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Thanks for joining us today.
Oh, it's my pleasure.
Thank you. Now it is our pleasure my friend because you are a legend in this field.
So can you please get the listeners acquainted with who you are and what you do?
Sure, my day job is a professor at the Harvard Business School.
I helped to start or in fact started the negotiation department there.
I've hired a number of people and teach what's now one of, if not the most popular course at the B School along with senior executive programs and so forth.
I am not a lawyer, but I'm also direct something called the Harvard Negotiation Project over at Harvard Law School.
That's part of the program on negotiation, which many of your listeners will probably know.
It's a consortium of MIT, the professional schools at Harvard, the Fletcher School of Law and Diplomacy at Tufts and other Boston area schools.
I've kind of bounced around, but my home base for the last few decades anyway has been Harvard and it's been a great platform.
So I've enjoyed it.
That may be more than you wanted to know, but the through line of all of this is all kinds of negotiation with all kinds of people and case studies and advisory clients and doing quite a bit of it myself for my own account and so on.
That's when I saw your podcast, I said, wow.
And that's actually what led me, Kwame, to this podcast that I've recently launched.
It will in no way be a competitor to yours because it's a newbie, but it's called DealCraft, Insights from Great Negotiators.
And kind of based on my career and all of the great negotiators that I had interviewed over time, many of them recorded or videotaped, I just thought, you know, I'd like to share some of these with a much wider group.
So on September 9th, we launched DealCraft and it's had a nice reception.
You know, the British papers have really liked it.
You know, Guardian made it a top pick and so forth, but my particular favorite was a write up in The Spectator, which said that I have a gravelly, authoritative, somewhat soporific voice that suggests expensive whiskey and oak panel boardrooms and to look out when Sabinius proposes something because it
will sound reasonable, but you will regret it.
I wanted to put that on my business card.
So what can I say? This profession takes you in odd places, but that's kind of, you said, what do I do?
You got an earful. Yes, Jim, I love this.
This is great. And listeners, remember, we're going to link to the podcast DealCraft in the description.
An exceptional show with an exceptional host and incredible guests.
The quality of guests that you have, Colin Powell, Condoleezza Rice, some really heavy hitting people.
So everybody make sure to check out that show.
And Jim, it's fascinating because you have an incredible background, an incredible bio, and you handled some of the highest level negotiations.
And one of the things that you didn't mention is the book.
The book, that's when I first was introduced to your approach, and it is phenomenal.
And I'd love to spend some time digging deeply into your methodology because it's unique.
It stands alone in the way that you approach DealCraft.
So can you tell us about negotiating in 3D?
Sure. And this is a set of concepts and skills that I developed very closely with my friend, co -author, and business partner, David Lacks.
The two of us had been advising on and writing about negotiation for a while.
And we realized that what most people think of when they hear the term negotiation and what the majority of advice has to do with how you handle what's going on at the table.
What the direct personal interaction, what the tactics, what the psychological approaches are, when you're engaged specifically with your counterpart.
So it's really the people side of negotiation where you get the most advice.
We just call that, you know, summarize that as tactics or what you do at the table, as sort of the first dimension.
And it's really important because it can be the difference between making a deal and a bad tactics or, you know, a bad interpersonal style can screw one up.
So that's the first dimension, tactics.
The second is familiar to people, but less of a focus.
And the second dimension is really the substance of it.
And we call it deal design.
And that's the art and science of crafting agreements that unlock value and do so ideally on a sustainable basis.
And when I say value, obviously, that means often financial value.
But value in a negotiation is whatever somebody cares about that's at stake in the process, whatever their interests are.
So if I'm, you know, if I can enhance your reputation and that's really that's really valuable to you, that's value.
If, you know, if if I care a lot about fairness and the relationship, that's value.
If I care about the precedent that this sets, that's value.
And similarly for you.
And how do you craft an agreement that unlocks value and does so on a sustainable basis?
And that's the second dimension or deal design.
People are familiar with that because if you think of the first dimension is sort of the people side and the second dimension is really the substance.
And it's reflected in a contract or a term sheet or, you know, an understanding or a treaty memo of understanding.
Those are those are how you reflect the deal deal design.
The third and less familiar to to most people, but something that great negotiators just do, I would say almost instinctively is what we'll call setup.
And those are the moves away from the table to make sure that you've got the right parties brought into the process in the right sequence under the right set of expectations to deal with the right issues.
The right process facing the right consequences in the event that there's no deal.
And so it's kind of the architecture that puts you at the table in the most promising possible situation to to realize the deal that you're that you're looking for.
