Negotiate like Trump? Not everyone can do it
In his 1987 book The Art of The Deal, Donald Trump described the negotiation and management style that led him to success in the American luxury real estate market at that time. The first weeks into his presidency demonstrate his negotiation style hasn’t changed much since then. So the question is: if you’re looking for success in business, should you negotiate like Mr Trump?
One thing is sure, Mr Trump knows how to negotiate. His negotiation style can certainly be defined as Competing. He shares with us in his book a story that illustrates his approach: “A new 727 sells for approximately US$30 million. A G-4, which is one fourth the size, goes for about $18m … I offered $5m, which was obviously ridiculously low. They countered at $10m, and at that point I knew I had a great deal, regardless of how the negotiation ended.” By anchoring the negotiation at a fraction of the price he is targeting, he obtains a better deal. While price comparison websites have become standard tools, many business valuations integrate non-rational factors.
In line with the anchoring process, Mr Trump described again in The Art of The Deal the tactic he uses to dominate the relationship. “I play to people’s fantasies. People may not always think big themselves, but they can still get very excited by those who do. That’s why a little hyperbole never hurts. People want to believe that something is the biggest and the greatest and the most spectacular. I call it truthful hyperbole. It’s an innocent form of exaggeration, and a very effective form of promotion.” By “exaggerating”, he’s imposing his point of view to the counterpart. Very few negotiators have the uber-confidence required to amplify a project value and go beyond a rational evaluation.
At a glance
What: Donald Trump’s negotiation style can certainly be defined as Competing
Why: He first anchors a negotiation, and does not hesitate to exaggerate if needed
The main issue with such a tactic resides in the fact that prepared negotiators resist well to the intended trick. Their absence of reaction, or simply a long silence, can shake the other’s assurance and bring back the discussion to rational terms. On Taiwan, Mr Trump had turned the tables by breaking the decades-long status quo in American policy, addressing directly the Taiwanese president. His objective has been to reshape the relationship with China, indicating he wouldn’t play by the old rules. But as he faced the silence of his Chinese counterpart and the signal that the One China policy was a limit they would never allow to be crossed, Mr Trump backed up and accepted the rule in order to allow the negotiation to start.
A basic principle of negotiation preparation is to reinforce your position before the negotiation. This is done by building the best possible alternative to a negotiated agreement. You ensure that if the deal goes wrong, you have other solutions. You also show your muscles to counterbalance a weak situation, or to balance the respective power positions.
Mr Trump describes one such effort in his book: “When the board of Holiday Inn was considering whether to enter into a partnership with me in Atlantic City, they were attracted to my site because they believed my construction was farther along than that of any other potential partner. In reality I wasn’t that far along, but I did everything I could, short of going to work at the site myself, to assure them that my casino was practically finished. My leverage came from confirming an impression they were already predisposed to believe.”
To ensure leverage, we learnt that he is not refusing confrontation. “The risk is that you’ll make a bad situation worse, and I certainly don’t recommend this approach to everyone,” he writes. “But my experience is that if you’re fighting for something you believe in – even if it means alienating some people along the way – things usually work out for the best in the end.”
“Dirty” tricks are sometimes used by negotiators. They can range from ultimatum to threats. But it is important to remember that even if these can possibly work, the fact they lose doesn’t mean you won. A deal that is accepted with reluctance may not become an implementable deal. But worse, it may be a bad deal. A competitor is sometimes so focused on the idea of winning that she or he misses the bigger picture, or the fine print, which will cost them more than the margin they negotiated successfully.
As a businessman, Mr Trump has orchestrated acts that got counterparts misreading his real intent. Either by framing a situation and controlling what people focus on, or by launching provocative ideas, with the objective of leaving everyone wondering, he built himself into success. Imagine a client concerned by price, who is headed by a salesman towards the important cost savings he will realise. Psychology researchers Daniel Kahneman and Amos Tversky explain that people are more influenced by the psychological pain of loss than the psychological rewards of gain. As you help your counterpart avoid a loss, you obtain their adhesion. You’re now taking control. Exposing framing isn’t easy. It certainly is a powerful negotiation tool.
Mr Trump is driven by an incredible energy to win. In business or during the presidential race, he demonstrated that negotiation tactics when used correctly have a multiplying effect. As a competitor, he first anchors a negotiation, and does not hesitate to exaggerate if needed. He strengthens his position by all means, and doesn’t refuse confrontation. This approach brought him success. But be prepared for highs and lows should you decide to implement the same. To quote him again: “I never get too attached to one deal or one approach. For starters, I keep a lot of balls in the air, because most deals fall out, no matter how promising they seem at first.” Not everyone can, or should, negotiate like Donald Trump.
Radoine Nachdi manages the Abu Dhabi activities of Chalhoub Group and is a guest lecturer on business negotiation at Paris-Sorbonne University Abu Dhabi.
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Published: April 11, 2017 04:00 AM