Category Archives: communication

CIA’s Approach to Problem Solving

Banner, a marketing agency in the UK, recently posted the Phoenix List*, a list of the questions used by the CIA when trying to solve a problem.  Banner was approaching it from a marketing perspective, but these same questions can be used to solve a contracts or negotiation problem, as well.

(*Being the child of the 80s that I am, I would like to believe that this was a creation of the Phoenix Foundation… better known as MacGyver‘s employer. 😉 )


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LegalTED

If you’ve never heard of TED, you should check it out!  (If you’ve gone to TED, please let me know.)

Anyways, TED’s an annual conference designed to bring the best thinkers together from the entire world to solve some of the world’s most pressing problems.  These folks are encouraged to speak with the other TED attendees for 18 minutes.  Then the TED Prize is awarded to three individuals as a way to grant their “one wish to change the world”.  You can check out their videos on the TED site to see some of the speeches that have been given over the years.  Pretty awesome.

Victoria Pynchon, author of the Settle It Now Negotiation Blog put pen to paper today to ask why there isn’t a LegalTED – a conference focused on finding new and innovative ways to not only resolve disputes, but also prevent them from happening.  I commented to her that I’d had the same idea for awhile now, but I simply didn’t know how to express it the way she did.

If you’re reading my blog, chances are that you spend a significant portion of your day trying to resolve disputes (real or perceived).  You waste time on repetition of the same tasks over and over (between different parties, sure, but the same task nonetheless)… and you fight many of the same battles in seemingly endless succession.  Isn’t it time to find a better way to get the job done?

Head on over to Victoria’s site and contact her through the comments to let her know if you’re interested in helping out.  It’s gonna’ take some work to get this off the ground – not the least of which is trying to get TED interested in allowing us to piggy back off their success (so if anyone knows the folks at TED and can connect us, that would be great).

I look forward to working with you on finding new ways to solve our old (and tired) problems!


Relative Size

During adolescence, in the middle of dozens of arguments with parents, children always look for a trump card.  They haven’t usually been taught (or have yet learned) that “proper” arguing is not an attempt to hurt someone or even to gain power over someone.  So they look for phrases they can use to wound.  I believe the current and historical leader is “I hate you!”

However, I’m adopted, and we have a thermonuclear weapon-style trump card in these battles.  Adopted children can tell their parents that “you can’t tell me what to do, you’re not my real parents.”  It’s a tactic/ploy that only possibly works once – but it’s quite effective at the time (if relationship damage is the goal).

If/when you work for a large organization and you’re in the middle of a negotiation, every once and awhile, you’re also tempted to whip out a trump card.  A phrase you can say which will simply put the other side “in their place” and remind them who is in charge of the deal.

For large organizations, that phrase is “We’re an $xxM/B company.  You can either accept my suggestion or I can turn to one of the hundred other customers/suppliers waiting to talk with me.”

I’ll admit it… I used the phrase once.  And yes, I got my way.  But ultimately, I hurt the relationship and the lesson I learned was the business version of the personal lesson from childhood.  Hurting the other side, thus hurting the relationship, is never the goal of an argument or a negotiation.  The goal should be to work together to successfully meet the needs of both sides and solve the (business) problem.  If the only way you can get your needs met is to use puffery, then perhaps the deal was not meant to be… and you should walk away.

Oh… and if you’re going to use this verbal weapon, you might also want to make sure you really have the relative size compared to your opponent.  Sony is currently learning this.


Update – Yahoo’s response to Microsoft

To be fair, I did this to Microsoft, so now it’s time to do this to Yahoo!, too.

Dear Steve:

Negotiation Point: In contract to Steve’s letter, Jerry’s responding directly to Steve, not to Microsoft’s BoD.  This is both a sign of respect (he’s responding to the person who sent him a letter – and not escalating to that person’s boss) as well as a weak negotiation strategy.  While I normally don’t advocate sending cc’s or bcc’s via e-mail to an individual’s boss, sometimes you do so just to make sure everyone knows that this is an open exchange.

Our Board has reviewed your most recent letter with regard to the unsolicited proposal you made to acquire Yahoo! on January 31, 2008.

Our Board carefully considered your unsolicited proposal, unanimously concluded that it was not in the best interests of Yahoo! and our stockholders, and rejected it publicly on February 11, 2008. Our Board cited Yahoo!s global brand, large worldwide audience, significant recent investments in advertising platforms and future growth prospects, free cash flow and earnings potential, as well as its substantial unconsolidated investments, as factors in its decision.

