

 

“Prior preparation prevents poor performance.” –Ken Marlin

 

And I highly recommend the read.

There was one section of the book that focused on an aspect of leadership that I wanted to ask him more about. That was the section on negotiation, on deal-making, on getting to agreement.

I had the opportunity to ask Ken about his 9 rules of negotiations.

 

Negotiation Tip: negotiate big things before little things.

 

Be Ready to Walk

Be prepared to walk away from the table. This is a great place to start. Do you have an example of when someone wasn’t willing to walk away and how that hurt them?

I have many examples both positive and negative. That’s because negotiating is much more about psychology than logic – and it has very little to do with finance.  The negative examples aren’t fun to talk about.  But we have had clients who simply weren’t willing to walk away from a prospective deal. Inevitably the other side took advantage.  One that comes to mind resulted in a sale that I strongly advised against.  Our client was a seller.  The price offered seemed quite strong, on the surface.  It was significantly higher in total value than those we received from other bidders – but a significant portion of the price was to be paid over three years based on the company’s future earnings.  We’ve worked with so-called “earn-out” structures before and often they are fine.  But, in this particular case, I believed that the upfront portion of the purchase price was much too low and the protections for my client post-deal were too weak.  We pushed back of course, but the buyer touted the total value of the potential deal and was unwilling to move.  I advised my client to walk away and negotiate with one of the other bidders – leaving the door open for the first one to get more reasonable.  But my client was also focused on the total theoretical value and – perhaps – a bit too sure of himself and his own abilities.  He was not willing to negotiate hard – and take the risk of losing this deal.  He took the deal.  The results were predictable.  Within a year the senior management of my client’s company were out – and the sellers never received most of the earn-out.  There were lawsuits.  But the lawyers are about the only ones who came out ahead.

 

“Discipline is critical to proper preparation.” –Ken Marlin

 

There must be less depressing examples of the where the approach did work. 

Sure, there are lots.  For example, a few years ago, we had a VC-controlled client that had been negotiating the sale of their company for months with a very qualified buyer before they came to us for help.  The offer was all-cash at a fair price by any measure.  At the same time, it was clear that the buyer would merge the organizations and fire at least half of my client’s personnel.  The VCs were mostly interested in the money, but they were sympathetic to the CEO’s desire to protect his people.  The CEO had tried to negotiate, but the buyer said that their offer was “best and final” and would expire in 3 weeks.  Further, the buyer said that if there were any solicitation of other bidders, they would walk from the table.  The buyer was using their leverage better than my client. They assumed that the VCs would not risk losing a high all-cash offer.Ken Marlin Headshot

I told my client that they could not negotiate if the other side perceived that they were unwilling to walk from the table. Otherwise we would just be begging.  We knew that if we solicited other bids we might lose the first buyer, but that was a risk we had to take to improve the terms.  My client agreed to take the risk. Once we had other bids coming in and the first buyer saw that they might lose the deal, they materially improved the cash portion of their offer.  But they put even more emphasis on cost reductions.  Fortunately, we had identified another interested bidder, and we were able to use our leverage – including the specter of sale to the original buyer – to obtain an offer for more money and protections for the employees.  That was win-win.

About a year ago we had a similar experience internally, as the lease on our office space was expiring.  We were the sole occupant of the top floor of a prestigious New York office tower.  It had terraces, great light and views, and it was all built to our specifications.  We were willing to stay.  But the landlord asked for a rent increase that was clearly above market.  He may have assumed that we would not walk away.  We pushed back. We showed him that rent for comparable spaces was lower.  But logic did not work.  He declined to offer more than a pittance.  So we went out and found another great space and used the specter of staying in the original space as leverage to negotiate great terms with the new building.  When the first landlord saw that we were willing to walk from the table, he finally got reasonable.  But it was too late.  We moved to the new space.  We love it.

 

“Staying safely at your home port is narrow thinking.” –Ken Marlin

 

Tell the Truth

Tell the truth. I love this one as part of your rules. What’s the Marine definition of lying?

I’m not saying that you can’t lie to an enemy who is trying to kill you or your friends.  This is about negotiating in normal business environments – or in Marine environments when you are negotiating with so-called “friendlies” (such as local villagers).  In this context, the Marine definition of lying goes beyond the standard definition of asserting something as fact that you know to be otherwise.  It includes making statements – or failing to make statements – as part of an express intent to deceive. It’s an extension of the concept that my word is my bond – with a focus on being honest with those who expect that of you.  Reputations are built over time and will outlast the negotiations at hand.  A reputation as a liar will eventually catch up to you.

