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The Art of Negotiation and Learning from Failures

Negotiation has been defined in a variety of ways like the ‘art of resolving conflict’ or a ‘conversation to reach an agreement’ or a cliched term called as ‘win-win for both the parties’. Four major negotiation agreements are discussed which are:

Budapest Agreement signed in 1994 between Russia and Ukraine
Oslo Accords between Israel and Palestine 1993-95
Camp David Accord between Egypt and Israel in 1978 &
The Treaty of Versailles between Germany and the Allied Powers after the First World War – 1919

1.Budapest Agreement between Russia & Ukraine: 1994

Ukraine during the erstwhile USSR had nuclear warheads. It was expected by the US, UK and Russia that Ukraine signs up the Nuclear Non-Proliferation Treaty (NPT) and give up the nuclear arsenal. Bill Clinton, Boris Yeltsin and Kravchuk, the president of Ukraine were the signatories of the Trilateral agreement signed on 14^th January 1994 in Moscow. Ukraine demanded security guarantee in exchange of denuclearization. What did Ukraine receive apart from the compensation for the Uranium that was returned? Maintaining nuclear equipment was also difficult after the Chernobyl disaster and the economic hardship the country was going through.

The terms of the agreement were: . 1.Respect the independence and the sovereignty of the signatories within the existing boundaries. 2. Refrain from threat or use of force against the territorial integrity or political independence of the signatories.

With Russia’s attack on Ukraine in February 2024, Boris Tarayuk the lead negotiator of the Budapest agreement said , “not only did Russia violate its commitment as the guarantor of Ukraine’s national security but other signatories like US and the UK failed to fulfil their commitment under this agreement.” (1) Four years and no end in sight Ukraine is on the verge of collapse as it is used as a pawn by all other nations.

2. Oslo Accords between Israel and Palestine: 1993-95

The Oslo Accord was signed in December 1993 at Washington DC between Israel and Palestine Liberation Organization (PLO) represented by Yitzhak Rabin and Yasser Arafat and brokered by Bill Clinton. It included limited self-governance for the Palestinians in West Bank and Gaza strip by creating the Palestinian Authority(PA). It included the following clauses:

Israel’s right to exist.
PLO as the representative of the Palestinians
Transfer of Authority to PA for education, health, social welfare, taxation and tourism. However the issue of Jerusalem was not resolved

Oslo II accord was signed in Taba, Egypt in 1995

Yitzak Rabin, Shimon Peres and Yasser Arafat were the stakeholders in the Oslo 2 accord. The negotiation focussed on issues like Jerusalem refugees, settlement and border and was to be implemented latest by May 1996. However, in November 1995, Yitzak Rabin was assassinated by a Jewish extremist and Benjamin Netanyahu came to power. Even though discussion went on, there was distrust and tension between the two parties. The issue became complicated by Ariel Sharon who made a provocative visit to Temple mount which led to anger among the Palestinians. (2)

3. Camp David Accord between Egypt and Israel : 1978

Camp David Accord was signed between Anwar Sadat of Egypt and Menachem Begin of Israel in 1978 and the deal was brokered by Jimmy Carter. The award failed because it was perceived as a unilateral peace initiative and did not include the interest of the establishment of Palestine. The Arab interests were also not given due respect. The negotiation lasted for 13 days from 5^th to 17^th September 1978.

4. The Treaty of Versailles: 1919

The first World War was fought between the Central Powers represented by Germany and the Ottoman Empire and the Allied Powers which included France, Britain and Russia.

The Istanbul Agreement allowed Russia the control of Istanbul, France got the control of Syria and Great Britain with Cyprus, Egypt, Haifa and Acre. Palestine came under the British regime. Palestine is a place considered sacred by Jews, Muslims and Christians.

Treaty of Versailles was a peace document signed at the end of World War I by the Allied and associated powers and by Germany in the Hall of Mirrors in the Palace of Versailles, France, on June 28, 1919; it took force on January 10, 1920.

