Lorenz’s Butterfly Effect holds that minute variations at the inception of a dynamic exercise will produce unexpected and increasingly larger variations as the exercise plays out. The longer and more complex the exercise, the more pronounced the variations. Negotiations are dynamic exercises and Lorenz’s phenomena holds true in this case as well. Negotiators constantly disclose new information and resort to a panoply of new tactics and unique moves. From early on, seemingly arbitrary decisions and moves can have a crucial impact as the negotiation develops. Preparation is required to anticipate and plan for these variables that can impact negotiation.
Proper preparation requires anticipating a myriad of pre-negotiation considerations then working through them. One important consideration is the staging of the negotiation, i.e. planning where the negotiation will take place. While this may appear to be a minor factor, the venue can have long-term ramifications on the relationship between the two parties. This article explores the possibilities and strategies surrounding this crucial decision.
Where Should You Conduct the Negotiation?
When a typical executive is asked where they would choose to negotiate—their place or the other party’s place—a significant number of them will say, “My place.” Most people assume there is a “home-court advantage,” but choosing the negotiation site is a critical move and should not be a knee-jerk, default decision. First, consider abandoning preconceptions you may harbor about conducting a negotiation. By allowing preconceptions to become “defaults,” a negotiator will overlook and possibly miss very powerful opportunities.
It better serves the negotiator and his or her principal if as many variables as possible are carefully considered and pre-planned. This way the negotiator can more fully concentrate on the task at hand—to negotiate—and employ proactive tactics and/or strategies and not knee-jerk reactions. There are clear tactical and strategic options a negotiator must consider when choosing a site. These apparently innocuous choices, like in Lorenz’s “Butterfly Effect,” will almost certainly have an ever-increasing effect on the negotiation. Whether the negotiation site influences the negotiation positively or negatively may be contingent on the initial decision of where to conduct the negotiation.
There are many benefits to conducting the negotiation at the other party’s choice of venue. The choices mentioned in this article are by no means exhaustive. I consider both practical and psychological reasons for choosing the other party’s office. Finally, there is no order of preference. That is to say, no one option is more important than another. Each should be independently considered.
First, consider the non-verbal communication you give when you are willing to go to the other side’s office, plant, or place of business to conduct an important negotiation. You are saying “I am confident in my position.” An aura of strength and confidence is important and can be transmitted non-verbally in a high-stress situation like an important negotiation. The perception of confidence in your position lends credibility, which, in turn, may help the other party more readily embrace your position.
Second, going to the other party’s site gives the message, “I respect you. I respect your time.” A more subtle Meta message says, “I am not afraid of you.” While many people view negotiation tantamount to warfare, that approach may lead the negotiators into an inefficient environment. Efficient negotiations often look more like a partnership than a battle. Respect plays in integral part in an efficient, successful negotiation, especially if the negotiator looks at “winning” as something beyond this “one-off” meeting. Respect leads to positive relationships and positive relationships lead to parties that are willing to explore possibilities in a negotiation in hopes of a more efficient, mutually beneficial outcome. Fear of “losing” can cause negotiators to feel vulnerable. Some respond to this feeling by acting more forceful or aggressive, while others are more reticent to explore possibilities. It’s important that both parties see the negotiation as an opportunity, not a danger. The more positive messages a negotiator can deliver, the more the chances increase that the other party will see this negotiation as an opportunity as opposed to a danger.
Third, conducting the negotiation at the other party’s site may also give them a sense of comfort. Negotiations, especially those entailing significant resources, can take a physical and emotional toll. Giving the other party the opportunity to remain in their comfort zone may ultimately be more helpful to you then it is to them, because it may get them to see the negotiation as an opportunity and thus engage in the bargaining process with a spirit of cooperation rather than from a place of fear and protectiveness.