Negotiation Point: Communication is the Fifth Fundamental Skill for Effective Negotiation.  Being able to reply to someone, telling them what you heard them say in your own words, is key to effective communication.  Jerry does this quite well.

At the same time, we have continued to make clear that we are not opposed to a transaction with Microsoft if it is in the best interests of our stockholders. Our position is simply that any transaction must be at a value that fully reflects the value of Yahoo!, including any strategic benefits to Microsoft, and on terms that provide certainty to our stockholders.

Since disclosing our Board’s position with respect to your proposal, we have presented our three-year financial and strategic plan to our stockholders, which supports our Boards determination that your unsolicited proposal substantially undervalues Yahoo!. Those meetings with our stockholders have also provided us an opportunity to hear their views.

We have continued to launch new products and to take actions which leverage our scale, technology, people and platforms as we execute on the strategy we publicly articulated. Today, in fact, we are announcing AMP! from Yahoo!, a new advertising management platform designed to dramatically simplify the process of buying and selling ads online.

Finally, our Board has been actively and expeditiously exploring our strategic alternatives to maximize stockholder value, a process which is ongoing. All of these actions have been driven by our overarching commitment to maximize stockholder value.

Negotiation Point: Jerry is tactfully saying that the offer is too low.  Note that he’s not asking for more – nor setting a price.  He’s simply saying that what was offered is not enough to consider further.  He continues to say things that are valuable to Yahoo! and its shareholders… again without stating actual dollar amounts.

Our Board’s view of your proposal has not changed. We continue to believe that your proposal is not in the best interests of Yahoo! and our stockholders. Contrary to statements in your letter, stockholders representing a significant portion of our outstanding shares have indicated to us that your proposal substantially undervalues Yahoo!. Furthermore, as a result of the decrease in your own stock price, the value of your proposal today is significantly lower than it was when you made your initial proposal.

Negotiation Point: This is Jerry’s first dig… essentially pointing out that Microsoft’s offer, over the last few weeks, has actually decreased in value.

In contrast to your assertions about the effect of general economic conditions on our business, Yahoo!’s business forecasts are consistent with what we outlined in our last earnings call. As you know, we recently reaffirmed our Q1 and full year guidance, which is a testament to our ability to perform in line with our expectations despite the current economic environment. In addition, our three-year financial and strategic plan which we have made public demonstrates significant potential upside not previously communicated to the financial markets. This plan has received positive feedback from our stockholders, further strengthening the view that Yahoo! is worth well more as a standalone company than the value offered in your proposal, and would be even more valuable to Microsoft. Your own statements have made clear the strategic importance of Yahoo!’s substantial assets and capabilities to Microsoft.

Negotiation Point: Because Steve made this whole thing public, Jerry’s got to stick up for Yahoo! in public – and he has to inform his shareholders of the reasons why the offer isn’t a good one.  This paragraph isn’t the best in terms of tone – it’s sounding a little sad, actually (ie:  “We really are valuable, yes we really are.  I swear.”).  But it’s necessary given how this is playing out.

We regret to say that your letter mischaracterizes the nature of our discussions with you. We have had constructive conversations together regarding a variety of topics, including integration and regulatory issues. Your comment that we have refused to enter into negotiations to conclude an agreement are particularly curious given we have already rejected your initial proposal, nominally $31 per share at the time, for substantially undervaluing Yahoo! and your suggestions in your letter and the media that you are considering lowering the value of your proposal. Moreover, Steve, you personally attended two of these meetings and could have advanced discussions in any way you saw fit.

Negotiation Point: Calling a bluff is difficult. You have to have facts to back it up.  Yahoo! apparently does (ahhh, the benefits of Information Gathering) – and Steve’s going to be red in the face as a result.  Lesson?  Don’t bend the truth.

As to antitrust, we have discussed with you our concerns. Any transaction between us would result in a thorough regulatory review in multiple jurisdictions. As a follow up to a recent meeting among our respective legal advisors we had on this topic, and at your request, we provided to you on March 28 a list of additional information we would need to further our understanding of the regulatory issues associated with any transaction. To date, you have still not provided any of the requested information.

We consider your threat to commence an unsolicited offer and proxy contest to displace our independent Board members to be counterproductive and inconsistent with your stated objective of a friendly transaction. We are confident that our stockholders understand that our independent Board is best positioned to objectively and knowledgeably evaluate our Company’s alternatives and to maximize value.