The conference was dominated by the national leaders known as the “Big Four”—David Lloyd George, the prime minister of the United Kingdom; Georges Clemenceau, the prime minister of France; Woodrow Wilson, the president of the United States and Vittorio Orlando, the prime minister of Italy. None of the defeated nations had any say in shaping the treaty, and even the associated Allied powers played only a minor role. Some of the conditions were:

Territory of Germany to be reduced by 10%
Compensation by Germany for all damages done to the civilian population of the allies and their property by the aggressors ( Germany) by Land, Sea and Air
War Guilt Clause
Losses estimated to be $33 Billion
German army reduced to 100,000
Manufacturing of armoured cars, Submarines and aeroplanes was forbidden (3)

The German delegates were presented with a fait accompli. They were shocked at the severity of the terms and protested the contradictions between the assurances made when the armistice was negotiated and the actual treaty. Accepting the “war guilt” clause and the reparation terms was especially odious to them.

What was the outcome of such a harsh and unilateral impositions of clauses? Did the execution happen as per the agreement? Harsh Treaty and Lax enforcement paved the way for German Militarism. When Hitler militarized Rhineland, the Allies did nothing. To a greater extent the rise of Hitler and the seeds of the second world war were sowed in the Treaty of Versailles marked by harsh unilateral negotiation and poor execution.

The negotiators included eminent leaders like Clinton, Carter, Wilson, Yeltsin, Anwar Sadat among others. Even then, why did the negotiations fail? Was it the lack of positive intent among the parties, the trust deficit or force majeure conditions? Roger Fisher and William Ury from the Harvard Business School say that in integrative negotiation, ‘people should focus on interest and not position’. Easier said than done.

Neil Rackham has made an interesting observation about the characteristics of a Skillful Negotiator who:

Is rated effective by both the parties
Has a track record of significant success.
Has a low incidence of implementation failures. (4)

Most of the leaders discussed above have passed into oblivion. If they were to think of leaving a legacy behind; of the long-term consequences taking precedence over the short-term glory, would the history be different? Dr. Manmohan Singh made a prophetic statement after the incessant criticism of him during the final years of his prime ministerial tenure, “history will be kinder to me.”

I am reminded of the concluding couplet from Alexander Pope’s satirical masterpiece, the Dunciad.

Thy hand great anarch, lets the curtain fall, universal darkness buries all.

Ref: 1. Through a Diplomat’s Lens – Capturing Momentous Times: Sudhir T. Devare

2. Encyclopaedia Britannica

3. Wikipedia

4. Behaviour of Successful Negotiators – Neil Rackham

Do we mean what we say?

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“The Galaxy Z flip 5 is ONLY Rs 99,999/ said the salesman at the mobile counter. Being a latest product from Samsung, we can work out a special price for you with an exchange of the old mobile additional upgrade bonus and extra bank cashback…”

While the salesman was rattling off the technical specifications in his sales pitch; I got stuck at the word ONLY. What happens when people use the word ONLY, is it something to convey or to hide?

Jacob and Isaac were two religious Jews living in an apartment complex with their balconies facing each other. They had not fasted on the Yom Kippur day, the day of atonement. They went to the Rabbi to ask for forgiveness. The Rabbi replied that it is possible only through observing a penance. He asked both about what they liked the most. Jacob said, “sharing the marital bed with my wife.” Rabbi said, “Jacob, for the next three weeks, you shall be sleeping in a separate bedroom.” To the same question, Isaac replied, “smoking a cigar.” Rabbi said , “likewise you are not going to smoke a cigar for the next three weeks.”

One night, Jacob’s wife knocked on his bedroom door. Jacob said, “Darling, it is ONLY the third day. We are not supposed to be together for the next three weeks.” His wife said, “ I ONLY wanted to tell you that Isaac is smoking a cigar.”

There are many undesirable thoughts and images which are in our subconscious mind which try to escape into the conscious mind. The way the word ONLY is used is to push back the undesirable thought coming into the consciousness. You may see that from the bottom of their hearts; both Jacob and his wife wanted to be with each other; but by using the word ONLY; were trying to repress the desire. Rationalization is a process by which a person justifies his action by hiding the real intention. As Voltaire said, ‘men use thought only to justify their wrongdoing and speech only to conceal their thoughts.’

Another example to illustrate the point: While having dinner with my mother-in-law; she said, “Rajan, is the curry over?” I replied, “No, the dal fry is still there. Do you want me to serve you?” She said, “ I ONLY wanted to see whether the fish curry is over or not.” My mother-in-law being a strict vegetarian; finds it difficult to hide her consternation of someone partaking of a non-veg dish while having her meals. You may observe the word only conveys, ‘for heaven’s sake, when will the curry get over?’

