negotiating life

Opening Moves

How a negotiation begins can profoundly influence how it ends. Consider the ill-starred bargaining process that unfolded between Frank, an acquaintance of mine who owned a trademark, and John, the president of a start-up beverage company. At John’s request, Frank traveled from a distant city for a meeting, which John opened by asking: “Frank, we’d like to buy the trademark and we want to know how much you want for it.” Frank replied, “How much are you offering?” John insisted on knowing how much Frank wanted for the mark, and Frank persisted in demanding an offer. Finally, as their conversation came to resemble a buyer and a seller haggling over the price of a mango in a tropical market, John and his two associates retreated into the hallway to confer.

Returning after ten minutes, John said, “Frank, we’ll give you $100,000 for the trademark.” Frank reacted angrily. “That’s ridiculous. It’s worth a lot more than that and you know it.” Frank slammed shut his briefcase and stormed out. It took more than a year for the two sides to resume discussions.

“With that offer,” Frank told me later, “John was telling me I was stupid. That made me mad enough to walk.” Had John chosen another option to open negotiations—say, by presenting a written proposal based on industry standards for comparable trademark sales—Frank would not have felt that John was belittling his intelligence. More important, the two sides would then have had a factual basis for serious discussions.

In any negotiation—whether between businesses, governments, or spouses—it’s essential to plan opening moves with care, taking into account three important elements:

Your options. The array of possible openers in any negotiation is often broader and more varied than you at first assume, so it’s important to consider carefully the whole range.

The likely reaction of your counterpart. Your choice of a particular opening should depend not only on the interests you are pursuing but also on how you anticipate the other side will respond.

Intended or unintended messages. Opening moves not only communicate your position on the issues at stake but may also convey messages about you, your company, or your opinion of the other side. Some people take the attitude “I’ll be tough at the start. If that doesn’t work, I can always be more conciliatory later on.” But an aggressive opening move may give your counterpart a lasting impression that you and your organization are unreasonable, rigid, and perhaps untrustworthy.

As in all aspects of negotiation, planning the right opening moves requires that you understand your counterpart's culture. Wise negotiators shape their opening moves to align with local formalities and customs. Some Americans encounter pitfalls when they disregard formalities and too quickly seek to develop informal relationships with their counterparts. In my survey of the negotiating styles of twelve different countries (see Tufts Magazine, Winter 2010), Americans had the greatest tendency to use informal negotiating styles in business dealings. The problem is that some cultures view informality as a sign of disrespect.

General Electric’s attempt to secure European Union approval for its acquisition of Honeywell in 2001 is one example. GE executives showed little deference in their approach to EU officials. Early in the discussions, Jack Welch, the company’s CEO, told Professor Mario Monti, the EU competition commissioner—as if he were addressing a fellow business exec—“Call me Jack.” Monti, keenly aware that he represented the European public interest, replied: “I'll only call you Jack when this deal is over.” The talks went downhill from there, and approval was denied.

Much better planned was the negotiation of an alliance between Northwest Airlines and KLM, the Dutch airline, in the early 1990s. Northwest knew that KLM, a much smaller airline, was worried about becoming a junior partner. To ease Dutch fears, Northwest structured every aspect of the opening of talks—from the preliminary dinner to the formal initiation of deliberations on the deal—as a summit meeting between two equal states. As one Northwest executive put it, “We used every symbol we could think of to recognize their sovereignty.”

No matter what kind of negotiation you are engaged in, remember: you’ll never have a second chance to make an opening move, so make your first one the right one.

JESWALD W. SALACUSE is the Henry J. Braker Professor of Law and former dean of the Fletcher School at Tufts. His most recent book is The Law of Investment Treaties (Oxford University Press).