And what does this actually mean?
You know, it means picking the right parties with whom to negotiate will place special value on what it is that you're bringing to the table.
It means building supportive coalitions and alliances means activating influencers on your behalf, mobilizing supporters, thwarting would be blockers, enhancing your walk away option or in negotiation jargon.
People talk about your bat in the best alternative to negotiated agreement.
You typically want to have a better no deal option.
And in some cases, you want to worsen that of the other side.
But what I've found and what certainly are great negotiators, whether they are conscious of it or not, that actions away from the table are often as or more important than what you do at the table in enhancing your chances of realizing the deal that you want.
And it's just I mean, if you if you'd be interested, I have a couple of quotes from some of the very best negotiators, you know, it's Charlene Barshevsky, who is, you know, headed the International Law Department at Wilmer Hale in Washington, you know, a top international law firm.
And she was also the trade representative for the U .S.
for a while. And she told me tactics at the table are only the cleanup work.
Many people's mistake tactics for the underlying substance and the relentless efforts away from the table that are needed in order to set up the most promising possible situation.
Once you actually face your counterpart, when you know what you need and you put a broader strategy in place, then the negotiating tactics will follow.
I think that's a little too strong because most of us have to think about tactics.
But again, it's kind of the have you done all those things?
Steve Friedman, who who managed Goldman for a good while, he's the one who actually brought private equity and mergers as a special category rather than part of general corporate finance.
And he told me silver tongues and tactics can be a sideshow as chess masters know success at the table flows from advanced preparation and strategically positioning your pieces to maximize leverage.
Hello, my friends. Before we get back to today's episode, I want to ask you a question.
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And you could just go on and on.
It's so interesting.
Just just to put a number on it, Marty Lipton, who is really the de facto dean of New York's takeover legal specialists and Wachtell Lipton is probably the top takeover merger and acquisitions firm.
But he basically said when he was talking about comparing people who are really good tactically versus people who set up the situation advantageously.
And he said, and I can quote him, he basically said, the effects of adding another interested party at the front end of a corporate acquisition negotiation.
If you compare that with the effects of simply negotiating more effectively with your counterpart at the back end of the process, he said basically the ability to bring that other person into a situation is far more important than the extra dollar a share at the back end.
At the front end, you're probably talking about a 50 percent improvement.
At the back end, you're talking about one or two percent.
And so these are people who've done probably more deals than almost any human beings on the planet.
And it's just interesting that they say, look, all of the work that you do away from the table to set up the most promising situation is really valuable.
And of course, I should probably offer you a couple of examples if your listeners would be interested.
I mean, here's one that was one of the first ones that kind of helped me to articulate this.
And there was there's a company was called Arizona Scientific and it developed an advanced technology for detecting leaks in underground gas storage tanks at service stations.
And the EPA, the Environmental Protection Agency, was in the process of proposing new regs.
And this new tech that Arizona Scientific had developed was one hundred times more accurate than the existing technology was faster, better, cheaper to install.
And it could detect a gasoline leak, the volume of an eight ounce drinking glass.
And the board, you know, when they figured this out, the board pressed management.
They said, you got to fast track this.
You got to commercialize it because, you know, with these new regs coming into place, this will be this will be really, really terrific.
And the new regulations did come through.
The new product was commercialized just in time without a doubt.
It was faster, cheaper to install and much more accurate.
And the sales engineers went out to, you know, all the kind of potential customers who run gas stations, effectively, mostly the large majors.
And they walked away and they only had they only made one sale.
You'd sort of say, what happened?
You know, these guys have terrible personalities or were they just too techie and couldn't bargain?
They didn't like look them in the eye and know how to close.
I mean, what was the problem?
And first of all, they made the classic problem because they didn't really think about how potential buyers would see their interests, especially since the EPA regs still said you could, you know, in a 20 ,000 gallon tank.
You could permit, you know, multiple gallon leaks.
But this new device caught leaks that were, you know, eight ounces or less.
It was faster, better and more accurate meant PR and legal trouble, you know, cool device, amazing tech.
I think our competitors should definitely have one on every tank.
You know, so it's a classic mistake.
Now, that's not a 3D business.
That's just focusing on your own view of things and not understanding the other side's conception of value.
And that just led to no deal.
I mean, it was clearly a failure of tactics and deal design.
Problem is, even if they focused on the other side's interests and they had more persuasive tactics, that's unlikely that anybody's going to buy this thing because it just looks like trouble.
So how might they be more successful?