When a salesman is telling you that a product costs ONLY Rs 99,999/- what he wants to tell you is that the mobile is economical and value-for-money (as conveyed by the management).What he wants to hide is his personal opinion of the product being expensive. If you are a seller, use ONLY during order closing; but if you are a customer; beware of the trap laid down by the seller.

“Sir, would you like to go for this model?” the salesman interjected. I was taken aback from my reverie of hidden meanings behind the words. “By the way, you shall also get a rebate of around Rs 30,000 on your old mobile; though for specific models.” He added a caveat. When he saw that I was using a Samsung Galaxy A12, an economy model costing only Rs. 12,000, the salesman was in a rude shock. I could see a tapestry of anger, frustration, pity writ largely on his face. “Sir I ONLY need to take this urgent call and shall be back within a minute.” I knew he would not turn back so soon.

So next time when you hear the word ONLY be careful: is your colleague trying to hide more than what he wishes to convey? As someone said, “statistics is like a bikini, it conceals more than it reveals.”

Winning a Jackpot: How do you decide?

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Situation: Imagine you are participating in a game show and after going through qualifying and elimination rounds, you have reached the finals. The game-show host presents you three options A, B & C and you have to select one of the options which are the respective doors. One of the doors leads to a jackpot (say a Mercedes) and the other doors to an insignificant prize, say a tennis ball through each door. Now let us say you have selected option A. You are curious and excited to see if you have hit the jackpot. The host asks you to be patient, opens the door C and what you see is a tennis ball. Now he asks you whether you would still stick with option A or switch to option B? What would you choose and why?

When this question was put on different platforms like linkedin, what’sapp it was observed that 95% of the respondents voted for A. Now read on:

Analysis: Generally people tend to stick to option A, the reason being they would not like to regret their decision. If A is selected leading to a jackpot, then he would be happy; however if otherwise, then he blames the circumstances or his fate. But at least he has the consolation that he was firm in his decision. However if he were to choose B, and were to lose; he would regret his decision and also for not being firm in his decision making process.

Let us see how this situation can be seen from a statistical probability basis. Generally people make decisions through their self-interest and do not look at a situation objectively. For example we tend to discount the impact of the environment on our decisions. When a person selects option A, the probability of success is 1 in 3. However when door C has been opened with a tennis ball, the probability of B has increased to 50%. Assume instead of 3 options you were given 100 options. And now 98 doors are opened without any jackpot. Would you still bat for A? Now you will appreciate that at the beginning of the game the probability of winning A was 1% but after the events have unfolded B has risen to 50%. So in a single event even though A and B has equal chances, over the long term it makes sense to switch over considering the environmental factors.

What happens if the game of ABC is played 100 times. or 100 people play this game simultaneously? Now you will understand that the human mind is not programmed to think in a statistical manner. During most of programs our clients ask us to train their executives to think out-of the box. But sadly they are hardwired to think otherwise.

Most people tend to overestimate fatalities and death in aeroplane crashes more than car accidents even though statistically air travel is much safer than car travel. One of the main reasons people tend to assign higher risk to air travel is due to wide publicity in media to such rare events.

A survey was carried out in the US after the 9/11 disaster. More people died in the three months on roads than those killed in the aircrafts during the twin tower tragedy. People tend to fear dread risk of low-occurrence and high consequence events such as the twin tower attack. ( Dread Risk : September 11 and fatal traffic accidents, by G. Gigerenzer) .There are two types of risks, actual risk and dread risk, the latter is more out of anxiety quite often overestimated than the actual risk. This in part may answer why people would still go on playing option A.

Another reason for dread risk is an illusion of control. A person driving a car feels more in control of the situation than while flying in an aircraft driven by someone else. Most of our unconscious processes control our thoughts and behaviour, which in turn creates an illusion of self- I or the soul. It also makes us feel that I exist, I am in control and thus I can make my own decisions. But the truth is otherwise. Most of the events in life are beyond our control; there is no self. And to create that illusion we tell stories, we fabricate them saying how intelligent we are.

