Global Negotiation: The New Rules

Global Negotiation: The New Rules

by William Hernandez Requejo, John L. Graham
     
 

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Each year American executives make nearly eight million trips overseas for international business. In the process, they leave billions of dollars on the negotiation table. Global Negotiation provides critical tools to help businesspeople save money (and face) when negotiating across cultural divides. Drawing on their more than 50 combined years of

Overview


Each year American executives make nearly eight million trips overseas for international business. In the process, they leave billions of dollars on the negotiation table. Global Negotiation provides critical tools to help businesspeople save money (and face) when negotiating across cultural divides. Drawing on their more than 50 combined years of experience, as well as extensive field research with over 2000 business people in 21 different cultures, John L. Graham and William Hernández Requejo have discovered how to create long-lasting commercial relationships around the world. The authors provide a rare combination of practical insight and illuminating anecdotes, and offer examples from well-known companies such as Toyota, Ford, Intel, AT&T, Rockwell, Boeing, and Wal-Mart.

Editorial Reviews

From the Publisher

“For many American businessmen, learning and understanding the principles of successful international negotiations is a daunting and seemingly impossible challenge. This book is helpful in providing useful insights and guidelines. It will become an important resource tool for not only beginners but also experienced veterans in dealing with the cultural and strategic nuances in cross-border negotiations. It is a must read.” —Dean Yoost, retired Senior Partner at PricewaterhouseCoopers

“In an ever shrinking and fiercely competitive world, this book provides the reader with up-to-date rules of engagement for successful negotiations.” —Manuel Junco, Sr. Vice President, Downstream Business Line for Fluor Daniel

“In today's business world, cultural misunderstandings can be deal killers. "Global Negotiations: The New Rules" gives executives the tools they need to navigate difficult waters. John Graham and William Hernández Requejo have filled this volume with crisp, actionable advice that will lead to creative business partnerships and build success in international markets.” —Bill Amelio, CEO, Lenovo Computers

“My work is hands-on. We negotiate multinational transactions all the time. In doing so, John Graham and William Hernández Requejo's book will be instrumental in assisting us to better understand the dynamic nature of global negotiations. It is a necessary book for those that seek to be competitive in the international arena.” —José Luís de Mora Gil-Gallardo, Corporate Development, Banco Santander

Global Negotiation: The New Rules, is a great guide to driving thoughtful, productive negotiations across borders.” —Michael Delman, Corporate Vice President, Microsoft Corporation

Product Details

ISBN-13:
9781403984937
Publisher:
St. Martin's Press
Publication date:
03/04/2008
Pages:
272
Product dimensions:
6.41(w) x 9.25(h) x 0.81(d)

Read an Excerpt

Global Negotiation

The New Rules


By William Hernández Requejo, John L. Graham

Palgrave Macmillan

Copyright © 2008 William Hernández Requejo and John L. Graham
All rights reserved.
ISBN: 978-1-4039-8493-7



CHAPTER 1

ADAM SMITH, JOHN WAYNE, AND THE AMERICAN NEGOTIATION STYLE

He fishes well who uses a golden hook.

—Latin proverb


We fully appreciate that not everyone reading this book is an American. Indeed, we trust our topic truly has global implications, so we expect many of you are not. Our fundamental advice here, Rule #2, still applies whether you're Indian, Mexican, or Chinese. You still need to understand your own culture to be an effective international negotiator. Indeed, we provide help in this regard for many people on the planet in Part III of the book and on our associated website—www.GlobalNegotiationBook.com. Therein we provide summaries of the cultures and negotiation styles we have observed around the world. Even if you are not American, reading this chapter will help you work with your American colleagues, clients, and customers.

Before we address the origins of cultural differences (chapter 2), their impact on business systems (chapter 3) and negotiation styles around the world (chapter 4), and the influences of personality and background on negotiation behaviors (chapter 5), we need to first address the unique style of business negotiations that comes natural to most Americans. Our story starts in New Jersey.


THE IMPORTANCE OF CULTURE (NEW JERSEY)

Some years ago John Graham attended a conference on international business alliances sponsored by the Rutgers and Wharton business schools. Now, New Yorkers reading this probably see a Jersey joke coming (culture in New Jersey?), but the keynote speaker at the conference started out a bit differently.

