Single Blog Title

This is a single blog caption

Diplomatic Negotiation Perspective

Diplomatic Negotiation PerspectiveThe diplomatic services of some countries have a working definition of diplomacy that excludes the word ‘negotiation’ because they don’t like the connotations of that term.  They feel that at worst, the role of a negotiator is to bamboozle the enemy at their front-door while your military forces kick down their back-door!  They see the purpose of practical diplomacy as being to clean up the mess that nations all too often get themselves into by trying to deceive one another and impose a ‘Win-Lose’ result in so-called negotiations.  This resonates with the ethos we have discussed throughout this material, where the objective of principled negotiation is a ‘Win-Win’ that aims to ensure that all parties to the negotiation realise they have achieved the best possible results.  This approach seeks to create additional value above and beyond the value that either of the parties involved in the negotiation could find in isolation.  In comparing the function of diplomatic and commercial negotiation, it is interesting to note that individual businesses could not effectively conduct commercial negotiations without the global infrastructure that is constantly updated and maintained by diplomatic negotiations.  At one end of the scale, that infrastructure seeks to avoid war, while at the other end of the scale it paves the way for international law, contracts, finance, transport and profit.  But there is also a negative dimension.  Countries can decide to ban trade of certain types such as military and strategic technology.  They can choose to impose sanctions on other states, perhaps restricting credit, transport and other infrastructure facilities.  They can set prohibitive trade tariffs and quotas on certain classes of goods.  So in many ways, commercial negotiations can only be successful under the facilitating umbrella of diplomatic negotiation.

There are mutual lessons to be learned from the different perspectives of commercial and diplomatic negotiation.  Of course, we won’t find the world’s leading diplomats blogging their negotiation techniques on the internet!  We don’t expect to see their social network pages telling us how they really fooled country ‘x’ in a massive bluff this week, or that they were embarrassed by how well their counterparty from rogue state ‘y’ managed to identify their point of resistance.  A great deal of effort goes into keeping secret the training and operational tactics that have been developed by countries over many centuries and the skills that have been developed by individual negotiators over many years.  The timescales involved can be very long, with international laws taking decades to negotiate; and wars taking many years to transition from the battlefield into a Disarmament Agreement lodged in the United Nations Treaty Library.

Diplomatic negotiations between countries or agencies are sometimes as serious as ensuring the survival of people and states.  More often, it’s about resolving divergent values and conflicts of interests that frequently erupt.  States have a wide range of possible interests.  For example, over access to resources such as: energy; raw materials; water; food; credit and trade.  In commercial negotiations, the focus is often on price, because money is easy to count whereas the other negotiable elements may be more difficult to quantify objectively.  Therefore a simple common yardstick is monetary value.  Non-financial criteria are often reduced down to potential future cash flows, discounted to present day values.  In diplomatic negotiations there may appear to be less overt focus on money and more on longer term issues such as survival, prestige and cultural identity.  Yet the immediate issues are often about access to critical resources that, in the end, force the focal point back onto the common yardstick of money.  In any conflict, even when it has huge humanitarian dimensions, politicians and the public will always want to know if their country ‘has a dog in this fight’ – if their national interests could be frustrated or promoted by the potential outcomes.

There is sometimes a slightly different vocabulary used to describe diplomatic negotiation compared to commercial negotiation.  We see words such as: threat, aggression, problem, situation, and dispute.  There are terms such as: counterparty, point of resistance, empathy, convince, bargaining and so on.  However, the underlying concepts and principles are very similar.  Perhaps we should not be surprised that there are strong parallels, given that for centuries there was very little distinction between diplomatic and commercial negotiations – often with the same people conducting the proceedings.

The traditions of diplomatic negotiators include careful research and planning.  They know how information can flow through their own organisations and will find out how information and influence flows within the counterparty’s various organisations.  They will also be aware that third party states, international agencies and the press can often be used as deniable ‘back-channels’ for leaking positions that if necessary can be subsequently dismissed as false.  Sometimes diplomatic negotiations suffer from too much direct political attention from the top, while progress can often be made along a depoliticised technical channel.  Similarly, the commercial negotiator needs to be aware of the other party’s official, structured flows, and should research the other informal relationships that may be even more important than those that are documented on the organisational charts.

Diplomatic negotiation is often about the resolution of differences and disputes by peaceful means, to reduce the possibility of either party resorting to even the limited use of force that has the potential to escalate into war.  The aim is for convergent, agreed action to resolve divergent values and conflicts of interests, even though this may only be achieved by both sides making compromises.  The motivation of either side to reach a settlement is sometimes to bolster their political power at home.  Often it is to encourage their citizens’ good opinion of their government’s flexibility and competence.  They may want to maintain their state’s influence in regional organisations, or to avoid having its credibility and power reduced on the international stage.  Finally, they may want to avoid upsetting their allies or provoking neutral states and agencies.  All these considerations provide motivation for a settlement.  However, in the end, diplomatic negotiators compromise because they believe there is more value to them in the concessions they receive than in the ones they give in exchange.  In that sense, there is no difference between the ‘bargaining’ in diplomatic negotiations and the ‘trading’ in commercial negotiations; they both follow the model discussed in this material and all of the ten golden rules for successful negotiation are relevant.  For example, the first rule is not to negotiate unless you need to.  In commerce you should prefer to buy or sell well whenever possible rather than compromise.  In diplomacy you should prefer to reach a settlement whenever possible without compromise.

