Negotiation Blog

Unilateral disclosure in negotiations — foolish or enlightened?

By Thomas Wood

When you disclose valuable information to your negotiation counterpart, you want equally valuable information in return. Right? Not always. Sometimes what you seek in return is a new level of trust – that will lead to getting more information and ultimately, trades that create value. Sometimes "one-way" is "two-ways".

Consider these situations:
  • Have you ever begun talking to a negotiation counterpart where sufficient trust hasn’t yet developed?
  • Are you facing negotiations where the trust previously established has been damaged?
  • Are you asking to re-negotiate an agreement as a result of changed market conditions that were not originally anticipated?
In these types of situations, you need to build (or re-build) trust in the relationship. Without the appropriate level of trust, parties are not likely to share their interests, and without discovery of interests, you are left only to argue positions, without much hope of creating value for both parties.
 
One trust-building strategy is to unilaterally disclose confidential or proprietary information that is valuable to your counterpart. (Obviously the disclosure has to be legal, ethical and appropriate to the circumstances.) You are taking a calculated risk that your disclosure will build trust and thereby assure progress in the negotiations.
 
What information should you disclose? The information should be of low risk to you but of significant value to your counterpart. This strategy only works if it is clear to your counterpart that you shared something you didn’t have to, and if the information is something your counterpart values knowing.
 
When should you make such a disclosure? The most ideal time is during the Information Exchange stage. You want to learn early on whether your counterpart is negotiating in good faith, or how much work needs to be done to restore trust. Of course, sometimes during the Bargaining stage you realize you have to back up and re-engage in the activities of Information Exchange before proposals that address interests will surface.
 
A very public example comes on this 1 year anniversary of the US disclosure of the size of its nuclear arsenal -- 5,113 weapons, down from its peak at over 31,000 weapons in 1967, a secret long held since the Cold War. Good minds debate the wisdom of this “transparency policy,” but as a negotiation strategy, well, it’s right out of the master negotiator’s playbook.
 
Historically, there is great distrust between those countries with nuclear power and those without it. All nations will be hurt by nuclear war, but those with nuclear power are the main targets. And remember, the US and many other nations are already obligated by treaty to decrease their nuclear arsenals.
 
Let’s check the US strategy for the key markers of a good negotiation strategy:
  • Is trust the goal? The US had a preliminary interest to bring other nations “to the table”, and the risk of that engagement taking years was too great, so trust needed to be repaired/developed quickly.
  • Low risk? The disclosure was low risk because experts had long provided reliable estimates that were very close to accurate. In fact, the experts’ guesses were only off by 18, so revealing the actual number did not put the US at a disadvantage.
  • High value? The value of the information to other nations was great, as it allowed them to justify to their stakeholders that working with the US in global nonproliferation would be met with the transparency they sought.
  • Information Exchange stage? Much preparation had been done, but no new offers were on the table, so Bargaining had not commenced when the US disclosed. The US was in the Information Exchange stage of negotiations, and chose to make the unilateral disclosure at the May 3, 2010 opening of a five-year review of the Nuclear Nonproliferation Treaty. 
The result? Whether such a unilateral disclosure builds trust remains to be seen. The general law of reciprocity would dictate that your counterpart would respond in kind if they too want to build trust in the relationship. If your counterpart does not respond in kind, it’s possible they don’t see any mutual benefit, or have a hidden agenda. This alone is valuable information that indicates you need to be serious about your alternatives. But if they do reciprocate, you have saved months (with nuclear war heads, years) of negotiations and began the open flow of information that can lead to effective bargaining.
 
Going back to our “public event” example, the US ally, UK, followed suit and on May 26, 2010 disclosed that it had a stockpile of 225 warheads. According to Deutsche Welle, the German Foreign Minister acknowledged the power of the US strategy when he said: "It underlines that the US is aware of its responsibility in the disarmament process. From transparency, grows trust - the basic precondition for further disarmament."
 
Can unilateral disclosure backfire? Yes, like all risks, there’s a down side, and an upside. Your counterpart could reveal some valuable information as way to trick you into trusting them. If you suspect such trickery, you are well advised to spend more time in the Information Exchange stage. People who want unjustified rewards are usually not willing to wait for them, hence their motives will become apparent.
 
An example from a Watershed client (names and specifics changed to protect confidences).
 
Our client (let’s call it Acme) had a contract committing it to a $1.5M spend per year and a 3-year contract with a key supplier (let’s call it BT Supplier).  Due to the economic downturn, Acme did not meet its volume commitment in the 2nd and 3rd year of the contract, by 12% and 22% respectively. Acme avoided discussion of the breach, offering only vague promises of a plan to catch up.
 
Acme came to Watershed for help because it wanted to negotiate a new contract with BT Supplier. The problem was that BT Supplier has lost all trust in Acme because Acme did not live up to its commitments and did not handle the situation well.  Acme needed to do something to re-build its credibility and trust. 
 