And, you know, if I had been advising them, I think I would have imagined I would have said, probably you should team up with a larger, more politically influential partner.
And spent efforts then working in Washington to get the EPA to require best available technology.
And that would have been.
And then you would have it because it's better, cheaper, it's easier to install and cheaper to install.
And it has environmental benefits.
If you've put that in place, imagine the negotiations that you then have, you know, you basically, you know, you would basically have captive customers for a good while.
And, you know, in that situation, if you think about their interests and no deal balance, and are you negotiating with the right person?
And the answer there was almost certainly not.
The setup was just all wrong.
And in addition to, you know, the deal that they proposed and wanted and the tactics probably weren't very effective.
But it's, you know, I mean, that's a simple case, but it's, you know, it's frequently, you know, I had a guy call me in my office some years ago and he was in a high tech.
He was in a firm that made high tech auto parts.
That was a Chicago based firm.
And their board had decided that they wanted to do a joint venture in Mexico.
And they had done a partner identification process.
And they identified three potential partners in Mexico, and it would have offered some tax and trade and other benefits to pull off this JV.
One of them was clearly superior.
A second was a very good potential partner.
And the third was certainly adequate, but no great shakes.
And so, you know, so they sent down some people, you know, they sent a letter describing what they proposed to do with a joint venture.
And it was certainly advantageous to the Mexican counterparts if they pulled this off because, you know, there would be capital technology, better market access to the US market and so forth.
And so it was an appealing, you know, appealing thing.
And the first Mexican firm said, yes, they love to talk.
They did talk. There seemed to be some level enthusiasm and then things just kind of got a little sour.
It was hard to hold meetings.
Calls and emails were returned.
And they, you know, and this guy, he's calling me and I'm telling you what he was telling me in my office when I was when he was talking to me.
And he said, so we, you know, so we did some investigation of like what went wrong and we realized we totally screwed up.
You know, we sent down, you know, the engineering managers who would actually run the joint venture and they sent the head of the family that owned the company.
And there was a big status mismatch.
You know, it was almost, you know, offensive that way.
And our guys really wanted to get into a discussion of the deal once the concept was clear and both sides liked it.
But the Mexican counterparts wanted to get to know better and they wanted to talk about a range of things that didn't really have to do with the deal, basically establishing some more of a relationship.
And our guys were kind of impatient and kind of forced it a little bit.
And, you know, they had a translator, but they didn't speak Spanish.
And their Mexican counterparts talked with some pride about, you know, the Mexican Revolution and the national nationalization of the oil industry and, you know, stuff like this.
And finally, our guys, you know, this guy said, our guys just said, look, we're engineers.
We don't know anything about American history, let alone Mexican history.
We're talking about the future, not the past.
Right. And so, you know, total screw up.
So this guy is telling me and I thought, OK, that was not that's not a big success.
So they so he then so he said, now we think we fixed these things because we are now talking to our second to the second most desirable J .V.
candidate. And we sent senior management down first, which is good because there was a status equality there.
We we made a point of having at least three long dinners beforehand so we could kind of get to know them.
They could get to know us.
We brought pictures of our kids, our pets.
We talked about, you know, Mexican players on the Cubs and the White Sox.
And, you know, it was like, you know, OK.
And it was hard not to talk about the deal, but three long dinners and talk about the deal.
And we got our staff to make us cards that had some highlights of Mexican history and a couple of words in Spanish, manana tequila, you know, cerveza in any case, stuff that was.
And, you know, and the other guys like this.
But again, the guy said, you know, it's again, things are turning.
They're starting to go south and the atmosphere is turned and we're you know, it's just not working very well.
And it's I don't know if we're going to be having more meetings even.
And, you know, if you stop and you say, what do you think is going on here?
You know, and you can imagine a lot of things.
I mean, they're sort of treating Mexican Firm A as if it's a clone of Mexican Firm B without really getting it.
They were kind of going through the words, but not the music.
You know, in terms of relationship, it was a little bit pro forma.
You know, there's a lot of cross -cultural stuff that's going on.
But also think about this for a moment.
They are, you know, the way that they've set up this process is they went to the most desirable firm first and now the next desirable firm.
And they're about to screw up the second firm.
Do you think these three firms talk to each other and know each other?
Answer? Yes, yes. Right.
But they didn't mean the situation.
And, you know, and I said, why did you choose to do this sequentially?
You know, and, you know, he said, well, it's kind of like an engineering test.
You know, you go to the most promising first and if that fails, you go to the next promising and so forth.
Great engineering logic, terrible negotiating logic.
