Part 1 of 2
When it comes to negotiation, there is a divide between what the experts claim is universally applicable 'best practice' and the current realities of our world. The world has radically changed but the general frameworks and theories related to negotiating have not changed much at all.
In this article, we will try to bridge the divide and show how you can become a culturally agile negotiator no matter who is on the other side of the table.
But before we dive into the 4 pillars of intercultural negotiation, let's first have a look at how much our world has changed.
A summary of Global trends:
> There are now more than 60,000 globally operating Multi-National Corporations (MNC's). These MNC's control more than 500,000 subsidiary companies. Their combined economic and financial power can influence national and international policy and since they control more than half of the international trade, they are a major talent magnet with a super diverse talent pool.
> But let's not forget the ever-growing not-for-profit sector. Currently, there are more than 40,000 Internationally operating non-governmental Organizations (I-NGO's). The current I-NGO sector represents 4.5% of the global GDP; almost 5 trillion USD.
When we look at people who live internationally or people who have exposure to multiple cultures, here are a few important statistics that tell the story of how diverse our world is becoming:
Close to 300 million people live outside the country of their passport.
More than 220 million people are classified as Third Culture Kids (TCKs): people born into a multi-cultural family being raised in another country.
We also have over 300 million Cross Cultural Kids (CCKs); people whose parents hold the same passport but who were raised in another culture.
And let's not forget one other significant trend: Of the 3.4 billion employees worldwide, about 1.3 billion connect inter-culturally on a regular basis through their work.
All of this has forever changed the fabric of our working lives. We truly are an interconnected world (although some people and some governments still try to pretend they can 'make it on their own'...).
The above trends have led to unprecedented mobility (virtual or physical) of employment. In the past, only a few jobs were on the international job market. Today, most jobs are accessible on the international stage. Virtual work is here to stay, and this has led to anybody being able to work from anywhere, for anyone and with anyone.
All the above is making the world of work more intercultural than ever before and this has consequences for the skills and competencies we need today and in the near future. The World Economic Forum has been advocating for a list of the top-10 desired skills for the 4th Industrial Revolution. Given the growing intercultural nature of our work life, we need to develop a new level of cultural agility to successfully deploy these skills in the 4th industrial revolution.
Negotiation is one of the 10 essential skills.
Complex Problem Solving
Critical Thinking
Negotiation
Creativity
People Management
Coordinating with Others
Emotional Intelligence
Judgement and Decision Making
Service Orientation
Cognitive Flexibility
I hope the above quick summary of global trends shows why taking your negotiation to the next level and becoming Culturally Agile in your negotiation is so important.
Pillar 1: Regular good best practice negotiation
Many negotiation techniques that are presented as 'universally applicable', require careful adjustments to the local or inter-cultural context of the negotiation. Other negotiation frameworks might be more universally helpful or applicable (e.g., BATNA or win-win or building 'if-then' scenarios).
Some experts like Thomas Kilmann have identified negotiation styles: Competing, avoiding, accommodating, compromising, and collaborating.
The biggest problem with a lot of these theories is not their usefulness but their application. People who write about these methods or styles seem to believe that the 'how' and 'what' of application is also universally applicable. They assume that an 'accommodating negotiation style' will look the same no matter who is on the other end of the negotiation table; nothing could be further from the truth. If you want to negotiate in a diverse and interculturally complex world you need to stop assuming that the 'hows' and 'whats' are universally applicable.
Thus, cultural agility becomes incredibly important. Knowing a method is one thing, but knowing how to apply that method within a complex intercultural context is an art that requires you to up your game. At the same time, there are practical things that will always hold true no matter who you negotiate with. The elements of negotiation below assume that you want to develop a long-term relationship with the other party.
Putting Relationship before the transaction.
In negotiating conflict, contracts, and complex relationships, don't forget that people remember the positive and negative experiences they have had with you. This morning I reconnected with a person who currently holds a regional SVP role and was part of an Executive MBA program where I facilitated 15 years ago. He is requesting assistance in a complex intercultural challenge his business is now facing.
Research from Microsoft shows that the ‘human connect’ part of virtual meetings has diminished because of the Covid crisis; we have become more transactional. If you are tempted to be the same, don’t give in, be counterintuitive, and invest in the relationship. It will pay off in the long run.
Prepare, prepare, prepare
Most of the 'negotiation' work is typically not done at the negotiation table, but in preparation beforehand. Here are a few important disciplines that we believe to be universally applicable:
Do your homework. The key homework should center around the stakeholders who you might end up working with after an agreement is reached. Knowing all the key stakeholders beyond the negotiation table will inform how to structure the relationship so that it will be beneficial for both entities and will positively impact your brand equity and reputation. Sometimes the informal stakeholders might be more important than the formal stakeholders. This is especially true if you are dealing with a family-owned business. The family dynamics might be such that a 1st generation family member has the final word when the family comes together behind closed doors.
Do your risk analysis upfront. What are the key stakeholders known for? Is the reputation of the other party a good match for the reputation you have built? Is a future relationship with the other party something you want to 'be known for’? We have walked away from clients multiple times even if it was a lucrative contract. Reputation is built over many years and one bad relationship can tarnish it for years to come.
Align on the way you do things. It is also crucial to assess if there is alignment between the way you do business and the way the other party does business. We take it one step further and try to assess up front if the future client is willing to work with us to establish a culture around the project that will make the project successful. We recently lost a contract because the client wanted to hire us to do some significant culture change work. But they were shocked by our approach because in their minds they just wanted to write some nice press releases about the project with very little true change. We presented a proposal to them that required them to be involved, required the president of the company to become the champion and face of the project and work with our team to operationalize the change. In hindsight, we were happy they declined because we knew the project would have been a major failure and bad for our reputation.
Know what could go wrong before you start. Try to work out as many different scenarios as possible and set up a financial simulation for larger negotiations so that you have calculated in advance the impact of unpredictable twists and turns in the negotiation. One way to prepare better is to do what we call a 'pre-mortem'; come up with as many reasons as possible why this project might go horribly wrong or not work out. Don't leave a stone unturned and when you have mapped out your pre-mortem, make allowances for the possible negative outcomes.
Get to know the people involved. Make sure you know everything there is to know about the people on the other end of the table. I was recently at a meeting, and I had watched several online videos of the founder of the company who was not present at this meeting. At one point in the meeting, I said, "This is a great idea, since the founder is a one-track-mind-guy, how do you think he will respond to this?" A simple question that unlocked an honest conversation about how likely it was that different ideas might be approved by the founder.
In the next article, we will explore the next 3 pillars of international negotiation. While this first pillar explored the best practices around international negotiation, the next three are each primarily about ‘Knowing Yourself’ so that you can apply them to better understand the other party.
Are you missing the key ingredient to negotiating successfully across the globe? If you want your negotiators to be truly effective contact us to find out more about Inter-Cultural Intelligence.
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