Identifying Ownership - It's Trickier Than You Think

Many times, when two parties approach a deal they tend to think of their contribution and ownership of the overall project like this:

The problem is that most of the time there is going to be a significant amount of overlap. In those three circles. Your deals need to be able to not only identify the areas of collaborative ownership that exist within a given deal, but it should also accurately reflect the parties' understanding with respect to these overlaps.

Here's a tool to help you think through the ownership issues that you might be facing in your next deal:

Read The Contract

I know, I know, kind of a 'no duh' piece of advice, but think about it.  When was the last time you actually read through, word-by-word, your contract? Let me guess what you're thinking: "Isn't that what I hired my attorney to do?"  Sure, but all too often, something that seems clear to one person can be lost in translation to the four corners of a contract. This can easily happen with some of the more technical or "legalese"-laden sections of the contract.

In order to avoid costly mistakes that can come about as the result of these communication failures, Professor Guhan Subramanian of Harvard Law School suggests a three-part strategy (abstracted from Before you sign on the dotted line... Negotiation Volume 12, Number 5, May 2009):

1. Discuss the deal landscape with your attorney.  Why are you doing this deal? What do you hope to gain? What are your expectations with regards to the other party? What are some of the risks you and the other party will be facing? What do we do if things don't work out as planned? If your attorney can see the deal landscape as you see it, this will go a long ways to having the deal drafted accurately.
   
2.  Take time to read the contract and encourage the other party to do so as well.  Yeah, it may be a long and tedious, but if either side comes up with sections that are ambiguous or unclear, taking time to find those ambiguities and having them clarified before a problem arises can be very important. Turn to your attorneys if you need help getting clarity.
3. Have your attorney read the "legalese" back to you in plain English (or Spanish, or Bulgarian...etc.). This will help both of you get on the same page with some of the more difficult language of any deal.
   

Deal World Rule #8 - Lean Into Your Fear

"Do one thing every day that scares you." Eleanor Roosevelt

One of the critical emotions faced by all great negotiators is FEAR. Fear is a

great teacher. We all experience fear, if you don’t … you are not growing.

Fear comes in many forms (e.g., internal politics, lack of confidence, no leverage), but if you are good at what you do you, then you will find yourself in situations that test your ability to deal with your fear again and again. Don’t try to run away from it. Don’t pretend it isn’t there. Don’t fool yourself into believing it will go away. Lean into your fear.

Apply this mindset to deal making. We are not talking about taking risk for the sake of getting your adrenalin pumping (although that’s fun too). We are talking about becoming great at what you do. Quite simply -- don’t avoid your fear, lean into it.

To help you lean into your fear, here are some exciting truths about fear:

1. You will experience fear as long as you continue to grow.
2. Extraordinary people don’t let fear create stop signs in their minds -- they see fear as a path to great opportunity.
3. You are not alone, others have their own fears to contend with.
4. Directly dealing with your fear weakens it (defeats it), while ignoring it strengthens it.

At the WieseLaw Contract Studio, we deal with fear by leaning into it. Do you lean into your fears? If so, congratulations. If not, start today.

Why Do Some Negotiations Fail?

Let's face it, not every negotiation is going to end with resounding success. That sucks, there's no doubt about it, but you can almost always learn something from failure. I would encourage you to do a post-mortem on each of your major negotiations to see if you can learn something from them, but this is especially important in cases where you end up with bad deals or no deal at all.

The following is a short list of areas of concern for most negotiators.  Rate yourself - how well would you say you are performing in each of these areas.  Try and put yourself in the shoes of your counterpart. How would you react if you were hearing the same information?

1. Goal Setting: Good goals allow for negotiators to operate with a Zone Of Possible Agreement (ZOPA).  They don't have to be rigid or set in stone, but they should give you direction in your negotiations.  Without an idea of where you're going, how will you know when you get there?
   
2. Emotions & Body Language: We've talked about some of the "intangibles" of negotiating on this blog before.  Don't underestimate the impact of emotions or ignore the information you may be able to receive via body language. Don't forget to examine your own emotions.  Are you letting emotions cloud your thinking or negotiation tactics? Taking these intangibles into account can only help you!
   
3. Communication: This is critical to the success of any negotiation. Ensure that everyone understands how the negotiations are progressing and put it in writing! Any complex negotiation will inevitably have milestones of agreement that will need to be reached before the group can progress. If these milestones are captures accurately and communicated to all interested parties you will significantly reduce the risk that a further milestone will be compromised by a failure to adequately understand what has gone before to prepare the way. 
4. Listen: This is practically a sub-point of communication, but it's so important that it deserves its own place on the list. Don't be afraid to shut up. Maybe you know everything there is to know about this negotiation. Maybe you are the world's foremost expert on this subject. Maybe you are certain you know exactly what the other side is going to say.  Then again, maybe you don't. You can learn a lot just by letting someone else do the talking. 
5. Stay on target...stay on target: Ok, I worked really hard to fit a Star Wars reference in here so stay with me. Agendas are worth their weight in gold. Send one out to the interested parties some time in advance to allow for changes and suggestions. Once you have a solid agenda this helps everyone prepare for the areas of interest that will be discussed in your negotiations that day.  This will help you avoid a free-for-all style negotiation where everyone with a stake in the outcome tries to assert their goals at the same time.
   