If you ask what's happening to your no deal options or your baton in negotiation jargon, because once you've blown up the first firm, now you've only got the second and third, which are obviously less desirable.
And now the second firm, if you blow that up, you're going to be stuck with a third in this situation.
And, you know, it's kind of like you're on a tree branch and you're sawing it off and it's getting shorter and shorter.
You know, and I said, why would you do it this way?
And so an interesting question is, again, the set up to go there and negotiate sequentially essentially means if it's not working and the firms are at all talking to each other, you're, you know, you're basically getting getting yourself in a worse and worse position.
So how might they have done this differently?
And first of all, how can you salvage where you now are?
And, you know, what I said is keep number two warm at all costs.
Then open up conversations with number three and begin to offer them something that will actually be a competitive threat to number two, you know, desirable tech transfer or more capital and so forth.
Well, they did that.
And all of a sudden firm to got really interested again and then, OK, start offering them, you know, a really appealing thing that will enhance their competitive position with firm number one.
Guess who came back into the game from number one?
And that's where they did.
I mean, it was. But if you step back and you think about it, they went to Mexico and negotiated in sequence without really thinking about it.
I mean, they had a superficial logic, but it was there.
If you think about this differently, what about going there and negotiating in parallel?
In other words, you open up a conversation with these.
In fact, I wouldn't even call it a negotiation.
I would, you know, getting to know them, getting to understand more, you know, what they're really about and so forth.
And frankly, what you thought was the case, you'll probably learn more with directly in dealing with the people.
And then you could begin to work.
And if one begins a little demanding, you can play them off against each other and so forth.
So that would clearly be better for an important negotiation of this kind.
But couldn't you do even better?
How about if instead of going there and negotiating in sequence, you get them to come to you and negotiate in parallel?
How could you do that?
Well, you know, you've got capital and you've got technology and so forth.
There's going to be Mexican investment promotion authorities, other people.
Let it be known that you've got this really interesting proposition for a Mexican counterpart.
Have them come to you and negotiate in parallel then.
In other words, none of that had to do, I mean, it had everything to do with the right culture and the right tactics and the right deal.
But the set up was so different.
Go there, negotiate in sequence versus have them come to you and negotiate in parallel.
Just radically different.
I mean, there's lots of other examples that we can use.
And I sort of deliberately picked a couple of commercial examples.
But when you talk to people negotiating really challenging situations or, you know, some of these diplomatic deals or really high end business deals or otherwise, the way that the set up is orchestrated is often way more important than what you do directly at the table.
Now, that's not to say the first dimension that we have is how you deal with it.
So, you know, if you think of set up, deal design and tactics and kind of that's that's your overall assessment.
You typically have a target agreement in mind that you'd like to have come out of this.
And then what you often do is what we'll call a barriers assessment.
You ask a systematic version of the following simple question.
What stands between you and the deal that you would like?
Is it, you know, is it tactical questions, trust, lack of communication, cross -cultural differences?
Is it people issues?
Or is it substantive issues?
You know, is does the deal make sense to both parties?
Does it meet the interests that they have to have met?
Is it as good as their alternatives?
How about yours? You know, so substantively, is that the barrier?
Do you have the right set up?
You know, in the examples that I mentioned, those two examples, the, you know, the gasoline tank monitoring one and the Mexican joint venture, the set up was all wrong and it was unlikely that you could salvage it otherwise.
But in any case, so that's that's what I actually mean by the 3D method.
And what often I've found happens and certainly in my advisory work and in even small seeming negotiations, instead of thinking about doing a deal, I'm increasingly thinking about orchestrating a negotiation campaign.
So typically, there's a target deal that you'd like to realize, and you need enough support to make the, you know, for the other side to say yes and be implemented and ideally be sustainable.
That's what you're shooting for.
But what are the, what deals do you need to have in place to make that deal most likely?
And many times you'll have a number of different parties on a number of different fronts.
You might have a regulatory front and a financial front and a labor front and a, you know, a competitor front, you know, a series of these things that will interact and you need to think about how you deploy your team so that you've kind of sequenced the process in an orchestrated sequential multi -front
negotiation campaign that adds up to the best shot at realizing the deal that you're hoping to get.
Now, that's a lot of stuff to pack into one, you know, statement and the two examples I gave were much simpler than those.
But negotiation campaigns, as opposed to just doing a deal, we found in all kinds of, you know, all kinds of negotiations just turns out to be a helpful way of thinking about it.
What are the fronts?
And within each of the fronts, you were looking at all the standard things.
Who were the parties?
What do they care about?
