Moneynomist “Seize the Advantage” Series of Workshops: Crossing Bridges: Negotiating Across Cultures

The following article is expanded from points based on my slide notes for my 30-minute workshop, “Dissecting the Message”, which is about project speech evaluations in Toastmasters.  This is part of the wider Moneynomist “Seize the Advantage” programme, along with Eric Tan Shi Wei, Gerald Yong Kim Heong, Margrette Lo Foong Quan, Oh Cheng Kok, and Zhuo Shu Zhen.  The Moneynomist team is from AIA Toastmasters Club, and are all past presidents.

I speak several languages, and am literate in half a dozen more.  My job normally involves talking, negotiating, closing.  We plan these tabletop meetings as if we are going to war, because we are.  This programme covers some of the nuances, and the preparations to consider before coming to the table, and the means to negotiate across cultures.

It is important for us to begin with definitions.  Imam Abu Hamid Muhammad ibn Muhammad al-Ghazali at-Tus (r.a.), the Persian philosopher and theologian once said that before we speak of a cup, it is important to know what a cup is.  It has always been my practise to begin with definitions.  Even when we speak to people who use the same language that we do, there is still that chance of misunderstanding.  We come into any conversation with the baggage of our experiences, and we view things through the prism of our level of understanding, shaped by history, by education, by our role in the relationship.

“Negotiation”, here, refers to any discussion with the intent of reaching an agreement.  It is a noun.  “Negotiation” is a word that entered the English language in the late 15^th century, denoting an act of dealing with another person, from the Latin, “negotiation”, from the verb “negotiari”.

The word “culture” as we understand it, entered English in the mid-19^th century, from Latin “cultura”, meaning “tillage”.  Culture was tied to the practices of the people of the land.  “Culture” is a noun, and refers to the ideas, customs, and social behaviour of a society.  It includes the arts, the intellectual achievements, and the shared history of a people, who identify under a specific label.  It may be a national label, such as “Singaporean” or “American”; or it could be an ethnic label, such as “Malay”, or “Chinese”; or it could be even religious, such as “Muslim” or “Christian”.  What makes this a challenge is the fact that these lines are blurred.  All of us carry multiple labels and identities, which we emphasise in different contexts.  In that sense, almost all negotiation is, in fact, cross-cultural.

Next, we have to understand the concept of the persona.  We are never ourselves.  We always wear masks, a facade.  William Shakespeare wrote, in his comedy, “As You Like It”, in Act II Scene VII:

“All the world’s a stage,

And all the men and women merely players;

They have their exits and their entrances,

And one man in his time plays many parts …”

Before we go to that table, real or virtual, we must always have a clear understanding about the role we are playing, and the role of each and every person on our team.  In most circumstances, negotiation is a team game.  We have people who play the “good cop” to a degree, and those who play the “bad cop” to a degree.  We give the impression that certain points of contention are non-negotiable, while looking for that compromise elsewhere that really does matter to us.  As such, that briefing before the meeting may be more important than the meeting itself. 

To be effective, we must also have a clear understanding of the people who we represent, the people we are speaking to, and their role in the entire programme, or project.  That way, we ensure that we do not overstep our boundaries, we do not make mistakes that diminish our credibility, or that show our hand.  We are playing chess, poker, where every move should matter.

In practice, my teams creates a portfolio of the people we are dealing with, when it comes to the major projects.  We endeavour to create the most complete picture of the people we are going to negotiate with, and the people they represent.  This includes things such as favourite child, marital status and stability, and even inconvenient facts, such as ongoing investigations, and marital infidelity.  We look to acquire every advantage we can to close the deal to our advantage.

At the negotiating table, we wear what we call the speaker persona.  The speaker persona is the mask we wear, utilising all the rhetorical and psychological tricks to lessen the distance between the other side and us.  Successfully done, it convinces the other side that we sit with them, and understand their perspective.  That is the power of rhetoric.

The primary tool of negotiation is rhetoric.  Rhetoric is the art of putting forward a cogent, coherent argument, for or against a position to move the people.  Rhetoric is as old as civilisation.  The moment one person was able to convince others to follow him, to believe as he said, to move towards common action, we had society, and human history began its inexorable march of progress.   If we want to be excellent at negotiation, then it stands to reason that we must be excellent at speaking.