"You've all heard the story about the invention of copper wire—two Dutchmen got a hold of a penny." This bit of anecdotage was served up during a dinner speech by the American president of a joint venture owned by AT&T and Philips. At one level, the story is a friendly gibe, although the professor from the Netherlands sitting at our table didn't appreciate the American's remarks in general nor the ethnic joke in particular. Indeed, at another level, the story is stereotyping of the worst sort.

However, at an even deeper level there is an important lesson here for all managers of international commercial relationships. Culture can get in the way. The American president was in his "humorous" way attributing part of the friction between him and his Dutch associates to differences in cultural values. (As an aside, humor often works poorly across cultures.) He might have blamed personality differences or clashing "corporate" cultures, but instead he identified national cultural barriers to be a major difficulty in managing his joint venture. Although we do not appreciate his humor, we certainly agree that cultural differences between business partners can cause divisive, even decisive problems.

Kathryn Harrigan at the Columbia University School of Business once suggested that a crucial aspect of international commercial relationships is the negotiation of the original agreement. The seeds of success or failure are often sown face-to-face at the negotiation table, where not only the financial and legal details are agreed to but also, and perhaps more importantly, the ambience of cooperation is established. Indeed, as Harrigan indicates, the legal details and the structure of international business ventures are almost always modified over time, and usually through negotiations. But either the initial atmosphere of cooperation established face-to-face at the negotiation table persists, or the venture fails.


THE DUTCH VIEW OF THE AMERICAN NEGOTIATION STYLE (SPAIN)

This chapter is not about American bashing. You don't need us for that. There are more objective sources. We ran across this quote in Expansion, a Spanish newspaper: "Los mejores negociadores son los japoneses, capaces de pasare dias intentando conocer a su oponente. Los peores, los norteamericanos, que piensan que las cosas funcionan igual que en su país en todas partes." Roughly translated, this says, "The best negotiators in the world are the Japanese because they will spend days trying to get to know their opponents. The worst are the Americans because they think everything works in foreign countries as it does in the USA."

Part of the reason we've included this quote is it balances out the aforementioned "penny-stretching crack." That is, Samfrits Le Poole, the much quoted author of How to Negotiate with Success, is Dutch. And, we've learned to always listen to what our Dutch associates have to say about international business. As we mentioned in the introduction, as a people, they are among the great traders of the world. The Netherlands is located strategically at the mouths of the three great rivers—the Maas, the Waal, and the Rhine—that both feed and divide (the Protestant north from the Catholic south) Western Europe. Many Dutch seem to know about five languages, and seem to have lived in as many different countries.

Certainly there are some Americans that are very effective in international business negotiations. And in some circumstances, the best prescription might be something we call an American approach. However, in the pages to follow we must be critical at times, because the secondary purpose of this chapter is to get you to change your behavior. But usually meaningful changes in behavior take both time and many contacts with your foreign counterparts. In fact, the best way to learn to behave appropriately in a foreign country is by letting yourself unconsciously imitate those with whom you interact frequently. A penchant for careful observation is also crucial. Hopefully, this chapter and those that follow will help to sharpen your observation skills.

The primary purpose of this chapter, then, is to make you aware of the multiple ways cultural differences in values and communication styles can cause serious misunderstandings between otherwise positively disposed business partners. And many of these problems manifest themselves in face-to-face meetings at the international negotiation table. For example, a silent Japanese individual doesn't necessarily mean reticence, and a Spaniard's frequent interruptions shouldn't communicate rudeness to you. Are there places where American humor works? Do all Chinese reopen closed issues? When should business be brought up in Brazil? How important are foreign language skills these days? How do you tell it's time to walk away from a deal in Peru? And what does it mean to be kissed by your Russian business partner?

We cannot answer all of these questions here. Clearly, after you've finished this chapter, even this book, you'll still have more work to do. It will be your responsibility to deepen your understanding of cultural differences by asking your clients and partners directly about the "strange" things they do that aren't mentioned in our book. Such informal interactions in a friendly way will in the long run be more important than any chapter or book or course on this subject, including ours!