What's their no -deal option?
You know, all of the things that any good negotiator does.
But that may be more than you wanted on kind of the essence of 3D negotiation, but that's what's distinctive.
And I think what I find is, you know, there's so many different approaches to negotiation.
So Roger Fisher and Getting TS, you know, Getting TS, one of my closest friends is Bill Urie, and we shared a house together in graduate school and helped to start the program on negotiation as sort of the graduate student gophers.
And I actually take the role now.
I had the Harvard Negotiation Project, which is what Roger Fisher used to add, even though I'm not an attorney, but I do that over at the law school.
And, you know, and at the business school, it's mostly business and financial negotiations.
But across the university, I teach a course with colleagues called Negotiation and Diplomacy.
And so that's mostly sort of public sector and diplomatic negotiations.
Problem is we can't teach it now because I jointly taught it with a colleague from the law school, Bob Mnookin, retired diplomat from the Kennedy School, Nicholas Burns, Nick Burns and myself, and I was from the business school.
So it was three professional schools and we took students from each of the schools and it was really a fun course to teach.
Had to put it on ice a couple of years ago because Nick left and he's now the U .S.
ambassador to China.
So it's, you know, so we knew that they were the students were getting something good out of it.
But any case. So this is this is kind of the you know, this is a world that I get a great kick out of.
And I have to say, you know, I've talked about some of these name negotiations and so forth.
But I I really enjoy negotiations that nobody ever heard of, you know, people who come at this without much in the way of formal education, but are just remarkable negotiators.
And, you know, one, I I I saw a woman in my office late earlier this week who about 10 years ago, I had written a case, a couple of cases on her name is Sarah Fry.
And Sarah was the youngest of 21 children on a kind of dirt poor farm in southern Indiana.
And her parents were pretty good at having kids, but not so good with money.
And the farm was about to get repossessed, which is about 15.
And she somehow caged a pickup truck and started to sell watermelons to the local Walmart.
And she got really good at this and and got the bank to sell her the farm.
And she let her parents live there.
And, you know, they 16 or so.
And then she begins this process whereby she becomes, you know, a major seller of watermelons and catalogs and gourds and so forth to to to to Walmart becomes the equivalent of the supplier of the year, you know, equivalent to Del Monte and so forth.
She now has farms in 17 states.
And, you know, she's negotiated into all the major retailers in the country and done all this stuff.
And, you know, she barely went through high school.
And, you know, and I love doing case studies on people like her because you just just they.
And but you watch what they do.
And a lot of what they do is kind of you think about it.
But a lot of it is just instinct and judgment and experience.
And then you kind of say, all right, that's a fascinating story.
What can we extract from that story that would be valuable for other people?
And in fact, one of the things that you know, that Sarah was telling me about how she wanted to become the equivalent of a tier one supplier to to Walmart.
And she knew and she she she applied to be one.
And the the the the product, the product line specialist at Walmart basically said, you know, you're you're basically a nothing and you want to be one of our top suppliers.
And you're frankly, it's it's offensive.
And we're going to we're going to demote you.
And so she was actually dropped down.
So she said, OK, how am I going to turn this around?
And she knew people in the fields and she knew people at some of the stores and so forth.
And she built this campaign because, by the way, this the the chairman and CEO of Walmart at the time, a guy named Lee Scott said, if you ever don't feel like you're being treated right by our organization, you come directly to me.
Here's my email address.
So I said, Sarah, is that what you did?
She said, are you kidding?
That would be the stupidest thing ever.
And so she kind of works up this process whereby ultimately she has all these supporters and becomes the supplier of the year.
I mean, you know, and that was Walmart and this other stuff.
And you sort of said and I said, so, Sarah, let's talk this through.
And and then I said, so basically you had a negotiation campaign, right?
She said, yeah, I never thought of it that way.
But there was this front and there was that front.
And, you know, and she and she's sort of famous for saying, no, it's just a bump on the road to yes, which I kind of like.
And, you know, just this, you know, everybody wants to make a deal.
They just don't know it yet.
And anyway, all this kind of stuff.
But it's you know, and, you know, and then there are other people, you know, as I mentioned, one of our great negotiators was James Baker, who I very briefly worked for, worked for indirectly when I was in the government.
He was in his first government job up from Texas.
Baker, you know, for the first 40 years of his life was an oil and gas lawyer in Houston.
His grandfather had started Baker bots, which is one of the major law firms there.
And he had four kids and tragically at age 40, his first wife died.
And he told us that he, you know, almost became an alcoholic, you know, with these responsibilities and this grief and his tennis buddy, George H .W.
