By nature of its manufacturing business, firm often creates long-term contracts and makes significant investments in nations that are in flux and where business relations do not always follow the expectations of more-developed economies. For these reasons, the firm’s leaders care deeply about creating the very best corporate diplomacy training possible.
Sadly, in a very high proportion of companies, these criteria are not fulfilled. Some companies, particularly small and medium sized, don’t even have non-executive directors, who would have much to offer as an NXD in someone else’s board.
It is not possible here to fully discuss the complex system of business relations, but one intriguing observation is that, International market knowledge comprises an understanding of international customers as well as changing politics, regulatory processes and business norms (Corporate Governance and Chairmanship).
An important, yet understudied, aspect of this is the knowledge about foreign institutions, governments and how to work hard the communication between the different relevant actors, including barriers, as well as competences needed in different industry sectors.
An important observation here is that policy in many countries has been formed with large companies in focus and if policies are to be support firms, some specific realities have to be met.
Politics is largely about taking advantage of the mistakes and opportunities made by an opponent. The lessons of diplomacy are relevant—especially when executives are as concerned about geopolitical dynamics as many are today. Such lessons are relevant when you’re negotiating in different regions or cultures within your own country.
- These ideas were subject of Negotiation Special Report #2 10 the December 2013.
Articles published by the Program on Negotiation at Harvard Law school: In developing and teaching a course on corporate diplomacy for the most senior executives of one of the 20 largest firms in the world.
- Much of the course focused on decision making and negotiation in untraditional business environments.
Rational decision is oriented to firms goals and refers to a managerial choice that is based on the collection and analysis of information relevant to the choice. When engaging in complex and contentious matters managers need also to tackle conflicting preferences.
Making managerial decisions informed by the best available scientific evidence improv managerial decision making, international market knowledge and better business relation outcomes. But only if we radically revamp existing approaches to management education and dissemination of research findings.” “The lessons of diplomacy are just as relevant when you’re negotiating in different regions or cultures
Corporate Diplomacy focuses on developing The Manager as Diplomat, and addresses the skills of international diplomacy in the scope of corporate management and business development.
There are so many uncertainties for business development in our very globalized world. Prospective investors, wherever they decide to go, need to do their due diligence and understand all these risks, but even then there are no guarantees that these adversely affect investments.
How to Improve Negotiation skills? Here are some of the important questions that the diplomats posed:
- “How will different owners of a potential partner firm in the foreign country react to the interests of a multinational?”
- “How will changing local laws affect the wisdom of the transaction?”
- “What opportunities for learning are you creating?
What did the diplomats bring to the discussion?
Negotiation insights from diplomats. Asking The Right Question.
Too often, negotiators consider only the information that is most obvious about the negotiation—specific information relevant to the bargaining task at hand. Meanwhile, critical information lies outside their awareness. New York University professor Dolly Chugh refer to the common and systematic failure to see readily available and important information as “bounded awareness”. What did the diplomats bring to the discussion?
A more inclusive mindset.
They provided that knowledge—and much more. They taught us, to think more broadly about information that is not obviously relevant to a given negotiation but is crucial nonetheless. It is common for decision makers—from laypeople to leaders alike—to focus too narrowly on the situation at hand, according to Harvard Business School professor Max H. Bazerman. By contrast, career diplomats can display an impressive ability to include information that is not obviously relevant to a negotiation in their decision making.
The real challenge is to pose the right questions;
Short of living overseas, there are measures the rest of us can take to expand our focus in negotiation. In particular, we need to ask more questions and seek more information throughout the negotiation process, Bazerman writes.
- An overly narrow focus can limit negotiators.
By contrast, effective negotiators include broader sources of information in their field of vision. As a result, they more fully understand the implications of their actions and expand their awareness of the negotiation.
The landscape of international relntions is the science of the tests and trials of several interwined actors. Clearly, the diplomats (as group) had a trained ability to think about the big picture of a given negotiation.