Now we turn directly to a brief discussion of the essence of the American negotiation style. Indeed, as Socrates said some 2,500 years ago, "know thyself."


THE JOHN WAYNE STYLE

Picture if you will the closing scenes of John Wayne's Academy Award-winning performance in True Grit. Sheriff Rooster Cogburn sits astride his chestnut mare, a Colt .45 in one hand, a Winchester .73 in the other, whiskey on his breath, reins in his teeth, stampeding across the Arkansas prairie straight into the sights of villains' guns. A face-to-face shootout with four bad guys, and sure enough, the John Wayne character comes through again.

Great entertainment, yes! We know it's all fantasy. We know that in real life Sheriff Rooster Cogburn would have ended up facedown in a pool of blood in the dust, alongside his dead horse. But it's more fun to see the fantasy nonetheless.

Such scenes from movies (think Clint Eastwood in Unforgiven, Daniel Day-Lewis in Last of the Mohicans, or even Uma Thurman in Kill Bill), television, and books influence our everyday behavior in subtle, yet powerful ways. We tend to model our behavior after such John Wayne figures. And when everyone else plays the same game, the bluff and bravado often work. But such behavior becomes a problem when we sit face-to-face across a negotiation table with business executives who haven't grown up on a steady diet of American action heroes. Our minds play out the familiar scenes. But instead of six-guns, flintlocks, or samurai swords, our weapons are words, questions, threats and promises, laughter, and confrontation. We anticipate victory, despite the odds—four against one is no problem. But we are often disappointed to find it's not like the movies. It's a real-life business negotiation. At stake are the profits of our companies, not to mention our own compensation and reputation. And like a real-life sheriff, we lose.

This scenario repeats itself with increasing frequency as American enterprise becomes more global. The cowboy bargaining style, which has served us well in conference rooms across the country, does us a great disservice in conference rooms across the sea.

Probably no single statement better summarizes the American negotiation style than "Shoot first, ask questions later," a phrase straight out of an old Saturday-matinee Western. But the roots of the American negotiation style run much deeper than movies and television reruns. To understand the American approach to bargaining, we must consider more basic aspects of our cultural background—in particular, the seeds of Western thought, our immigrant heritage, our frontier history, the fundamental competitiveness of our social and business systems, and finally, much of the training in our present-day business and law schools.


THE ROOTS OF AMERICAN CULTURE

Culture starts with geography. Our ancestors adapted social systems and thinking processes to the problems and opportunities their environments presented them. The cradle of ancient Western civilization is Greece 500 BC. Look at a map and you'll see thousands of islands. That's the prominent geographical feature of Greece. Islands allow for individualism, and isolation—indeed, the word isolation comes from the French isola, or island. If you got mad at your neighbor you could always move to another island, particularly when the seas are Aegean calm. You didn't need his or her help to cast your net. In fact, you couldn't fit many folks into your boat anyway. Of course, boats did get bigger and trade brought a flood of new ideas from all over the Mediterranean. Most would agree that personal freedom, individuality, objective thought, and even democracy have deep roots in this ancient island realm.

Now fast forward two millennia. Throughout its history, the United States has been a nation influenced by its immigrants. Certainly the continuous mixing of ideas and perspectives brought from across the seas has enriched all our experiences. Every newcomer has had to work hard to succeed; thus the powerful American work ethic. Another quality of our immigrant forefathers was a fierce individualism and independence—characteristics necessary for survival in the wide open spaces. Indeed, The Declaration of Independence both coincided with and seeded our history and national identity. But independence often does us disservice at the negotiation table. Negotiation is by definition a situation of interdependence—a situation that Americans have never handled well.

We inherit more of this island/individualistic mentality from our frontier history. "Move out West where there's elbow room," ran the conventional wisdom of the first 150 years of our nation's existence. Americans as a group haven't had much practice negotiating because they have always been able to go elsewhere if conflicts arose.