Bush, was going to run for Senate in Texas.
And to kind of pull Jim Baker out of his funk, he said, well, you help manage my campaign.
And Baker got the political bug, ended up managing five presidential campaigns, ended up as secretary of Treasury and secretary of state and so forth.
But we, you know, we honored him.
He was a terrific oil and gas lawyer.
And it's funny, his grandfather, who was very influential in his life, said, study hard, work hard and stay out of politics.
He didn't he didn't follow that order at all.
But, you know, he's the guy who put together the, you know, the political and military coalition to kick Saddam Hussein out of Kuwait.
He was really the brains behind the integration of Germany, of East and West Germany into the Federal Republic of Germany within NATO, which was almost unheard of because the Russians, how could they possibly let the enemy alliance, you know, which was remember as the Warsaw Pact versus NATO.
He pulls that off peacefully, you know, and the Madrid Conference and so forth.
So Baker was really, really impressive.
And we learned a ton from him on this.
And in fact, we had honored him as one of the great negotiators in, I guess, 2012.
And that led us to say, you know, this guy who was a pretty tough Texas conservative, he wowed relatively progressive Harvey, Harvard audience.
And so that's where we decided maybe what we should do is go back and interview all the former U .S.
secretaries of state and ask about their most challenging negotiation and what they learned.
So kind of brazenly we, you know, we went back to Henry Kissinger, who had not been in the Harvard classroom for over 40 years, because after Vietnam and Cambodia, he was sort of persona non grata.
But we came back to press him on his negotiations, you know, to open China or detente with the Soviet Union or arms control or the 73 war where he negotiated disengagement agreements that have held to this day between Egypt and Israel and, you know, and, you know, and just a series of things, including
some failures. But we ended up, you know, well, two things.
We ended up asking all the former secretaries of state to come and spend a day or two with us after we did a lot of research and agreed on what their most challenging negotiations were.
And then, you know, videotape them, some in front of big audiences and some in private sessions.
But, you know, with Henry Kissinger, George Shultz, Jim Baker, whom I mentioned, Madeleine Albright, Colin Powell, Condoleezza Rice, Hillary Clinton, when she was secretary under Barack Obama, John Kerry, Rex Tillerson.
And for a while, Mike Pompeo said no to us.
I think he was hoping to run for president and he was allergic to Harvard.
But but he's recently said, no, this, you know, realizes that the process, we're just trying to learn.
We're not trying to score political points or anything.
And so I think he's going to come through as well.
But we actually ended up writing a book on Kissinger, the negotiator, and he's sort of like the ultimate 3D negotiator because lots of people have written books saying Kissinger was a war criminal or Kissinger was a brilliant strategist or on, you know, the China negotiations or others.
And we said, if we look across all of his negotiations, what can we learn?
And, you know, because he was so successful in so many respects, people understand the statecraft, you know, the kind of grandmaster moving the chess boards on moving the global chess pieces on, you know, on a massive on a massive board.
But the negotiating piece is far less well known and it turned out to be fascinating.
And so we ended up, you know, writing a book called Kissinger, the negotiator, I say, we, my two colleagues, Nick Burns and Bob Nukin and myself.
And so it's, you know, and actually in retrospect, I sort of think of him as the ultimate 3D negotiator, you know, you look at the case studies, you know, one that's it was almost nobody is familiar with.
But after the US lost in Vietnam and he was in Nixon had resigned, there was a real concern in southern Africa that the Cubans and the Soviets and the Chinese were basically making inroads and the critical minerals and so forth.
And so Kissinger wanted to stop that.
How could he do it?
Because the US was not about to do any more military adventures.
They weren't going to spend a lot of money abroad.
So how might you do this?
And he came up with a plan 17 years before Nelson Mandela and and and declared agreed to end apartheid in South Africa.
17 years before that, he basically worked with the Non -Aligned Movement and the frontline states, you know, especially Julius Nerei of Tanzania, who was something of a of a hero of the Non -Aligned Movement.
He basically said if we can get what was then called Rhodesia, now Zimbabwe, and if we can get the head of Rhodesia, a guy named Ian Smith, to permit black majority rule within two years, will you agree to keep all foreign forces out of southern Africa?
And I mean, it wasn't quite that brazen, but that was the basically the deal.
Well, how are you going to get Ian Smith, who said black majority rule will never come to Rhodesia, not now or in a thousand years?
Okay. So how does Kissinger without money, without military, and how does he orchestrate this?