They asked questions that did not occur to very high level and successful business executives or business school professors. International factors have played a much larger role in explaining changes in an firm’s strategy, the role of multinational corporations (MNCs) in international economics and politics within and between countries. In decision-making (a sub-field of foreign policy) takes its starting point the dependent variable, a specific foreign policy choice by an international actor and then seeks to explain the agent, groups, organizations involved in the decisional process. This tendency to think broadly is a skill that would serve all negotiators well. It’s particularly important when the rules of a negotiation are foreign and unfamiliar. Their questions broadened our awareness beyond the scope of the teaching plan in very interesting and productive ways.
- How to broaden your focus?
The more important and complex your talks are, the greater the need to seek information from the outer edges of your awareness. In addition, the more unusual the negotiation is and the less you understand about the other party, the more you should strive to broaden your focus.
- What type of information might you be most likely to miss?
To answer this question, reconsider your most important past negotiation.
- In retrospect, did you ignore any important information or miss any key opportunities?
- Was it possible for you to obtain the missing information?
- How would you have found it?
Your answers may provide hints on where to find the most important information in the broader concentric circles of your negotiations in the decisional process. What did the diplomats bring to the discussion? The diplomats enhanced our understanding of the negotiation at hand by asking and answering lots of questions that hadn’t occurred to any of us—not those who had brokered the deal, not the other executive students, and not the teachers. I present four of their questions that I found as important here and explain why it might be useful for you to pose similar questions when preparing for and conducting your most important negotiations. 1. How will various individual owners of a potential partner firm react to the interests of a multinational? When we negotiate with people we don’t know well, we’re likely to fall back on stereotypes. As a result, we miss the unique views represented by the unique individuals on the other side—and miss key insights as well.
Negotiators often act as if another company or another culture speaks with one unified voice.
In fact, different people within an organization inevitably will have different opinions about the negotiation. 2. How will the partner firm’s competitors react to a potential joint venture? Within our own economy, we tend to overlook how our negotiated outcomes will affect the next move or moves of competitors who aren’t seated at the table. For example, suppose that the second-largest player in an industry buys the fourth-largest player to become the largest industry player. It’s all too likely that the two companies involved in the merger failed to consider how their closest competitors might react to this industry shift. What did the diplomats bring to the discussion?
Wise executives broaden their focus beyond the negotiating table.
They highlighted the extent to which this change is strategically important. Given the complexity of deal making in developing and rapidly changing economies, the tendency to ignore the role and power of your competitors grows exponentially. You can overvalue your assets and your power. Understanding the perspective and interests of your counterpart will enable agreements that benefit both parties and maintain strong business relationships.
Learn how to prepare for a collaborative negotiation that avoids a power backlash and leads to success.
3. What precedent are you creating for future deals? Negotiators are likely to find that the first deal they create in a developing or rapidly changing economy is the most difficult one. Due to the intense concentration required, it’s easy to become absorbed in the current deal and lose focus on future deals. Yet the first deal can very easily create precedents for future deals that will affect your company for decades.
Developing and attending to a long-term perspective are difficult yet critical tasks in these contexts.
Last but not least: Foreign policy wins take time and perseverance The lessons of diplomacy are just as relevant when you’re negotiating in different regions or cultures within your own country. By broadening your focus in negotiation, you will learn to recognize and respond to differences between cultures and within them. Above all, seek out the best of both worlds, focusing intently when necessary while remaining open to important information from the periphery. Create better alternatives. Occasionally, it may seem as if everything is riding on the outcome of a particular deal. But that kind of pressure can sabotage even the best negotiators. When preparing for a negotiation that seems like a once-ina- lifetime opportunity, make a list of all the other options you might explore if you don’t succeed. Promote role models through different types of source of inspiration. By improving your sense of psychological power, you set yourself up to perform at your best. During the negotiation process, it’s easy to lose sight of what you want out of the deal and ovecommit in order to make the deal happen. A keener understanding of what is valuable to the buyer and how committed your counterpart is to the deal will help you make better choices in the negotiation.
Find out how to manage your bias and commitment to the deal before making an agreement.