Negotiation Point: Again, Jerry’s having to respond to a direct threat.  There is usually no good way to do this in public – tipping your hat to the opponent to let them see your plans on how you’re going to respond isn’t good.  Jerry does a pretty good job of responding without specifics, essentially saying “bring it.”  But from a negotiation perspective, if you’re not prepared for your opponent to respond affirmatively – enticing them to do so is a bad strategic move.  Using Information Gathering, Strategic Thinking and Time Management skills (the first three of the Five Fundamental Skills), Jerry has most likely spent the last few weeks prepping for this possible move by Microsoft.  Thus, when Steve threatened, Jerry had a pre-packaged response.

In conclusion, please allow us to restate our position, so there can be no confusion. We are open to all alternatives that maximize stockholder value. To be clear, this includes a transaction with Microsoft if it represents a price that fully recognizes the value of Yahoo! on a standalone basis and to Microsoft, is superior to our other alternatives, and provides certainty of value and certainty of closing. Lastly, we are steadfast in our commitment to choosing a path that maximizes stockholder value and we will not allow you or anyone else to acquire the company for anything less than its full value.

Very truly yours,

Roy Bostock, Chairman of the Board

Jerry Yang, Chief Executive Officer

From a negotiation standpoint, Steve attempted a play with Power.  He used only one of the Five Fundamental Skills.  Jerry, on the other hand, almost entirely ignored power (his few mentions of not taking an offer less than fair market value could be seen as a power move, but barely so).  Instead, he used Information Gathering, Strategic Thinking, Time Management and Communication.

Which one do you think is “winning” so far?

Jerry.  Hands down.

Announcing Skribit!

I’ve worked hard to try to encourage discussion on the various topics that I blog about.  However, this hasn’t let the conversation move to the topics you want to read/hear about.  To address this need, I’ve installed Skribit – which allows you to suggest topics for us to talk about!  So, scroll down a little on the site and look to the right.  You’ll see the greenish box, click where it says “Click here to make a suggestion!”  You’ll have to register (for free – just to keep out the spam), but then your suggestion will appear.

I look forward to talking with you about your interests!

Internal Relationships

I really love my business owners. They’re new to having a contracts person in-house, but they appear to understand my purpose and don’t make it too hard for me to implement proper contract management processes and procedures.

But it’s not something that has happened over night and it’s not something that transfers from one individual to another without my participation. In other words, if I have a good negotiation/contracts experience with one business owner, I have to do it again with the next one. This increases the length of time it takes to build a reputation within the organization. It also means that not all of my business owners will be equally satisfied with me or my performance.

Some of this is due to human nature. You’re simply not meant to be best friends with every person you meet. There’s just too much individuality and uniqueness in personalities. There’s also the nature of each deal to worry about. Sometimes you’ll have an easy win (from your perspective) which looks impressive from the outside. Or sometimes you’ll just work really hard and be rewarded with a successful outcome and a grateful business owner as a result of your hard work.

What do you do, however, when you feel an internal relationship slipping away? You know what I mean – that situation where you KNOW you’re doing the best you can, but for whatever reason, your business owner is just not on the same page with you. Or perhaps YOU are the business owner and you need your contracts person’s help, but you feel like they just don’t get the fact that you have deadlines, budgets and other constraints?

See, I’ve got one of these going on right now. I have a business owner that I respect highly and knows his business. He also knows his vendor and he has put in the effort to understand my position. Here’s the scoop: long-time vendor on an important aspect of our business, agreement that’s over a decade old, vendor isn’t a sole-source and doesn’t perform as well as we would hope. I really am encouraging him to start fresh from our template Master Agreement. It would add in some of the checks & balances-type language that would give us some amount of leverage to encourage better performance.

The vendor, of course, doesn’t want to review our paper (it’s a 30+ page document). The business owner doesn’t want to do anything that would damage the relationship. His initial suggestion was to do a document comparison of the old doc against the new one and identify the differences and pull those in via an amendment. Frankly, that would take longer than just starting from their template agreement again and doing a redline. I’m slammed as it is. If we’re going to re-open negotiations across the board, it doesn’t make sense to start with their document.

His second suggestion was to use outside counsel. That’s well within his right – assuming he’s got the budget to spend. But I would prefer he doesn’t (I don’t like wasting the money on something I can do for him). Again, we’d simply be opening the door to a negotiation to edit a decade-old agreement rather than start from the template.

And now he’s talking about going through our template himself and looking for those things that he would love to pull into the existing agreement. I would rather not see him spend that kind of time on it – as it seems that he really wants our better language yet is afraid that pushing our template will ultimately damage his relationship with the vendor.

I’m not sure what to tell him at this point. Any suggestions for him or me?