And he goes around Africa, he sort of builds a coalition, and then he persuades the only country that recognized Rhodesia, which is South Africa, to get on side and persuade Ian Smith to accept black majority rule, which is incredible, because then that would leave only South Africa with white minority
rule in that region of the country.
How he does this, it's an absolutely extraordinary and largely forgotten story, you know, in this situation.
And it's, you know, I'd love to tell you, but I mean, we're a little bit off on these things.
But as you can tell, I'm sort of a deal junkie.
And, you know, and I just get the I, I'm very fortunate to have, you know, the chance to learn from a lot of great negotiators and, and, you know, and work with some of them and and then try to write it down in a way that will be helpful to other people.
That's really what I think, what I think I enjoy most, or what gives me the most treasure.
And we love this because the stories complement perfectly your methodology.
And I think that's what makes this so legitimate, because this is not just existing only in these theoretical models.
We're seeing this in real case studies with real people at all levels, right?
Starting from somebody who is the 21st child on a farm going all the way up to Kissinger negotiating at these incredibly high levels.
And I think that's what makes your approach so robust.
And the one of the things that I hear very frequently is there is a constant concern about negotiating without power.
How do I negotiate effectively without power?
Because we recognize that there is only so much being empathetic can get you.
And when you think about it in terms of your model negotiating in 3D, we only focus on that first dimension.
We recognize that tactics only get us but so far.
So for people who are recognizing that they are at a power deficit, and it seems like everything is against them.
How can we use this model to start to balance those odds?
So there are multiple approaches to that.
But frankly, the most interesting negotiations, from my perspective, are cases where somebody feels like they've got a very weak hand, and the other guy has a strong hand.
Because it's really nice when you're in a power position, and you say, how do I deploy a strong hand effectively?
That's a nice problem to have.
And it's not super simple because sometimes people who are in a power position piss off others and everybody loses.
Or they stimulate a counter -coalition of a lot of people who themselves are scared, and they get together.
But the question of how do you negotiate when the other side seems to have more power.
And it's really worth asking why it is that they have more power.
What gives it to them?
Is it the fact that, in other words, they don't really need the deal and you really do, and they know it so they can squeeze you?
I mean, is that what it is?
In other words, if they have really good alternatives, if they say no, it doesn't really matter to them.
And if you say no, it's a big cost to you.
That's a pretty common situation.
Or you have a lot of competitors and they're maybe offering better deals or you think they're offering better deals.
The buyer that you're trying to get to take your product, they're saying, well, look, you got to match all these other conditions and so forth.
You just feel like you're really, you know, your back's up against the wall.
And I think that the real, you know, probably the best advice that I can give in situations like this is to diagnose what the barriers are that make it feel to you like you're not in a powerful position.
And then you want to ask, what is your power?
What is it that you have that they actually want?
And what are your alternatives and what are theirs?
Because sometimes instead of just beavering away at a deal where you feel like you're at a disadvantage, you should spend some of that energy building up alternatives to that deal.
Because sometimes you'll find that you could do, you know, you feel like there's a car that you really want, and they know that you want it.
And maybe you should look at buying a couple other cars and get that in your head, you know, to do.
Maybe you should, you know, in a situation, hire better lawyers if it's a lawsuit situation.
In some cases, what you want to do is worsen the alternatives of, you know, the other side.
I was telling you about Michael Jackson's lawyer, John Branca, who I've gotten to know pretty well and in fact, work with some.
But there was a situation where he wanted to buy the Beatles catalog for Michael Jackson, who had decided that with his money, he wanted to buy songs, the publication rights to the words and the music and so forth.
And he was and Branca was a relatively young lawyer.
The guy who had the who had the catalog was an Australian billionaire.
And he let his negotiating counterparts know, he said, look, the North Vietnamese didn't play by the rules and they beat the Americans.
And I don't play by the rules either.
Let's talk. And so this young lawyer in his early thirties Jackson has basically said, I want that catalog, don't over negotiate.
You must get the catalog, but do not overpay.
OK, so they're all these people who are very interested in that catalog.
And how is Branca going to handle this situation?
And, you know, and and the guy reneges on three or four deals that he's that he's done with Branca.
And then and then some other people come in and they top his bid significantly.
And so, you know, what's he going to do?
Because Jackson told him not to spend too much, but don't go on without it.
Right. So, you know, he could try to spend more, but he was already way above what the major record companies were willing to pay.
And otherwise, you know, so it was really, really dicey.
Well, we'll have to think about the ethics of this.
But he finds out where the financing of the people who made the top bid actually came from.