The long distances between people allowed a social system to develop with not only fewer negotiations but also shorter ones. A day-long horseback ride to the general store or stockyard didn't favor long, drawn-out negotiations. It was important to settle things quickly and leave no loose ends to the bargain. "Tell me yes, or tell me no—but give me a straight answer." Candor, laying your cards on the table, was highly valued and expected in the Old West. And it still is today in our boardrooms and classrooms.

We must also recognize the uniqueness of the fundamental driving forces behind our social and business systems. Adam Smith in his Wealth of Nations, published in 1776, well justified their emphasis in perhaps the most important sentence ever written in English: "By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it." In a stroke of his pen, Smith solved the age-old conundrum of group versus individual interests. And, through his coauthor, one Benjamin Franklin, he inseminated the philosophy and structure of the most dynamic social system ever devised by humankind. Thus, in no other country on the planet are individualism and competitiveness more highly valued.

Of course, our educational system also reflects Adam Smith's profundity. And, what goes on in the classrooms in our business and law schools in turn has a strong influence on Americans' negotiation style. Throughout the American educational system we are taught to compete, both academically and on the sporting field. Adversarial relationships and winning are essential themes of the American socialization process. But nowhere in the American educational system are competition and winning more important than in case discussions in our law and business school classrooms. Those who make the best arguments, marshal the best evidence, or demolish the opponents' arguments win both the respect of classmates and high marks. Such skills will be important at the negotiation table, but the most important global negotiation skills aren't taught or, at best, are shamefully underemphasized in both business and legal training. We don't teach our students how to ask questions, how to get information, how to listen, or how to use questioning as a powerful persuasive strategy. In fact, few of us realize that in most places in the world, the one who asks the questions controls the process of negotiation and thereby accomplishes more in bargaining situations.


THE TEN TRAITS OF THE AMERICAN NEGOTIATION STYLE

A combination of attitudes, expectations, and habitual behaviors constitutes the John Wayne negotiation style. Each characteristic is discussed separately below, but it should be understood that each factor is connected to the others to form the complex foundation of a series of negotiation strategies and tactics that are typically American. We hope it is clear that what we are talking about is the typical or dominant behavior of American negotiators. Obviously not every American executive is impatient, a poor listener, or argumentative. Nor does every American manager encounter difficulties during international negotiations. But many do, particularly when compared with businesspeople from other countries. Finally, you will also notice that almost all of the ten traits of the American negotiation style listed below ignore the new rules and the basic best practices of negotiations we described in the last chapter—knowledge, communication, and creativity.


I Can Go It Alone

Most American executives feel they should be able to handle any negotiation situation by themselves. "Four Russians versus one American is no problem. I don't need any help. I can think and talk fast enough to get what I want, what the company needs." So goes the John Wayne rationalization. And there's an economic justification: "Why take more people than I need?" Another more subtle reason might be, "Why not take full credit for success? Why split the commission?" Often, then, the American side is outnumbered when it shows up for business discussions.

Being outnumbered or, worse yet, being alone is a severe disadvantage in any negotiation situation. Several things are going on at once—talking, listening, preparing arguments and explanations, formulating questions, and seeking approval. Numbers help in obvious ways with most of the above. Indeed, on a Chinese negotiation team one member may be assigned the task of carefully listening with no speaking responsibilities at all. Consider for a moment how carefully you might listen to a speaker if you didn't have to think up a response to his or her next question. But perhaps the most important reason for having greater, or at least equal, numbers on your side is the powerful, subtle influence of nodding heads and positive facial expressions. Negotiation is very much a social activity, and the approval and agreement of others (friend and foe) can have critical effects on negotiation outcomes. Numbers can also be a subtle indicator of the seriousness and commitment of both parties to a negotiation. Clearly American negotiators are at a communications disadvantage when "going it alone."


(Continues...)

Excerpted from Global Negotiation by William Hernández Requejo, John L. Graham. Copyright © 2008 William Hernández Requejo and John L. Graham. Excerpted by permission of Palgrave Macmillan.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

Meet the Author

William Hernández Requejo is a university professor and president of Requejo Consulting, Inc., an international management consulting firm. He lives in Irvine and spends a significant amount of time in Santander, Spain.

John L. Graham is a consultant and Professor of International Business at The Paul Merage School of Business, University of California, Irvine.

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