Fourth, going to the other party’s site has other very practical advantages. The negotiator has an opportunity to see more than just a body in front of them. Going to the place they consider a safe or comfort zone lends more dimension to the person. It also affords the negotiator an opportunity to gather intelligence about what influences the other party and may be a window into their motivations. It also helps in making a connection to build rapport. For example, When you enter another negotiator’s office, what pictures are on the wall? What books are in the bookshelf? What items are on the desk or in the office that appear to bring meaning to this person’s life? What artwork or memorabilia do they put on display? All of these things are clues into what drives this person. They are also cues you can use to open up a conversation and ask questions.
“Is that your family?” “Beautiful car, did you build it?” “What is the meaning of….?” These are just a few of the questions one might ask, which have nothing to do with the pending negotiation. They are a segue into a personal conversation that can alleviate some of their fear or concerns the other party may have about you, and open a dialog wherein you become more human and not just “the other side.” The goal is to use every tool you have at your disposal to find a way to get the other party to “buy in” to your perspectives of the issues, positions, and interests you are going to negotiate. By establishing common personal interests, you are more likely to establish a positive relationship than if you were to just cut to the chase and begin butting heads. Whatever you have to sell, whatever you need from this person, whatever the purpose is for being there to negotiate can wait a few moments while you connect with the other side on a personal level. Being in the other party’s office or factory may help in establishing this kind of rapport.
Finally, another tactical consideration for going to the other party’s office or factory is that when negotiating there it is difficult for them to hide paperwork or declare files unavailable. It also gives you the advantage, when you need to defer or “hide the ball,” by saying, “Oh, that file is at my office.” Of course this can cut both ways. If it is something you truly don’t have and need, not having immediate access can be detrimental.
The On-site Visit
Negotiating at their plant or manufacturing site can have numerous benefits and is another important source of intelligence. For instance, are they in a rented facility? Are family members in critical positions that could be compromised in the event of a familial rift? Can they do what they say they can?
Suppose you are a buyer negotiating a “requirements contract” with a manufacturer. A “requirements contract” is an agreement by the manufacturer to provide all the buyer’s needs for a certain product. In doing your due diligence, you find a manufacturer whose price is very favorable. It would be a prudent move to schedule the negotiation at the manufacturer’s plant to see the facility, the manufacturing line, and just observe the daily routine at the plant. It affords you an opportunity to see, firsthand, if they really have the capacity to deliver what they promise. Under the guise of a respectful offer to negotiate at their factory, you get the ancillary benefit of gathering important information. On the other hand, any hesitation on their end to show you their plant and line should put you on notice that there may be a problem.
As mentioned above, most negotiators generally feel more comfortable and possibly more confident in their ability to engage in meaningful negotiations at their own place of business. Additionally, if the negotiator is at his or her office, they will have easier access to any documents or records they may need during the negotiation. He or she will also have the benefit of the support staff and access to computers and other sources of information that may be important. On the other hand, it is important to note the other party has the same ease of access to your information. Conflict over whether or not to provide the information could then become a distracting issue.
There may be another, more subtle purpose, for insisting on your office being the negotiation site. You may want to deliver a non-verbal message to intimidate, or more euphemistically, impress the other party. One successful attorney in Los Angeles takes visitors by a number of model dioramas. Each diorama depicts the incident that gave rise to a lawsuit for which he was lead counsel. Accompanying the models are newspaper clippings with the basic facts of the case and headlines such as, “Largest Award in the History of California,” “Largest Verdict Ever Awarded by a California Jury,” and “Multimillion Dollar Jury Award Assessed Against the City of…” The visitor sees this before speaking to anyone other than the receptionist. Nothing needs to be said, but there is the message to the visitor that they are in the presence of a powerful and successful attorney.