 

Negotiation Tip: don’t make promises that will be challenging to keep.

 

So in that context, how do you bluff in negotiating?  Doesn’t everyone bluff?

It’s true that, in my business, many people bluff.  And more than a few lie.  Lying is always bad.  Bluffing usually is.  It is also dangerous if your bluff is called.  It can cost the loss of major negotiating points – and sometimes kill the deal.  That’s why I prefer the truth.

 

“Discipline can help ensure successful execution.” –Ken Marlin

 

Understand Leverage

Recognize when you have leverage-and when you don’t. How do you know what the leverage each side has? How does this impact your deal making?

Ken Marlin holding a rifle at OCS Quantico VA @ 1972In the Marines, leverage comes from a combination of superior force combined with moral certainty.  Moral certainty was one of the key ingredients in how Americans won the Revolution against the superior forces of the British Empire.  It was key to winning World War II, and it was also key to the US losing the War in Vietnam.  Sure, there are many exceptions where superior force trumped all.  See the Russians in Chechnya.  But 150 years later, that war isn’t completely over yet.  In deal making, the best leverage comes from a combination of being on the moral high ground and being willing to walk from the table.  That leverage increases the more the other side wants to get the deal done.  It’s usually not hard to recognize.  In the book I relay a vignette about the CEO of a very large firm that had made an offer to acquire our client’s company.  After we shook hands on what appeared to be a very fair purchase price, he began to dictate deal terms – and even to change some that had previously been agreed. The CEO acted as if he had all the leverage, when actually, by his bullying tactics, he had squandered the moral high ground.  He was then left with the assumption that my client was desperate to complete the deal.  They weren’t that desperate.  The CEO was surprised when we walked from the table.

 

“If you know the enemy and know yourself, you need not fear the result of a hundred battles.” –Sun Tzu

 

Remember the Peace

Remember the peace. Most non-military experts will pause on this one. What does it mean and why is it so important?

Most statesman learned long ago that after most wars end, there is wisdom in finding a way for the formerly warring parties to live with each other.  After the Civil War came what was supposed to be reconstruction.  After WWII came the Marshall plan.  When people forget that basic rule of remembering the peace, it can be bad.  That’s what the allies did after World War I, forcing impossible reparations on the Germans.  The result was resentment that fermented and eventually boiled over.  And then we got World War II.  The consequences of scorched earth policies in business negotiations may not be quite as dire.  But still, the smart move is to recognize that the completion of a transaction is usually not the end of anything. It is a phase point, after which it is better if the formerly battling parties (buyer and seller) can continue to work and live with each other in peace and harmony.  Otherwise, life is long, resentment ferments, and bad things may happen.

 

9 Negotiation Rules from Ken Marlin

Rule 1: Be prepared to walk away from the table.

Rule 2: Know where you are going.

Rule 3: Recognize when you have leverage—and when you don’t.

Rule 4: Tell the truth.

Rule 5: Remember the peace.

Rule 6: Negotiate big things before little things.

Rule 7: Don’t bully.

Rule 8: It is personal.

Rule 9: Take reasonable, defensible positions.

 

Negotiate Big Things First

How to Spot the Telltale Signs of a Lie

 

How do you know if you are being deceived?

Do you want to know when someone is lying to you?

 

“Lie spotters are armed with scientific knowledge on how to spot deception.” –Pamela Meyer

 

Pamela Meyer will help you spot a liar. She’s the author of Liespotting and a Certified Fraud Examiner.

 

Surprising Facts about Lies

Some interesting facts about lies:

  • We lie more to strangers than to our coworkers.
  • Extroverts lie more than introverts.
  • We learn to lie as babies by faking cries for attention.
  • The more intelligent the species, the more they are apt to lie.
  • We are lied to on average between 10 and 200 times per day.

Pamela tells one particular story that grabbed my attention. Koko, a gorilla, loved cats and was given a kitten. On one particularly destructive day, Koko managed to rip her sink right out of the wall. When asked about it, Koko signed to her humans that the kitten had done it. Amazing.

 

“The essence of lying is in deception, not words.” –John Ruskin

 

The Telltale Signs of a Lie

What are some telltale signs of a liar?

Meyer touches on some patterns of deception including verbal dodging and body language slips.