The art of rhetoric is threefold: the ability to listen carefully, the ability to discern the underlying message, and the ability to dissect and put forward a response.  Negotiation should never be a zero sum game because we want to have a reputation that we are reasonable, and we may want to do business with these people, or their network again.

There has to be a certain ruthlessness to attain a winning position,  but we must be certain not to press that advantage home too brutally.  The other side must feel that they gained something, no matter how insignificant it may be.  Paradoxically, whist it is important to be magnanimous, that gain, for the other party, must feel earned.  Everybody has some form of an ego, their pride.  It they feel we are too generous even with every advantage, it generates suspicion, or worse, resentment.  Nobody want to be made to feel small.  Absolute ruthlessness is only a card played when we are ready to burn bridges, and make an example.  That is the realm of international diplomacy or hostile negotiation with terrorists, not international business.

Now, we have to address some misconceptions about being an effective speaker, or communicator.  The first is that we do not necessarily need to have an excellent command of the language.  Effective communication merely requires that we are able to bring our point across succinctly, and simply.  If mere facility with flowery language was a requirement, poets and language teachers would be negotiators.  It helps greatly to have a command of the language, but command in the sense of being able to convey what we intend for the other side to understand, and discerning what the other side brings across.

We do not require mastery of grammar.  Having the ability to write an essay about the morphology of words, and the relationship between tenses does not make anybody a good negotiator.  It is possible to be lost in the apparent meaning of the conversation, and lose the underlying message.

We do not require an expansive vocabulary either.  We do need an understanding of the technical terms pertaining to the subject matter, whether it be shipping, finance, or otherwise.  However, in a general exchange, the average person uses between 16,000 to 20,000 words, if he is reasonably fluent.  In a business exchange, that drops to around half, since in a tense situation, people retreat to the most familiar, and sentences and exchanges become utilitarian.  The real skill here is to use the words that people use, and lessen the psychological distance between your speaker persona and their listener persona.

That persona has to be applied within a context.  To paraphrase Sun Tzu, from his third chapter of “The Art of War”, “Know your enemy, know yourself; your victory is certain.  Know heaven, know earth; your victory is complete.”  The “Art of War” talks about nine types of ground: Dispersive ground, weak ground, strategic ground, open ground, intersecting ground, serious ground, difficult ground, deadly ground, and desperate ground.  It is imperative to identify the ground.

Dispersive ground is ground near your home base, such that when things get challenging, the army is wont to retreat because they have safe harbour in their home villages and towns, and will lack resolve.  In terms of negotiation, this is the initial phase, where the client you represent could fold at the first sign of compromise without an actual resolution.  This is addressed by briefing them before the meeting, and prepping them for the false retreat from the other side.  This means figuratively burning the bridges by pre-emptively rejecting certain apparent compromises that may arise.  For example, you are negotiating a price of the transport of a certain product with a difficult supplier.  They would give you a price that is lower than the usual for the product, but change the terms of payment.  Terms of payment have a greater impact on the credit line than the apparent decrease in unit price of the purchase.

Strategic ground, or contentious ground, is ground that has value to both sides.  This would be the main points of contention in any negotiation.  This would be the points where an advantage is sought, and the other side is convinced that they have won as well.  For example, in a scenario where we are negotiating an acquisition, sometimes it is not the number of shares but the voting power of the shares that really.  Control of a company does not necessarily mean having a majority stake.  Addressing these contentions is a matter of approach.  Every person, every groups has a blind spot, a psychological weak point, that can eb exploited.

Open ground is ground where both sides have room to manoeuvre.  This would be the open ended clauses of the contract that would lead to the points of contention;  This is where we find common cause and build rapport, so that there are areas of agreement and alignment.  These small concessions build a bank of goodwill that can be used later.

