Wednesday, December 15, 2010

When the Process Hurts the Substance

“I’m afraid that’s the end of our hour together,” Peter said to Tyler Gitou. “If you could get back to me on those points by tomorrow, I’d appreciate it.”

“Peter,” Tyler said quietly, “I can certainly get a response to you by tomorrow. But it won’t be a very informed response because there is not enough time to get all the information I need. Can I send you the material on Thursday instead? That way I can give you a better response.”

Peter thought for a moment and then nodded his head. “Yes, that would be OK.”

“Terrific,” Tyler said. “And after you have a chance to review it, could we schedule two hours for our next meeting? I don’t feel we are making enough progress in the hour we meet each week. I am mindful that you are trying to sign this deal before the end of the quarter.”

Peter shrugged. “That sounds fine. Let’s plan on two hours next Tuesday.”

The parties stood, shook hands and left the room. Tyler and Verdi got into the elevator.

“Mr. Gitou, why did you make such a big deal about the time?” Verdi asked. “You know they get very upset when we don’t follow the process.”

“The same process does not work for every deal, Verdi,” Tyler said. “Peter has made it clear that his primary interest is getting this engagement closed by the end of March. I mapped out all that both parties need to do in the next six weeks and we can’t meet that deadline using their process. We will miss something.”

“Miss something?”

“Yes, Verdi,” Tyler said. “This is a complex deal and both parties have a lot of details to review. What will happen is we will discover with two weeks left how much has to get done, we will rush, and we will miss something. The process of a negotiation can be as important as the substance, and poor planning of the process can impact the quality of the deal.”

“I agree, but how do you get a party that says, ‘This is the process to follow” to change?” Verdi asked.

“Talk about the outcomes and options and let the parties choose,” Tyler said. “Map out the process with your own team, reach a conclusion on the expected outcome, and then share it with the other party. Ask them whether they would like to follow the current process for a sub-optimal outcome, or a different process for a better outcome.”

“So you negotiate how to negotiate?” Verdi asked.

“Exactly,” Tyler said. “A Deal Whisperer knows that a good negotiation is a collaborative event. Presumably the parties share a common goal: to get to the best possible deal for both sides. If one side says, ‘I think the process we are following is going to impact our outcome’ then the other party should listen. Ideally, the parties would agree in advance on a jointly-developed process that drives to the best outcome. Establish the process before discussing substance. But if you don’t have the chance to do that up front, look for an opportunity to raise the issue so the process does not hurt the substance.”

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