Verbal dodging includes:

  • repeating the question
  • telling a story in strict chronological order
  • offering irrelevant details

But lies are not only verbal; we can have body language slips. Meyer explains that liars:

  • chatter with their fingertips
  • shrug their shoulders
  • freeze their upper bodies
  • say yes and shake their head no
  • shift their blinking rate
  • give an overabundance of eye contact
  • show a smug smirk on their face when lying (which she calls duping delight)
  • point feet to the exit
  • place barrier objects between them and the interviewer

And a cautionary note. Most of us may read the book or watch the video, but that likely doesn’t qualify us to know for “certain.” Be careful when making your own conclusions.

Still, it was a fascinating view into a world I knew little about. These signs are not proof of deception, per se, but she says to watch when you see clusters of them appearing together.

 

“In a time of universal deceit, telling the truth is a revolutionary act.” –George Orwell

 

Interested in learning more on how to spot a liar? Check out Meyer’s book Liespotting: Proven Techniques to Detect Deception.

 

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The Power of Truth Telling At Work

Do you have a personal pit crew to fuel your career?

Is it possible to take worry-free, unplugged vacations?

Would you rate your peer relationships as outstanding?

 

Mindy Mackenzie is a speaker and advisor who has served as the Chief Performance Officer of Beam, Inc. She has served in various senior HR leadership and organizational development roles at Jim Beam, Walmart and Campbell Soup Company. Her new book, The Courage Solution: The Power of Truth Telling with Your Boss, Peers, and Team, is filled with practical advice and tips to improve communication with your colleagues.

Mindy’s perspective provides a roadmap for success in relationships at work. I recently asked her to talk about her current work.

 

“Peace is possible, truth at all costs.” -Martin Luther

 

A Crisis of Truth

Courage SolutionYou see a crisis in the corporate world that’s rooted in a lack of courage and truth telling. Tell us more about that and the rationale behind your new book.

I wrote this book in answer to a crisis. And the crisis, from my experience, is that the thing that companies and individuals need most they often get least – and that’s the truth. And I saw it again and again and again even though I worked for three fantastic companies (Walmart, Campbell Soup and Jim Beam). So there was this crisis. The crisis was the absence of truth. Why? Because people didn’t have the courage to tell it. People were afraid of the consequences. So I wrote this book to show them how to tell the truth diplomatically but effectively. I learned that myself through trial and error to the point that I earned the nickname the Velvet Hammer.

 

“Live truth instead of professing it.” -Elbert Hubbard

 

Is “truth telling” getting more difficult these days?

Truth telling is always challenging because people like to be liked and agreed with. And telling the truth many times runs counter to that – so you have to know how to do it right. But let me pan back for a moment and make a broad statement. I think truth is the commodity in shortest supply in the corporate world, and it may be the most essential commodity of all. Why don’t people tell the truth? They are afraid of the consequences. I wrote this book to cure them of that fear. Because without the truth, no company or individual can survive, let alone thrive.

 

“Honesty is the first chapter in the book of wisdom.” -Thomas Jefferson

 

Why You Need a Personal Pit Crew

What’s a personal pit crew and why do you recommend one?

A pit crew is an external group of people committed to your success in your work and in your life. The analogy to a race car driver is apt because while they are driving the car, they have an entire team of people dedicated to helping them stay on the track going as fast as possible. Same with navigating a career. Going it alone is a bad strategy. You need to have a small group of people you trust and respect that you can go to for advice, support and practical help. The most successful business professionals I know all have their own pit crews, even if they don’t label it that.

 

Career Tip: Have a pit crew, a team dedicated to helping you stay on track.

 

Name It to Claim It

Would you share more about your advice “name it to claim it?”

If you want to achieve something or advance in your career, it helps immeasurably to be clear about your destination. Spending the time to get clear and know what you want and why is a massive accelerator to attaining it. That’s the “naming it” part. So when you are asked, “Where do you see yourself in five years?” for example, you will have a ready, well-thought-out answer. When you know what you want, you can then engage others in helping you to get there. To claim it.

 

Take Worry Free Vacations

Many people will read your chapter on vacations and say, “Worry-free, relaxing, unplugged vacation? Impossible!” How do you respond to those who say it’s impossible?