Intersecting ground is ground that is adjoining other ground, and facilitates movement and communication.  This makes it strategic, not for what it has, but where it is.  As they say in the real estate business, it is location, location, location.  In terms of negotiation, it is the position that leads to what we really want.  Sometimes, to secure a term, we need to secure the circumstances that lead to it.  For example, when considering an investment in another country, it is important to look at the structure of the investment, and how the funds are moved in or out.  For example, Japan has a withholding tax of almost 40%.  And Japanese interests must have at least 50% of any special purpose vehicle.  In such a case, it is important to consider a trust or company as a holding vehicle elsewhere, to “loan” the funds for the project to the Japanese vehicle.  This is because payments on a loan are not subjected to a withholding tax.

Serious ground is when an army has penetrated hostile territory without securing all the positions in its rear, leaving it vulnerable to a multi-front assault or an encirclement.  This also means its logistics chain is insecure.  This can be seen when an aggressive negotiator is so fixated on one issue, such as the price of a commodity, and did not consider things such as delivery, payment schedules, tax liability, and currency exposure – all of which would have an inclement influence on the final price.

Difficult ground is ground which makes it challenging to manoeuvre.  An example would be wading through a project that has multiple stakeholders, across several legal jurisdictions, and has serious political exposure.  The way to deal with this is not to be part of it.  This means a lot of preparatory work in cleaning up the ambiguities in the contract, moving up the broker chain, and identifying the key stakeholders.

Deadly ground is ground which is difficult to manoeuvre, full of choke points.  In such a scenario, it benefits us to be there early, and prepare the ambush, or prepare for the ambush, instead of being ambushed.  This is why research, and preparation is very important even before we enter that meeting room.  Even though we carry ourselves with decorum, dignity, and honesty; it would be foolish to assume the same for others.  People are here to win.

Ground on which we can only be saved from destruction by fighting without delay, is desperate ground.  This is ground to be avoided.  When you find yourselves caught out by new developments during the negotiation process, from events in the wider world that may affect price and availability, to changes in legislation or management; it is important to recognise this, and retreat.  It is preferable to come back another day, rather than be outmanoeuvred, and lose.

In tandem with this, it is important for us to know who is attending the meeting; to know who is in the state of need, and how to create it; and most importantly, to remember: “What is in it for me”.  Everybody wants something, and we appeal to that.

Once we have established the persona and the context, it is then a matter of putting it together to effect what we call the performance.  We have to understand that there are three points of influence: ethos, pathos, logos.  And then, there is kairos.  To master these is to be a Toastmaster, and this is not what this course is about.  Instead, we will focus on the finer points that you can take, and use immediately.

George Bernard Shaw, the Irish playwright, once observed, that the United States and Great Britain are two countries separated by a common language.  This means that our greatest challenge in negotiation is actually with people who speak our language, because there is this inherent complacency, and that leads to expensive mistakes.  This comes back to what we addressed earlier, about definitions.

When we speak, we have to understand that there is a distance between the listener and us.  We need to use every rhetorical and psychological device to lessen the distance, and convince them that we walk in their shoes, and think as they think, that we are them.

Finally, we must recognise that people want to be aggrandised, elevated, recognised.  The goal of negotiation is to fulfill our mandate, and get what we want.  To do that, we need to open the hearts of the other side, and with that, their mouths, and sometimes, their wallets.

It is important for us to understand the language the parties think in, because that is their thought process.  Some languages are more visual than others.  Other languages are more linear.  This gives us an idea of how the negotiating process with go.  For example, when dealing with the Japanese, or East Asians, in general, their languages have many subtleties, and negotiations proceed according to hierarchy.  The one making the decision is almost always the most senior, but not necessarily the one we want to speak to, and vice versa.

We need to understand the power dynamic, which is most apparent in a Western context.  In such meetings, we have to spend extra time establishing our credibility.  Although it is impolitic to state so, the post-colonial dynamic and tensions are still there beneath the surface.  Where East Asians are subtle, the Germanic peoples are direct, the Anglo-Saxons are aggressive, and the Arabs are fluid in their discourse.  These are cultural issues we need to nail down.

When it comes to negotiation, the more personal it is, it is important to understand that is never about the ego.  This is about winning.  It is important that are never seen to be too quick to take charge, because the first person to do, is also the first head on the chopping block when they need someone to blame.

There is always someone there who wants to be the master.  It is important to let him be that.  He should be on the other team, because we have assigned the roles on our team.  This person is the one who will play the cards, and likely, reveal more than he should.  We make sure to praise him, to elevate him, and he will bloom like a flower, and spill everything we need to know.

