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

24 Quotes to Help You Relax When You’re Stressed

Don’t Worry, Be Happy

It seems that our pace gets faster each year, the stresses pile on, and the work never ends. Deadlines loom. We want to hit our goals.

Relax.

Here are some quotes to help you relax. As you read them, breathe. Really breathe slowly and just let whatever is bothering you go for a few minutes.

 

“I’ve decided to be happy because it is good for my health.” –Voltaire

 

“Tension is who you think you should be. Relaxation is who you are.” –Chinese Proverb

 

“It is nice finding that place where you can just go and relax.” –Moises Arias

 

“Your mind will answer most questions if you learn to relax and wait for the answer.” –William Burroughs

 

“Sometimes the most important thing in a whole day is the rest we take between two deep breaths.” –Etty Hillesum

 

“Life isn’t as serious as the mind makes it out to be.” –Eckhart Tolle

 

“How beautiful it is to do nothing, and then to rest afterward.” –Spanish Proverb

 

“Give your stress wings and let if fly away.” –Terri Guillemets

 

“There is more to life than increasing its speed.” –Mohandas Gandhi

 

“Silence is the element in which great things fashion themselves together.” –Chris Bradford

 

“Sometimes the most productive thing you can do is relax.” –Mark Black

 

“You don’t always need a plan.  Sometimes you just need to breathe, trust, let go and see what happens.” –Mandy Hale

 

“Nothing can bring you peace but yourself.” –Ralph Waldo Emerson

 

“Almost everything will work again if you unplug it for a few minutes…Including you.” –Anne Lamott

29 Ways to Celebrate World Hello Day

World Hello Day

 

Hallo. Ciao! Hallo. Ni hao! Hola. Marhaba! Shalom. Bonjour!

November 21 is World Hello Day.

What are you supposed to do on World Hello Day? Greet 10 people. That’s it.

 

“For every goodbye, God also provides a hello.” –Donna Gable Hatch

 

The idea is to encourage the resolution of conflicts through communication instead of force. Sure, we can all point to examples where this is not possible. We may call it idealistic. Still, I like having a day where we can celebrate the power of communication. It’s easy to cite the examples where it is difficult, but there are far more conflicts resolved through negotiation than any other method.

 

“Don’t tell your friends about your indigestion. ‘How are you’ is a greeting, not a question.” –Arthur Guiterman

 

Let’s celebrate that today by sharing World Hello Day with others.

 

29 Ways to Celebrate

Here are a few suggestions on how to make World Hello Day worthwhile:

Greet others enthusiastically today.

 

“When the power of love overcomes the love of power, the world will know peace.” -Jimi Hendrix

 

Introduce yourself to strangers and tell them about World Hello Day.

Share this post with someone you haven’t said hello to in a while.

Let someone cut in front of you in line.

 

“Send out a cheerful, positive greeting, and most of the time you will get back a cheerful, positive greeting.” –Zig Ziglar

 

Make today a day of happiness.

Spend some extra time with a good friend.

Have your team at work write down five things that you are grateful for.

Encourage someone.

Radiate peace and joy.

Make today the day that you forgive someone for good.

 

“The weak can never forgive. Forgiveness is the attribute of the strong.” -Gandhi

 

Allow a driver into your lane.

 

“How glorious a greeting the sun gives the mountains!” –John Muir

 

Send Facebook messages or Tweets to 3 people who you admire.

Compliment others sincerely today.

Success Starts With Self-Mastery: 7 Effective Strategies

This is a guest post by Thai Nguyen. The power of words to evoke positive change motivates Thai to write. Formerly a professional chef and international athlete, he’s now somewhere in the world with a backpack, MacBook, and a story to share. You can follow his work at The Utopian Life, Facebook or Twitter.

It all begins with looking in the mirror.  Success in the public world goes hand-in-hand with success in your private life.  Effective leadership flows from effectively leading yourself.

 

“Effective leadership flows from effectively leading yourself.” -Thai Nguyen

 

Our empirically dominated culture places all focus on the external and physical world, blinding the importance of the internal and mental.  Self-mastery is being in control of the internal thought processes that guide your emotions, habits, and behaviors.

It’s the ability to respond rather than react.  The former is done with intention and awareness, the latter is visceral and without reason.

Self-mastery is captured well in this quote attributed to many:

“Watch your thoughts, they become words;
watch your words, they become actions;
watch your actions, they become habits;
watch your habits, they become character;
watch your character, for it becomes your destiny.”

It seems counterintuitive, but being selfish and focusing on enriching yourself will lead to being selfless and enriching the lives of those around you.

 

Here are 7 effective strategies for cultivating self-mastery:

 

1. Talk To Yourself

There’s a voice inside your head, and that’s completely normal. It’s your internal dialogue, the inner commentary that strives to make sense of the world.  The first crucial step in developing self-mastery is to become an observer of your thoughts—to become self-aware, self-reflective. To think about your thinking.

Throughout history, psychologists and philosophers have presented theories on the multiplicity of the human mind. Plato divided the psyche into appetitive, logical, and high spirited.  Freud categorized into the Id, Ego, and Superego.  Modern theories continue to be presented and debated.

But they all agree on the multi-dimensional aspect—as strange as it sounds, there seems to be more than one “you” inside of you.  And often, we’re at odd with ourselves.  Self-mastery is about creating inner congruence—an agreement and peace between an external stimulus, our internal interpretation, and our emotional response.

A lack of mindfulness will respond to external stimulus immediately with an emotional response.  Self-mastery causes a pattern break and allows for an internal interpretation to take place.  Stop, fully observe the emotions welling up inside you and the thoughts that present themselves.

Self-mastery requires this observation and recognition.  Label the emotions and thoughts as they present themselves.

 

“Becoming the best version of yourself will equip you to spark change in others.” -Thai Nguyen

 

2. Make Peace With Your Past

While there’s truth in the statement, we’re the sum total of our experiences, self-mastery recognizes we’re certainly not confined to them.  It’s not easy to do; our experiences, particularly negatives have a way of seeping deep into our soul.  But although some stains can’t be removed, we can choose not to wear those clothes again.

A personal example, I made peace with my father and our lack of relationship: Acknowledging the post-war trauma he was no doubt affected by, and that he had to play the father role in light of a difficult script.  Self-mastery meant not allowing past negative experiences the power of emotional collateral to spark present and future fires.  As a result, the clean slate has given birth to the relationship I’d always desired.

Making peace with your past allows you an untarnished and more objective approach to the present, ideally resulting in a positive future.  It’s hard to pick up anything new when your hands are full with burdens.  It means to let go, forgive, and as humanly possible, to forget.

Author Eleanor Brown has a great quote on mastering your past:

“There are times in our lives when we have to realize our past is precisely what it is, and we cannot change it. But we can change the story we tell ourselves about it, and by doing that, we can change the future.”

 

3. Play Devil’s Advocate

Challenging your thought patterns and reasoning will help with self-mastery.  Putting on the other shoe and playing devil’s advocate will uncover weaknesses and holes in your thinking.  A more critical mind will result in making better decisions.  You’ll be able to iron out any unreasonable biases that appear in your logic.

Whatever decision you’re working through, come at it from as many different angles as possible.  Debate with yourself, have a spirited argument.  You may be surprised at some of the insights you come up with.

 

4. Keep A Journal.