And the financing came from a record company that is now headed by a guy who who they had hired for the victory tour of Michael Jackson and otherwise.
And and Branca was beginning to look so and he said, look, if you want Michael Jackson to help you in this circumstance and you want me to help you because I'm an upcoming, you know, you know, an upcoming music lawyer and so forth, you might think about whether you really do want to finance those guys
or not. Because after all, in the victory tour, you were on Team Jackson and now are you going to effectively take that away from him?
And so he said, I think I will pull their financing.
So the top bid, the financing fell through.
Branca does this. Now, that's a little unorthodox, but he was in a very weak position in that circumstance.
He sort of thought more broadly and said, OK, now most of us don't have that kind of option, but almost nobody had thought about that either, you know, in those those kind of situations.
And again, that like most things in negotiation, that raises some pretty challenging ethical questions and so forth.
But lots of you know, you want to typically build alliances.
You want to really understand what they care about.
You want to, you know, because your power in a negotiation is the added value that you represent compared with what they would do otherwise.
And the better you understand that, the more you can orchestrate the process so they see that advantage in dealing with you.
And, you know, I'm thinking of examples of people who were really tough players in major companies who were pushing hard on, say, small suppliers.
And the question really became, what did the technology of the smaller supplier have that, in fact, was better than what the competitors were offering, even though these were bigger competitors?
They were confident that they had something of an edge.
But how could he demonstrate that?
And what they ended up doing is they went to some of the people in the company said, would you like to use this, you know, for free?
And these were people in the company who valued that technology.
They were starting to use it.
And they were influential enough that they could go to the buyer and say, we actually want this.
So rather than try to persuade the buyer to take, you know, when you're small and they're big, they have lots of options.
If you could go around it and persuade the actual users for free to use it, and then they put pressure on the buyer.
Again, you can find this.
I mean, there's never a simple solution to, you know, to dealing with, you know, a weak bargaining position.
But it's your power.
You really have to understand where your power is, where their alternatives are.
Many times work on your alternatives or alliances or people who are influential with respect to them.
But if you just look straight at the, you know, and, you know, look, a simple example from many of my students, they want to work for a very desirable firm.
And maybe they work there in the summer.
And now they're dealing with HR.
And, you know, HR is saying, well, here are the conditions and they're not very appealing, you know, because they know they want, you want to work there.
So they're squeezing you a little.
Can you work with the people who hired you over the summer to lobby the HR people to get you and, you know, basically say, look, you know, and you can go from there.
But again, it's not necessarily how you persuade somebody directly and interpersonally.
You often need to go more broadly to, you know, to understand where power can be generated.
But, you know, there's lots of such examples anyway.
Oh, Jim, and I could talk to you about this forever.
This is fascinating.
And I think the listeners might be saying to themselves, well, Jim, is there anywhere else that I can listen to such deal craft?
Is there any other podcast that they could go to where they could learn more from you?
What a great title.
Where did you ever come up with that anyway?
So you're very nice to you're very nice to mention that.
And on September 9th, we launched deal craft, insights from great negotiators.
The very first one is how Michael Jackson, how that thriller, the first music video that ever made it to the to the Library of Congress's registry of great, you know, of great films and has been seen by more people.
It almost was never made.
And in fact, it was almost destroyed at Michael Jackson's insistence.
And how that ended up happening is an extraordinary negotiation and that you can hear about.
And then you could hear about critical moments in negotiation or, you know, or a form student that, you know, at HBS, Deb Stoller, who came up with a product called Unshrink It, which took wool sweaters that had shrunk.
And you could put them back and it actually worked.
And she and her and her co -founder, actually, when they were at the business school, ended up ended up on Shark Tank.
She ended up negotiating with Mark Cuban and turned down.
And it's like, you know, and she's just this extraordinary young woman.
You can hear a couple of broadcasts of Steve Schwartzman, who I worked for for a number of years.
And I said, Blackstone is, you know, Forbes calls Steve the Wall Street's greatest deal maker and or, you know, Tommy Co, or dealing with Vladimir Putin or all kinds of stuff.
So I hope that people will, you know, will enjoy cool deal stories and find some insights from it.
But that's Dealcraft.
3D negotiation, of course, is a book that we wrote some years ago, but we've been expanding on that since.
And that certainly informs much of what's there.
And I think they had to listen to your your podcast.
I've been listening to some of the episodes and each time I learned.
So thank you. Thank you.
Oh, that means the world to me.
Jim, thank you so much for joining us.
Really appreciate it.
Well, I appreciate it.
And thank you. Take care.
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