The above problem is called as a Monty Hall problem ascribed to the presenter of the famous game show in USA, Let’s Make a Deal. Monty Hall Problem states that there are two errors people make while taking decisions:

They ignore the influence the external environment makes on their decision making and
How their perceptions are shaped by the external environment. In fact we feel we are making decisions in a neutral environment and our decision making is rational. We feel we are safe when we are in control of our destiny. Rituals and routine give us more control of the situation. However truth is otherwise, Dan Ariely, author of Upside of Irrationality says we are poor in risk analysis and are irrational animals.

Rajan Parulekar|rajan@paradigm-info.com|98450 14098

Three Bad Habits Sabotaging Your Productivity

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Peter Drucker was consulting for a CEO of a major bank in US. For every meeting the CEO used to assign Peter a time slot of 90 minutes. A highly effective person, the CEO was delivering consistent results for his bank year-on-year. During the one-and-half hour meeting the CEO refrained from taking any telephone calls Continue reading →

Achieving expertise also depends on the domain!

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Why is there a gap between efforts executives put and the results they get? The linkage between the improvement in one’s skills vis-à-vis the efforts put can be termed as structure of growth.

Last two weeks I was conducting training programs on Effective Value Selling for Capital Equipments which were in the price range of Rs. 50 L to Rs. 1crore.( Approx. $100k-200K) Selling of CNC machines involves considerable technical complexity and the sales engineers need to understand the customer behaviour in a sensitive manner. For most of the participants, I perceived a huge gap between the job role and the skill set possessed.

Remember the adage, practise makes a man perfect. Generally it is assumed that the improvement of a skill is directly proportional to the efforts, time spent and the intelligence of a person which is partially true. But it also depends on the domain in which one is working. Most of the domains may have the following types of growth structure. There are a number of growth structures but the major ones are: Logarithmic, Exponential and Sinusoidal ( Please refer figure: growth figures )

Logarithmic Growth: Here one tends to get visible results during the initial phases of activity. But the growth becomes harder as you go along. For example, in athletics running 100 metres in 14-15 seconds looks an achievable task for a beginner. Chopping off the next second or two is relatively easy. But to break the 10 second barrier only athletes at international level can achieve. One needs to be an Usain Bolt to reach a figure of 9.79 seconds where the runner up can be behind by just hundredth of a second. Same is true in cricket where a cricketer can scores a century on debut and become a celebrity but then it is only people like Sachin Tendulkar who go on reinventing their styles and techniques even after reaching a few milestones.

The first phase of logarithmic growth is steep and success comes easily. The second phase is like a plateau where the rate of growth slows down considerably. (refer figure a. logarithmic growth)

Thanks partly to media hype, you see such growth in music ( with pop stars, Little Champs in Saregamapa shows etc.) and in sports like IPL Cricket. With some talent and average efforts some people in such domain, become instant celebrities overnight. The real challenge is in phase 2 where you need to maintain your disciplined habits. You need to move away from your regular routine and break away from those habits. You can even develop a technique which may be beyond the textbook. Tiger Woods reinvented his swing in the second phase.

Exponential Growth: There are some fields where one needs to put lot of hard work initially and the results will not be visible for considerable time. Mastering a field like Physics, computer science, music takes a hell lot of time. In the HBR Article titled The Making of an Expert by Anders Ericsson, Michel Pretula and Edward Cokely, the authors propose that to master a particular field it takes around 10,000 hours of systematic efforts. The results may not be visible initially so one needs to have lot of patience (refer figure b. phase 1 of exponential growth ). And one day, a miracle happens. Suddenly things fall in place and what you were struggling all these days and years, the obvious answers are revealed. The pieces of jigsaw puzzle get into the right place. Kekule developed the model of Benzene ring in his dreams by correlating a serpent swallowing his own tail, Einstein worked on his special theory of relativity for a number of years as a clerk in a Swiss patent office. Marie Curie had to process tonnes of pitchblende in inclement weather and in an ordinary laboratory for a number of years before extracting a few milligrams of radium. Science whether applied or pure is a typical example where the structure of growth is exponential. Einstein, Kekule or Marie Curie did not get the success overnight but had enough perseverance to sustain the phase 1

Sinusoidal Growth: Fields like spiritual growth are neither exponential nor logarithmic. You do not start your spiritual journey as your hobby or for earning a livelihood/achieving fame. ( with the exception of fake gurus,babas & bapus ) It only comes out of genuine suffering or existential dilemmas of life. ( Refer figure c. Sinusoidal Growth ) It is said if you have not suffered a breakdown you may not get a breakthrough. Initially you start from a negative state, you may get results for some time, again you fall down and each time you raise the bar. Siddharth Gautam had to experiment with different techniques that were available in his time from the age of 30, and by 36 he realized chasing the techniques itself was a mirage and he was enlightened to realize his Buddha nature.