We worked through several trust-building strategies with Acme, and the company chose a path of unilateral disclosure. Acme decided to invite an engineering team from BT Supplier to a round of R&D meetings. Acme proactively solicited input from the BT Supplier engineers on a series of new products Acme was developing. This would give BT Supplier a significant advantage when it came time to bid the parts for the new products. Most important, however, Acme’s unilateral outreach and sharing of valuable information demonstrated a serious commitment on Acme’s part toward BT Supplier, and was integral to re-building trust between the parties.
 
Trust Building Strategies are legion. Trust, of course, is fundamental to the success of collaborative negotiations. There are, however, many ways to build trust with your negotiating counterpart. Unilateral disclosure of valuable information is only one such strategy, but it can be a powerful ally in certain situations.
 
Foolish or enlightened? You decide.

Negotiating Tip

Take a negotiating risk today: Ask, "Is there any flexibility on that?" where you usually don’t negotiate. Try at it work, at home, and in the mall. You will be surprised at how effective it is. What do you have to lose?

 


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Negotiation Blog

Masters of the "Mulligan" on the Golf Course and in Negotiations

By Leslie Mulligan

One of the preeminent “grand slam” golf tournaments celebrated globally, The Masters in the U.S.(Augusta, Georgia), began today, Thursday, April 9th. As a negotiation expert with a long career in sales and business development, I know how helpful golf can be to your professional career. Forbes distilled the 19 tips to “Closing a Deal on the Golf Course” and all of them ring true for me. But what many negotiators miss is that mastering the game is not enough; you must also master the "Mulligan", on and off the course.

A "mulligan" is a do over stroke in golf. My last name is also "Mulligan." As you may imagine, many people ask me if I play golf. I do play golf, enjoying the mental and physical challenge as well as the time spent with colleagues, on business and with friends. And I also leverage the "mulligan."

If you are not aware of the golfing term “mulligan”, it is a free stroke that you can claim, but only if your partner agrees. For example, if your ball happens to make its way into the sandtrap (never happens to you?), well, you get a do-over – a mulligan. It's sort of an unwritten rule of golf that found its way into the game when prominent golfer David Bernard Mulligan took a correction shot on the course with friends, and he and his partner later won by 1 point. Getting a mulligan can make a difference.

But offering a free stroke or mulligan, may be even more impactful – on and off the course. 

Let's back up and take a look at Forbes tip # 6 -- also a cornerstone for master negotiators – “don’t be too competitive. The emphasis in a business golf setting should be on building rapport and trust with your playing partners.” In collaborative negotiations, a win-win philosophy where value is expanded for all by addressing parties' interests, establishing a trusting relationship is imperative if you want your “playing partners” to reveal their essential interests. If they view you as trustworthy, they may let you know what their priorities are – and you can do the same – allowing the business deal to grow in value for both parties.

Even the PGA (Professional Golf Association) highlights the fact that golfing can help you in your business networking, enabling you to learn about your playing partners, on their Get Golf Ready website:  Networking is like socializing on the golf course (or anywhere)– “but with the purpose or intent of gaining information and insight about someone or something.”

Offering mulligans to your playing partner may significantly improve your business relationship (and their golf round). In social science, we know that doing a favor for someone triggers a debt of social obligation, where the recipient of the favor feels like they may “owe” the giver something. Even if it is a small favor, it can still work to your advantage. So why not ensure your playing partner can take a do-over now and again in their 18 holes. They will appreciate your offer, and it may pay off for you in a subsequent business deal.

Now, none of the professional golfers at The Masters will take mulligans, but for amateurs like us, it can be a powerful lever at the negotiation table! A few other tips in the Forbes article caught my eye as potentially very helpful - not just on the course, but at the negotiation table as well:

  • Be on your best behavior – golf is a very revealing sport, and if you play with potential business partners, rest assured that they will take their impressions of you on the course into the negotiating arena. If you are trustworthy, likeable and hopefully competent on the golf course, that will serve you well once you are sitting at the bargaining table with them.
     
  • Respect the etiquette of the game – on the golf course, your partners will take notice that you respect the game, and them as well, if you follow the rules and play with decorum. Don’t take your own mulligans, unless offered by your playing partner. In the negotiation process, you also want to earn respect. Don't make outrageous offers or claims, avoid tactical maneuvers (i.e., arbitrary deadlines, bluffing, good cop bad cop) designed to trip or trick the other side. Respecting the process and earnestness of the discussion will accelerate your ability to gain trust, allowing you to more easily learn the interests of your business associates.
     
  • Control your anger – emotions running high can undermine any negotiation, so best if you control yours while at the negotiation table, just like on the golf course. You want your partner across the table, and on the links, to see you as someone who is rational, capable, and working with the spirit of win-win.

In my experience, I know that do-overs in business do not happen often, even with the last name of Mulligan. So seize the moment if someone proposes one at the negotiation table, but more importantly, watch for opportunities to offer a mulligan to your negotiation partners. Favors offered early in a developing business relationship can definitely pay off down the road. And the golf course is an ideal way to tap that opportunity!

Negotiating Tip

Try not to negotiate if you are in a negative emotional mood. Research shows you will make inappropriate or unnecessary concessions.


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