Aiken PR

The Briefing

Business can lead the way in the art of negotiation

by Aiken PR

12/02/2019

“LET us never negotiate out of fear, but let us never fear to negotiate.” JFK

As the ebb and flow of strenuous Brexit negotiations continue with no definitive end in sight, Theresa May last week set about trying to gain concessions to the previously coveted withdrawal deal in Brussels.

With the guillotine blade set to fall on March 29, time is very much against the UK government, particularly in light of the EU’s consistent, clear and ardent stance towards the Northern Irish Backstop.

History will remember this period as a hugely significant chapter for negotiations, regardless of the outcome, however, when we look at notable and successful negotiations in the arena of business, what are the strategies that politics can learn from?

History fondly remembers JFK’s mastery in the midst of the Cuban missile crisis, Mandela’s quest to end apartheid and, locally, George Mitchell’s role in chairing the high stakes Good Friday Agreement talks, though the many significant business deals which shape our everyday lives are less celebrated.

Business negotiations take place regularly, and often spur hugely significant effects which impact our consumerism, what we watch, what we listen to, and how we travel. Business deals, new products coming to market, mergers and acquisitions, buyouts and rebrands all require long, and often drawn out negotiations.

One of the great phenomena of the last 15 years has been the introduction and growth of social media powered by Facebook, with its own inception and subsequent journey forged by negotiation. The company has been defined by its shrewd negotiations, notably the purchase of WhatsApp which further bolstered the tech giant’s market share following a $19 billion deal.

The Facebook–WhatsApp deal is famed for its fraught and complicated buyout stipulations, with the messaging platform famously independent (having previously ignored substantial offers of investment). However, Zuckerberg’s fostering of relationships helped to build a rapport which proved decisive. At the heart of the deal was his commitment to make no profits from the platform in the short term, to maintain the brand name and to ensure senior personnel who had helped define WhatsApp remain in charge.

Zuckerberg set about building a strong personal relationship with co–founder Jan Koum, and through a series of hikes, dinners and existential conversations, was able to garner a strong sense of trust, an aspect which is key to any successful negotiation. The acquisition may not have generated an instantaneous return, however, plans to integrate WhatsApp into Facebook’s advertising channels will change all of that in the early part of 2019.

Staying in the tech industry, Bill Gates’ dream of ‘a computer in every home’ was brought to reality through an exceptional period of negotiation, foresight and business acumen in his early days at Microsoft. After being approached by IBM (the major player in the computer market at the time) to create and implement a bespoke operating system, Gates commenced work on a system based on his existing 86–DOS platform.

Gates successfully delivered the software solution to IBM for a one–off fee of $80,000. Crucially however, as part of the deal, he stipulated that Microsoft should retain the copyright for the platform. IBM subsequently agreed, and in 2019 the Microsoft empire would be valued at more than $750 billion.

Above and beyond trust and listening, the Microsoft deal highlighted the importance of opportunism and timing within a negotiation process. Negotiations and deals are often characterised as being won by the party in the right place at the right time. The theory of opportunism and its impact upon deal making is evidenced strongly in the case of another landmark business deal, the ‘American Airlines US Airways merger’.

In 2011, on the same day American Airlines filed for bankruptcy, US Airways chief executive Doug Parker called American Airways to discuss a possible merger. Parker was rebuffed.

Undeterred, Parker then went to Wall Street to tout the benefits of a merger with American, and in March 2012 launched informal contract negotiations with American’s Pilots Union by outlining how US Airways would improve their career prospects.

Later that year, catching the American Airlines management off guard, US Airways announced that all of American’s unions supported a merger between the two airlines and issued a formal merger proposal to American and its creditors. Confidential negotiations led to a new deal and a merger was born.

Pivotal to US Airways’ success was their recognition of the importance of negotiating with American’s pilots first. The tactic of gaining buy–in from the front line is a tried and tested methodology which works from the bottom up and, in this case proved to be ultimately decisive.

In 2018 we saw the power of internal unions ground more than 400 Ryanair flights courtesy of a well–coordinated pilot strike which hit international headlines. The airline’s chief executive Michael O’Leary had previously said he would rather cut off his hands than agree to union recognition. However, this is exactly what had to take place in order to gain resolution. There is no doubt that good internal negotiation is crucial in mitigating against such scenarios.

That said, negotiation processes can break down. However, before issuing court proceedings dispute resolution can be an effective means through which to find common ground.

The Bar of Northern Ireland’s Resolution Centre was set up specifically for helping businesses, individuals and families resolve situations with professional assistance. As we’ve seen in the past, politics has benefitted from external mediation and assistance where an honest broker is employed. Famously, the Haas talks in 2013 did not deliver the desired outcome but having gained from an external presence at previous talks processes, we know it can work.

In the last week or so we have seen a semblance of an olive branch offered by Jeremy Corbyn to Theresa May, and with reports that the respective party leaders are set for talks, maybe we are on the verge of a breakthrough. Getting internal UK wide agreement is essential before anything meaningful can happen with the EU.

In order for any new progress to take place with the EU, a new sense of trust must be established, then can come rapport, and maybe then opportunity. We see this in our own lives, and perhaps we could all learn from the business community who lead the way in securing meaningful deals on a regular basis, free from the microscope of the media and public scrutiny.