I say it only feels impossible because you’ve never done it and likely have never seen anyone around you do it. But that doesn’t mean it is impossible for you – it just means it is scary, uncomfortable and foreign. But if you want the big pay-off – which is to truly relax, refresh your energy and perspective, have unfettered fun (which is aided by not having any responsibilities) and come back to work feeling great – then you choose to be courageous and work through your discomfort. Taking the steps laid out in the chapter really work. You just have to be brave enough to try.

 

“Truth is so rare that it is delightful to tell it.” -Emily Dickinson

 

Develop Extraordinary Relationships

Tools to Become an Authentic Leader

The Power of Authenticity

Be yourself. Be true to you. Don’t try to be someone else. Don’t put on false airs. Be authentic.

 

“The essence of authenticity is being yourself fully.” –Karissa Thacker

 

Most leaders hear this advice but don’t know what it means, what to do about it, or how it impacts everyday life in the office.

Becoming an authentic leader is more than a lofty goal. It’s an essential part of your effectiveness. My own experience is that it’s often authenticity that sets the great leaders apart. We don’t always know why we are inspired by certain individuals, but I think it is this characteristic that appeals to us at a deep level.

To learn more about this subject, I read Karissa Thacker’s terrific new book, The Art of Authenticity: Tools to Become an Authentic Leader and Your Best Self. Karissa is the founder and president of Strategic Performance Solutions. She is a management psychologist, focusing on human performance and satisfaction at work. I recently asked her to share some thoughts about her work on authenticity.

 

“There is no one alive who is more Youer than You.” –Dr. Seuss

 

What I particularly like about her new book is that, as the subtitle of the book suggests, she provides tools to help with the goal.

 

Lead with Authenticity

How would you define authenticity in leadership?

9781119153429.pdfBoth authenticity and leadership are important in defining authentic leadership. Leadership is about getting things done that are both difficult and important in the context of a specific organization or more broadly any human community. Authenticity adds another layer which is being true to your own nature AS you are getting things done that are difficult and important.

What’s the relationship between authenticity and leadership?
Our typical way of thinking about authenticity is to just be yourself, and it will all turn out better. Of course, be yourself. It sounds so simple. The first problem with that is you are not that simple. We humans are just not that simple. There is no one solid self like a concrete block. Our hardwired adaptive traits as humans mean that we behave differently under different situations and circumstances. Leadership requires this adaptability. But you have to find ways to communicate who you are as you are leading effectively. More importantly, you have to figure out ways to stay in touch with what is important to you as you are in the thick of getting things done. Paying attention to the inner game and outer game at the same time is a lot easier said than done. Said another way, it is easier to just be authentic or just figure out how to get things done that are difficult and important. But the daily question is how do we do both at the same time?

 

“Authenticity is knowing, and acting on, what is true and real inside yourself…” –Robert Terry

 

Why do you think there is currently so much interest in leadership authenticity?
Trust in big institutions like our government here in the US is low. I also think that the modern era poses some challenges with upping the ante on aspects of authenticity like transparency. Like it or not, we are in an age of transparency. The boundaries between private life and work or with private life in general are not what they used to be.

Leadership is never a value-neutral concept. To say someone is a leader means we have high expectations. A lot of this interest comes down to people wanting our leaders to step up and make things happen that are good for the whole. Any robust discussion of authenticity takes you fully into the thicket of human moral psychology as authenticity is so not a value-neutral construct.

 

“Fear is not your friend if you want a culture of authenticity.” –Karissa Thacker

 

Jim Carrey’s movie Liar Liar immediately came to mind when I read your Truth Serum Question. Would you share this exercise with us?

Andy Andrews on Why Truth Matters

One of my favorite authors is Andy Andrews, who always writes things from a very different perspective as anyone else.  I have all of his books, and am always interested in his point of view.

One of his latest books is called How Do You Kill 11 Million People?  I have to admit that I would have passed by the book if it weren’t for the author.

The new book is the story of the holocaust, but unlike anything you’ve ever read.  It’s also a very small book, which you can read in about fifteen or so minutes.  But you will find that you are thinking about it for days afterward.  It’s a book that just makes you give it to someone else and say, “Read this.  I want to talk about it with you.”

The story is basically a question about how millions of people were killed by Hitler and the Nazis.  Most of the time, they boarded trains with little resistance.  Trains heading to concentration camps.  I’ve heard directly from Holocaust survivors the horrors involved.  Most of us have read books and seen movies depicting the events.

But I don’t know of anyone else who ever asked “Why?  Why did they board the trains without fighting back?”