Successful people (or people who want to appear successful) give numerous non-verbal messages. They use expensive watches, exotic vehicles, and custom-made suits. Their homes, offices, and personal appearances are all staged indices of success and power. Successful people know how to use these tools to their advantage. It is fair to assume their negotiation venue will also be staged to impress. Sometimes it is important to make the statement non-verbally. It would be gauche to say, “Look how good I am. Look at all my awards.” For this reason many professional people will have an “ego wall.” The ego wall is intended to impress and/or intimidate. It may have awards, citations, unique artwork, and certificates from schools and universities. Under some circumstances, pictures of the host in a golf foursome with a president of a multinational company, a famous celebrity, or shaking hands with the President of the United States makes a strong statement. As with every medium of communication, one has to be prudent. If you have a picture of you shaking the hand of your good friend George Bush or, alternatively, your friend Barack Obama and your guest is an ardent supporter for the other party, you may have made a critical faux pas. It all goes back to preparation. The central question is, “Why am I deciding to negotiate in a given place and what are the potential risks and benefits?”
The tactic of choosing a place that neither party has ties to has been in effect for time immemorial. Some popular neutral sites include the golf course, the Rotary club, other service clubs, or a place like the Jonathan Club, an “exclusive” club where deals are negotiated and made sans the pressure of outside disturbance. If the environment is upscale, there are additional messages to consider, such as “I think you are special enough to bring you here,” or “This is the way I do business” or any other number of unstated messages.
In days gone by, the venue was often a bar for a couple of lunchtime martinis. We see this scene played over and over again in “Mad Men,” a current, popular television program on AMC depicting 1960s business behavior. The alcohol, along with the informal environment, was intended to create a relaxed ambiance and to lower defenses and inhibitions. The purpose for choosing a neutral, informal venue is to take the edge off of the negotiations. In today’s wired, high-speed world, proposing a meeting at a neutral site should take into consideration whether or not there is Wi-Fi or other technological requirements.
As a note, some organizations and clubs discourage the discussion of business on the premises. It would be a major error for you to attempt to open a business negotiation under such circumstances. Presumptively your host knows the rules and bringing you to the site is a polite way of saying, “I am not ready to discuss business yet.” Other forums are too busy or noisy to allow any meaningful negotiation. Going to a public forum, such as a bar or restaurant, may not provide the necessary confidentiality or privacy for a crucial negotiation. Also, the other party may have some bias against such an unprofessional environment. The attempt to convey a certain message could backfire.
A Note about Manager-Employee Negotiations
A negotiation in which a manager is negotiating to resolve a conflict with subordinates requires some special considerations. Does the manager go to the “floor” and discuss the matter with the employee(s) in a place where the conversation could be overheard or observed by the employee’s peers? Does the manager have the subordinate come to his/her office with a “power desk” separating them? Does the manager take the employee to the local bar for a beer and informally discuss the issue? Each of those decisions has ramifications that should be considered before the manager begins the negotiation.
The pros and cons discussed in this article for deciding where to conduct the negotiation are not exhaustive. The article is designed to raise your awareness of the potential benefits and detriments of a given choice. If there is any crucial “take away,” it is that the place to talk should be a factor of thoughtful and reasoned consideration. In making your choice you should consider the nature of the negotiation at hand, the parties involved, the goal, the issues, and the interests. You should not fall back on a default choice of “our place.” Choosing the proper site for the negotiation can be a powerful move. It should always constitute a part of your negotiation preparation and it should be carefully considered.
As the Butterfly Effect Theory holds, failure to consider minor matters at the outset may result in those “small” issues becoming gigantic issues—issues that can spell the success or failure of the negotiation. A little factor such as not having expeditious access to your files and records can become exponentially more troublesome the longer and more complex the negotiation. The negotiator who fails to plan should plan to fail. Get it right the first time through thoughtful and meticulous planning.
Lorenz is generally considered the formulator of the Chaos Theory. He began to formulate his theory when he did a computer run of a formula. He wanted more information so he did a rerun. In the second run he did not extend one of the numbers to the same place after the decimal as he did in the first run. Because the original number had such an extensive number of digits to the right of the decimal, he was just trying to save a little computer time. What he found is the omission of what appeared to be an insignificant change, drastically changed the outcome. The change became radically different the further out he projected his analysis.
For further information see: http://www.12manage.com/methods_ lorenz_chaos_theory.html (link no longer accessible).