Each field may have either one or combination of the above growth structures. So to be an expert and an authority in a specific domain, it is not only important what traits you carry ( which is your DNA ) but to see whether there is a synergy between your traits and structure of your domain.

Remember, Vinod Kambli and Sachin Tendulkar had similar talent. Sachin could sustain in the phase 2 of logarithmic growth; Kambli could not.

As a professional remember, a formal education at the university does you no harm, provided you start learning there afterwards. It is simply beyond attending a 2-day company sponsored training program.

Who is more ethical ? Sex-Workers or Corporates?

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Usha Multipurpose Cooperative Bank (UMCB) is based in Sonagachi, North Kolkata, one of the largest red-light areas in Asia. The bank was formed in 2001 and is run by former sex workers and run for the women from the same trade. ( Deccan Herald, Bangalore 5^th Feb 2015)

UMCB has been named the ‘Best Managed Cooperative ‘ in West Bengal for 2014 at the 61^st All-India Cooperative Meet. The bank has recorded a recovery rate of 98% of the loans with minimal NPAs.

Now compare and contrast this behaviour and attitude a few of the ‘suceessful’ corporates!

As per the All India Bank Employees Association the top 50 loan defaulters’ total default amounts to Rs. 40,528 Crores and is headed by Vijay Mallya ( Rs. 7000 Crores+) Sterling Biotech, Deccan Chronicle etc.

I heard a Sr. Finance executive of a large petrochemical company telling me (darling of investors, shareholders etc. all these days) how the company increases its net margins by at least Rs. 100- 150 crores per year by simply delaying the suppliers’ payments for more than six months under some pretext or the other.

The page 3 celebrities get all the limelight and the glitter. But then who is more ethical and moral the Sex-workers or the ‘successful’ corporate?

Ground-rules for Implementing Key Account Management

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Can I send Salil, my Sales executive, age 23 years for the Key Account Management programs? said Jagdish,,Sales Manager of an engineering company. I had to tell him the following aspects which determines the ground rules for implementing Key Account Management (KAM)

Needs a Different Mindset: Successful Companies who have implemented KAM look at it as a Strategic way of doing business and not a sales activity. You need to have commitment to work with priority customers differently. For example Supply Chain management can be an integral part of KAM
Commitment from Top Management: It cannot happen at the Sales Manager’s level. The buy-in has to be at the CEO, CMO, VP-Sales level. The sr. people should sponsor at least 1-2 such accounts and interact/visit them regularly.
Select the Right Person: Maturity is the most important attribute while selecting the Key Account Manager. It is not necessary that your top-performing salesman can become a good Key account Manager. He has to be more of a generalist with good understanding of finance, inventory, planning, influencing skills and the ability to see the big picture. A typical salesperson who is desperate to close order may be a misfit. One key competency is to understand the customer’s business beyond his immediate requirement.
Identify Key Accounts Carefully: Lynette Ryalls in a HBR article says the number of accounts should be within 5-25. Even a company like Xerox does not have more than 100 customers as Key Accounts.
Appoint and Train the KAM: The communication and influencing skills of the Key Account Manager has to be exceptionally good. He should be able to talk technicality at lower levels as well the macroeconomic environment, the interest rate with CFO and CEO comfortably.
Put the right Metrics: He should not be judged on top-line results. In case of rate contracts with low margins when the cost of servicing a key account is high, the consequences can be disastrous. Performance should be judged more by the margins or net contribution. Another yardstick can be the lifetime value of the customer.
Rework on the KAM cases every six months: All major accounts need not be key accounts. There are some unique parameters on which you should decide which customer remains in the Key account basket and those who need to be taken away.

Does success in Small Value Sales a Guarantee in Key Accounts too?