Hopefully this will help you with your next negotiation review. Remember, making mistakes isn't what can make you a poor negotiator, but failing to learn from your mistakes will!

What Are You Saying That You Aren't Saying?

Ok, that's a bit cryptic, so what do I mean? Body Language. Whether or not you are consciously aware of the signals you are sending and receiving, body language plays an important role in how your message is perceived by your negotiation partner(s).

To be sure, there are many, many ways that we communicate non-verbally. Further, there is no set way in which a particular hand gesture, posture or eye movement will have a definitive meaning. Many of those subtle non-verbal clues will vary from person to person. However there are some steps you can take to help you better understand your own non-verbal cues and those of others.

Be aware what your body language is signaling to the other side. How do you act when you are nervous, angry, happy, confused, agreeable, disagreeable, etc. By taking stock of some of your own non-verbal communication, you may more quickly pick up on those same signals in others. Additionally, if you are working on your "pokerface" when it comes to negotiations, being able to shed some of these non-verbal clues will help you ensure that you don't unintentionally give away information in a negotiation.

The more difficult step is connecting the body language of your counterpart to information that can help you better understand how your communication is being received and perceived by your negotiation counterpart. Much of the time, you may have to rely on time and experience to provide such information, but you may be able to shortcut the process by following up when your counterpart is sending some non-verbal cues such as crossing arms over the chest, looking away, doodling or otherwise fidgeting. For example, if you are discussing payment terms and your counterpart suddenly crosses their arms, you can follow up by saying "Is there anything about the payment terms I've just described that you think we should discuss?"

This important skill of understanding non-verbal communication will not come overnight and takes some work, but it will help you better see how the negotiation process affects the other party and provides clues about problem areas that may require further discussion. Good luck!

Eat Up - You'll Need Your Strength!

No matter how well you prepare for any negotiation, there are always unknowns that you won't have control over. One of these, is the intricacies and complexities of an individual’s personal life and its effect upon the negotiation.

I once negotiated a complex and high-risk deal with a woman on the counter-party’s team who was engaged to be married. We had a series of in-person negotiations that followed a cycle of decent progress and discussion in the morning followed by difficult and unproductive afternoons. As the day progressed, she became withdrawn and sullen, stubborn and uncompromising.

At the recap at the end of each day, our internal team would brainstorm what we could to in order to achieve success and expedite the progress of the negotiations. All of us noticed that this woman ate very little during the day despite the plethora of lunches and snacks available. During the course of idle chatter during one of the breaks, I learned that this lead woman negotiator was on a strict diet to lose weight before the wedding.

Food and the associated acute mental energy it provides is a critical tool in any negotiation. Beginning the next day, we stocked the conference room with fresh cut fruit and many healthy snack alternatives. We managed the flow of negotiations to start earlier in the day, shortly after breakfast when the energy level was the highest. We learned quickly to hit the hard issues in the morning followed by the easier issues in the afternoon.

To be mentally acute, eat right! In-person, day long negotiation sessions take a lot of energy. Food is key to maintaining energy. Don't skip meals! Look into healthy alternatives - this is better for everyone involved so you don't mix the sugar high with the inevitable sugar crash.

Deal World Rule #7 - Simplicity

The Simplicity Principle. One of the maxims we live by in the WieseLaw Contract Studio is – “Simple, But Not Easy.” In the world of deal making, there are far too many people who have an unfortunate talent for making things overly complex.

You should do the opposite – bring refreshing simplicity to your deals by doing the following:

• Have Courage. Reduce to what is needed. People, especially lawyers, often feel the need to overcomplicate deals. Have the courage to include only what is needed.
• Shorter is better. Although it is harder to craft short, tight and concise deals, we know they are more effective. As Blaise Pascal* once famously said:

“I'm sorry this letter is so long, I did not have time to make it shorter.”

*This quote, in one form or another, has also been variously attributed to Mark Twain, George Bernard Shaw, Voltaire, Winston Churchill, Marcel Proust, Rudyard Kipling, Henry David Thoreau, Abe Lincoln, Ben Franklin, and Larry Thomas, among others.

• Patience. Go Slow to Go Fast – Take time on the front end to get all the needed understanding and information to determine what is important and what is unimportant. This is the step most often ignored.
• Design. Create a deal structure and process that is designed to support the clearest deal making.
• Experience. Leverage your lessons of the past and apply them forward toward creating a deal that focuses on what is important and not on what is unimportant.
• Deal Maps. Map out the deal with a picture. Work through the actual deal from start to finish with a deal map.
• Listen. Understand and factor in the interests of the other parties.
• Capture all interests.

Some of these ideas are discussed by John Maeda in The Laws of Simplicity.

Do you embrace the power of simplicity in your deal making? If so, congratulations. If not, start today.