It is also helpful to claim a slightly lower position in the hierarchy – high enough to have a say, but not high enough to take the ultimate blame.  That way, when we are at an impasse, and need to buy time, we can always say we need to confer with our management, our director, our board.  It allows us time to regroup, and come back with a variant strategy.  Flexibility is important.

Sometimes, we spend time talking about a lot of things, but never what we really want.  This allows the other team to prepare their position, but not the counteroffer for what we really want.  For example, in a recent project involving a biomass power plant project worth US$250 million, we needed a specific concession on the coupon of the insurance coverage.  We spent more than an hour going over the finer points of the contract, knowing that the other side had a time constraint to make a decision.  With less than 15 minutes to go, we pivoted the conversation to what we really wanted out of the meeting, and secured it.  In this case, time is also a weapon.

There are times we have to be explicit about what we want, and we need the other side to understand that.  Most times, however, we say less than we need, and allow the other side to talk themselves into a corner.  Most communication is non-verbal.  When we think about it, we never take things literal.  We use a lot of allusion, allegory, and idioms in our daily conversations.  Much of our social interactions are built on cultural assumptions.  This can be a good thing, or a bad thing.

Idioms, and other forms of cultural assumptions in communication, are culture specific.  This means that we cannot assume that the other side understands what we do, and vice versa, especially when they are from a different culture.  In an Anglo-Saxon context, when we say that someone let the cat out of the bag, we understand it to mean that this person was less than discreet, and a secret was let out.  Someone not exposed to this would assume we keep cats in bags, and may be appalled.

In that same vein, we can use this, and say less than we need.  If done correctly, we can lead the other side on, and they will eventually reveal more than they intend.  The average person abhors silence.  When there is silence, there is a sense of discomfort, and people will fill that space with conversation, and nervous smiles.  By simply being quiet, and looking intently at them, we can get most people to continue speaking until they let their guard down, and reveal more than they intend.

We all play a part in life.  Our credibility is the sum of our reputation, and it is important that we cultivate, and protect it.  Eventually, reputation alone closes the deal, or reputation alone loses it.  Our reputation is also dependent on our network, and who we are associated with.  As such, we must be careful about who we are associated with, and who is associated with us.  We must be ruthless in pruning our networks as and when necessary, and picking our team carefully.

It is required of us is to cultivate credibility.  Otherwise, we borrow it.  Perhaps the easiest way to borrow credibility is to build a point around a quote from a credible source.  This quote needs to be a worthy sound bite, from a known authority in the field.  We may also borrow credibility by our association.  That is a consideration when building a negotiation team.

It is because of the reputation we have, for example, that our mere presence in the meeting sometimes swings it in our favour.  However, that is based on a body of work; our team has a combined 120 years of experience.  It took years to put together such a team, and what they bring to the table is not just their curriculum vitae and experience, but the network built over decades.  Often, who we know is more important than what we know.

When we talk to people, we appeal to their self-interest, never their altruism, never their benevolence, never their pity.  When we appeal to pity, or cite favours given, we may get what we want – the first time, but it will also be the last time.  It creates resentment because there is an imbalance in the power dynamic.  No one likes to be reminded that they owe something, even a tiny favour.  People want to feel empowered, and that is why we create that dynamic.  Any appeal to the higher self is a lottery, and businesses cannot be run on chance.  We require certainty, and vanity, greed, and self-interest are certainties.

The Benjamin Franklin effect is a proposed psychological phenomenon, a form of cognitive dissonance.  In essence, when people do you a favour, they are more likely to have a good opinion of you.  We think people do favours because they like us, and that may be true for some.  However, in business, people like us because of the favours we make them do for us.  This effect is named after Benjamin Franklin, who is quoted in his autobiography, “He that has once done you a kindness will be more ready to do you another, than he whom you yourself have obliged.”  This is explained with an example in Benjamin Franklin’s autobiography regarding the animosity of a rival legislator when they both served in the Pennsylvania legislature in the 18^th century.  He wrote, “Having heard that he had in his library a certain very scarce and curious book, I wrote a note to him, expressing my desire of perusing that book, and requesting he would do me the favour of lending it to me for a few days.  He sent it immediately, and I returned it in about a week with another note, expressing strongly my sense of the favour.  When we next met in the House, he spoke to me (which he had never done before), and with great civility; and he ever after manifested a readiness to serve me on all occasions, so that we became great friends, and our friendship continued to his death.”