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This question when asked by my clients, I am reminded of Marshall Goldsmith’s book, What Got you Here, Won’t Get you There! One of our clients nominated his star performer, Akshay for our training program. The main reason being he was not able to reach his desired targets in selling high-value capital equipments, the way he was selling laptops and mobiles in his previous organization. It is generally believed that a great salesman can sell anything to anybody. Translated otherwise, most of us feel that a great salesman is the one who can sell a refrigerator to an Eskimo. The above statement is not true for the following reasons:There has been a paradigm shift from a Sellers’ to a buyers’ market. Today’s customers have more choices vis-à-vis their counterparts in 90s.

Thanks to internet, today’s customers are knowledgeable. A person before buying a mobile or a car has done enough research on the net comparing products technically as well as commercially.
If you try to sell something a customer does not need, there is possibility the customer express his anger and frustration on twitter/trip-adviser etc. and in no time the contents may go viral.
In a low-value sale, generally the customer knows what he wants to buy and the interaction between the salesperson and the customer is transactional. The salesman needs to inform the product features, the price and the competitive comparison.
In case of a high-value sale, or a key account sale, quite often the customer may not clearly know what he needs, he may have a vague idea. He needs a solution not a standard sales pitch. Precisely for this reason the salesman needs to be an active and empathic listener and also willing to probe deeper. He also needs to understand the customer’s business that is customer’s customer. Here the interaction is more on relationships. You will observe that the some of these competencies can be acquired but others are natural traits like strategic thinking. This is one of the reasons why a Star Performer in Small Sale may not always succeed in high-ticket deals or Key Account Management.

Paradigm Trainers Private Limited is having training programs on Key Account Management and Advanced Negotiation Skills in Bangalore ( 14/15^th Nov.) and Mumbai ( 21/22^nd Nov.) for more details : www.paradigm-info.com

New Strategies to Manage the Downturn

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It is said that when the going gets tough the tough get going. Some of the strategies companies are employing to beat the downturn are:

Find New Niches: Some companies are finding new niches which are more visible, easier to record and have a lower cost of acquisition. Maruti is targeting priests in Tamil Nadu and turmeric growers in Nashik. Groundnut and cotton growers in Jamnagar due to the bumper harvest are cash-rich and are buying mid range and high-end Maruti cars. The sales team was also able to sell 40 Eeco vans as a cost-effective mode of transport to restaurant and motel owners on the highways of Ahmedabad and Baroda.

The niches can be in rural market too where there is more scope for growth vis-à-vis the urban centres. Mayank Pareek, the CMO of Maruti has identified 300 new niches which account for 10% of company’s growth which include potato growers in West Bengal, blue-pottery makers in Jaipur, timber merchants in Gujarat, granite polishers in Hyderabad, painters in Madhubani in Bihar & Nut-bolt manufacturers in Sonepat.

For the migrant workers in Mumbai using entry-level feature-phones, Vodafone launched an application of booking train tickets on IRCTC , says Vivek Mathur, Chief Commercial Officer, “with an application much cost-effective than a connection of MBs of a data plan.”

Godrej was selling Aer, its car freshener as a FMCG product through its traditional trade channels. But the response was not encouraging. The consumer care research team found that the car owners are possessive about their cars and the accessories and may not visit the conventional FMCG outlets to buy a ‘freshener’. Godrej changed the strategy and appointed different distributors mainly from the car accessory market. The sales started picking up.

2. Get out of the Office: Axis Bank is coming out with similar initiatives which include involving senior citizens to open accounts. The Senior Citizen Privileged Account offers health checks, bill payment, an ID card for medical emergencies and a CD of old movie songs. Manish Lath, head of marketing says, “it is not about acquisition business but more of people relationship.”

3. Listen to the Sellers: Dealers, retailers considered as an extended arm of an organization are the important touch-points with the customers. Aircel has launched a new reward scheme for the retailers who sell the highest number of mobile connections. The star performer’s wife is eligible for a brand new Hyundai Santro car and the runner-up gets to meet MS Dhoni in person. Chandu Virani, MD of Balaji wafers has meetings with 800 dealers in group of 40-50. The purpose is not about sales and achieving the numbers but to listen to them and resolve the bottlenecks.

Whatever business you are in; can you identify the new niches which were hitherto untapped and with whom there is a greater fit between your offerings and the niche’s requirement?