The similarity continues when we consider the competencies and behaviours of diplomatic negotiators.  To be fully effective, they need to have a clear vision of their mission and its goals and a well-developed ability to communicate their objectives.  They are strong defenders of their own state or agency and competent protectors of its security and interests.  They need to know their own country’s bottom line and at what point diplomacy may give way to force.  Both sides study their counterparties and research their motivations, needs and negotiating styles.  They plan how best to question and elicit the counterparty’s expectations and their views of the situation.  They develop a rapport to help them identify attitudes, feelings about important issues, and pressures being exerted by the counterparty’s superiors.  All this will help them to determine the probable point of resistance – the minimum that the counterparty might accept as a resolution.  The relevant lesson to be carried from diplomatic to commercial negotiation is to dedicate an appropriate amount of time and effort in the planning stage, commensurate with the potential risks and rewards.

Perhaps there are a couple of areas of marked difference between commercial and diplomatic negotiations: there may be an element of bluff in some situations, requiring diplomatic negotiators to develop a strong personal relationship with the counterparty and convince them that they are ‘super-trustworthy’ right up to the point when the bluff may be exposed.  A second tactic is initially to refuse to negotiate; then provoke an incident so that crisis negotiation becomes necessary at a point when the counterparty may be so anxious to reach an agreement that they offer compromises they would not have considered in normal circumstances.  These are not tactics we feel are productive in commercial negotiations, but there are times when the other party may try these tricks and so you should be wary of them.

Diplomatic negotiators will avoid being sympathetic, as this brings the danger of too close an emotional bond, but they will develop empathy so they can imagine what the situation feels like from the counterparty’s perspective.  They will explore the ways in which the two potentially conflicting agendas can be made to appear more compatible.  They will listen carefully and look for opportunities to develop a relationship where they can take the counterparty into their confidence on certain issues.  The intention is to encourage the counterparty to also open up and bring our negotiators into their confidence.  They will search for ways to assist the counterparty to achieve their objectives as long as this helps our negotiators to achieve our goals.  They will sustain an untiring effort to communicate and seek understanding, trying to convince the counterparty of the legitimacy and logic of our stance and explaining why it is that our values and interests are so important to us.  All this demands unbounded patience and resilience, not least because the counterparty will often try to manipulate the world media to denigrate the other state and launch personal attacks on individual negotiators.  On occasions, we have seen all of these factors and tactics, both good and bad, also being used in commercial negotiations.

Diplomatic negotiators will use their bargaining skills to make conditional offers and seek concessions, using incentives and disincentives, and will forge a link between the issues currently on the negotiating table and other issues that might also be brought into the bargaining position.  Sometimes, a state may be unable to agree to concessions it knows that it can and should make, because it would lose too much face, not just with its population but also with other countries and agencies.  In these circumstances, diplomatic negotiators may agree to mask the details of any concessions through confidentiality clauses.

This may also be used in some commercial negotiations, to avoid competitors and prospects from learning about potential concessions, or to protect a company’s public image.  For example, we have seen this done in software licence agreements where the customer has inadvertently or wilfully exceeded the number of ‘seats’ allowed under the licence.  The supplier generally wishes to retain the revenue stream from the customer and may be reluctant to accuse them of theft.  But they may subtly apply the threat of public exposure in order to pressurise the customer into accepting a negotiated multiple-year deal at the list price for a single year, with no discounts.  In effect, the previous year’s transgression may be paid for by rolling forward the obligation disguised as a new deal.  When a company’s reputation is threatened by bad publicity, its staff engaged in a negotiation may place so much emphasis on managing their business image that they forget they are still in a negotiation.

Throughout a diplomatic negotiation, one or both parties can often maintain a threat as a deterrent, or as an incentive to compromise.  Sometimes the threat is very real and at other times it may be a bluff, but the diplomatic negotiators need to be able to employ brinkmanship without losing control and tottering over the edge.  This is not something we feel is useful in commercial negotiations, but there are times when the other party may try to emphasise the power they have in the negotiation by reminding you how difficult it would be for you to find another suitable supplier quickly, or another key customer in time to hit your annual targets.

Finally, there is a striking difference between diplomatic and commercial negotiations regarding the percentage of time actually spent in the main sessions with the parties face to face.  Diplomatic negotiators often spend only a very small percentage of the total time sitting across the table from each other.  Most of the time is spent in recess so that each team can, in private, discuss progress and tactics and plan what their next few moves are going to be.  Very often we find that in commercial negotiations this percentage is reversed, with people spending most of their time around the table.  The lesson to be learned is to have frequent breaks and use this time to consult discreetly with your immediate team and if necessary with other supporters on site or at the other end of the telephone.  Review and update your plans and make sure the whole team knows what needs to be done in the next session.

This blog is an extract from ‘Advanced Negotiation Techniques,’ by Alan McCarthy and Steve Hay, of the Resource Development Centre LTD.