This can be seen in clubs, where people ask to borrow cigarettes or a light.  These small favours build a positive impression.  This would explain why smokers at the smoking point can have conversations with strangers.  Because they shared a light, the brain creates this cognitive bias that since they did a small favour to a perfect stranger, it must follow that they like that person.  In a physical meeting, it is not difficult to replicate this.  For example, I have the habit of asking the other person to get me coffee.  It is the application of this psychological principle.

In an online meeting, this is a challenge.  In such a case, we substitute it by asking small favours while doing small talk before the meeting, such as recommendations for restaurants should we ever visit, or places to visit, or even how to get simple things done in their country, if they are from another place.  It is a similar application of this principle, but it is not as effective as in a physical meeting.

In the application of all these points, we make everything a group decision.  At every milestone, it is important to commit to something in writing, and get as many signatures, as many buy ins as possible.  This makes it difficult for any side to simply pull back without taking a hit to their reputation.  Should it be a bad decision, companies cannot fire an entire management team.  The shit that hits the fan may not be evenly distributed, but enough will fall on others that they will all smell the same.

This is why companies and organisations have annual general meetings, and other events.  They need the illusion of a buy in from every major stakeholder.  This is not just about moral authority, but a form of insurance against detraction and criticism.  When everybody is part of the process, and everybody has accented to it, no one can say they are against it, or work at cross purposes without risking their credibility.

In that sense, when negotiating, regardless of who they are, it is a human thing that we all have the same notion.  As such, the moment they agree, have it documented and recorded.  It is important to stop the conversation at milestones, and impress upon all present that we have arrived at an accord on a specific point, and use it as a way marker for the next stage of the conversation.

A lot of business intelligence is spent knowing who makes the real decisions.  It may be the managing director; it could be his girlfriend.  People are people, and everyone has a pressure point.  For example, I once attended a meeting at a hotel, negotiating the sale of an entire hotel chain.  In that event, I was still new to the business, and was there as part of the team, but not leading it.  People attended in their suits, Italian style or English style, wearing very expensive ties.  The billionaire came dressed like he was the gardener.  And that is power.  When you have enough money, you can dispense with conventions.

This concept of the power behind the throne may be expanded to not just be a person who influences the decision maker directly, but a person he has the softest spot for.  For example, I once had a meeting with a client.  In the course of our conversation, I discerned that his youngest daughter was his favourite.  I then steered the conversation to his daughter’s approval, and made the sale.

My final tip is to check the wind before taking a leak.  When I worked on the ship as a deck cadet, there were times when we needed to take a leak.  Working on a container vessel, it was not always convenient to use the toilet.  When we worked at the forecastle, that was 300 m walk to the accommodations, so we learned to do it over the side.  The first lesson we learn is to check where the wind blows when we take that leak, otherwise, we would get urine in our face.  In that vein, it is important to always understand where the wind is blowing so that we do not waste time in the wrong strategy.  No plan survives first contact.

In one project, we spoke to a client about a possible investment in a port development in a neighbouring country.  The problem we had was that the other side was trying to raise the cost, instead of lowering it.  That was suspicious.  It was discovered that they wanted our side to bid higher, and they would then split the excess with us, essentially defrauding the state.  That is not how we do business, and we walked away.

On a side note, anybody can claim to be honest, but that is hardly ever true.  Everybody has a price.  Most of us have never been tempted to the limits of that price.  No man can say he is truly incorruptible if he has not walked away from millions offered on principle.  All that we have, from our reputation, to our career, to our health, to even our life, can be taken away by others.  But only we can sell our souls.  We have to work to ensure that the price for that is so high, no one can buy us.

As can be seen in these few points, the entire purpose of negotiation is to create the conditions for effecting a sale.  In this case, that “sale” is what we set out to achieve.  We are not so much selling a service or a product; but a solution.  A good solution should leave everybody at the table satisfied, that they were part of something momentous.