K&R CEO Mladen Kresic Discusses Negotiation Trends and Principles with Knowledge@Wharton Host Dan Loney (Complete Transcript)

On Friday, November 13 K&R CEO Mladen Kresic joined Knowledge@Wharton (Sirius XM Channel 111) host Dan Loney to discuss negotiation trends, principles and tactics.  The talk centered around practical negotiation strategies from Kresic’s bestselling “Negotiate Wisely in Business and Technology,” which was republished this fall with updated information and a new companion workbook.

Loney and Kresic discussed the nature of credibility, leverage and other key principles of the book, which has been read widely by business professionals and used in universities and numerous corporate programs across the world. This content reproduced courtesy of Sirius XM and Knowledge@Wharton.

Mladen Kresic

Mladen Kresic

Dan Loney: Negotiation, I think everybody would agree, is pretty much a common part of our lives on many fronts, whether you’re talking about our business lives or just negotiating the price of something we want to buy on Amazon or Ebay. But there are certain tactics that you need to be aware of, especially when you’re in the business world or even in the realm of technology.

Mladen Kresic is the president of K&R Negotiations, is also a technology lawyer and co-author of the book, Negotiate Wisely in Business and Technology. He joins us on the show right now. Mladen, thank you very much for coming on.

Mladen Kresic: Thank you for having me, Dan.

Dan Loney: You’ve represented quite a few companies in the tech sector. I would think that negotiation in this area is at an all-time high or very close to it…and expected to continue that way?

Mladen Kresic: That’s a good observation. Business negotiations have been pervasive for time immemorial. What’s particularly increased the pace of negotiations in technology is the pace of innovation. In fact, traditional companies like banks and financial institutions are now technology companies. The answer is, “Absolutely.” You’re on point.

Dan Loney: The interesting thing is, we’re talking about an area that not only has the massive tech companies, but it also has so many entrepreneurs that are trying to push that next great idea out there, push that new idea forward. You’re talking about very different types of frameworks for companies.

Mladen Kresic: Absolutely. You see in nanoseconds companies grow from being startups to having multibillion-dollar valuations, and a lot of that’s through negotiating deals with other companies in the business.

Dan Loney: Are some of those entrepreneurs, when you’re talking about negotiation and deals they are trying to get done, are they even running into a little bit of resistance from those “big guys”?

Mladen Kresic: That’s natural. The big guys want to defend their turf, but I think a lot of companies that would be considered in the traditional sectors have become accustomed to the fact that they can be disintermediated, in other words, their businesses can be turned upside down by innovations. So they’re more likely to make deals with small companies.

You don’t have to look much past Kodak, for example, to see what can happen to a company that doesn’t react to innovation in its industry.

Dan Loney: [Laughs] Yeah, it can be a short leash real quick. Mladen Kresic is our guest, the book is Negotiate Wisely in Business and Technology. We’re going to get into some of the tips that he has in terms of negotiation in just a second, but your comments are welcome at 844-WHARTON or 844-942-7866.

Let’s delve into it because there is a variety of different pieces to this. What are really the key ingredients for people to understand, especially ones that don’t have that background in business and negotiation? What are the most important things for people to understand?

Mladen Kresic: I don’t care whether you’re an experienced negotiator or not — you can always be prepared. Preparation is key. So preparing the subject matter of what you’re going to negotiate, preparing to understand the other side, those things are critical. The other thing is credibility. Having credibility — part of that is, of course, being prepared — and closely related to that is something we would call “principled behavior,” behaving in a way that is rational and principled, especially when you are in the give-and-take process, is comforting to the other side. It makes it easier to do deals.

If you are arbitrary and you’re not principled in your approach, that tends to cause doubt on the other side, which then becomes an impediment to deal-making. The last thing related to that is being organized. Again, it’s related to the other two; being organized, managing agendas, has to be comforting to both sides and facilitates deal-making.

Dan Loney: The fact that you really have to have all the people on your negotiating team on the same page…it sounds like a fairly basic concept, but I guess there can be times where the communication isn’t as good as it probably needs to be.

Mladen Kresic: It happens when you go to buy a car or a house with a significant other, right? Teamwork, or lack thereof, happens at the very basic level. And the more complex a deal is, where more people are involved, the more likely you are to have a divided team, especially with communication the way it is today — so much of negotiations are done by phone and email. Divided teams are very common and can cause a lot of obstacles.

Dan Loney: You bring up a great point that I wanted to touch on anyway. Is the nature of negotiation today compared to 20 years ago…you go back 20 years, obviously the majority of it was either face to face or it was over the phone. Now a lot of it is email, it could by Skype, it could be still hand to hand, it could be phone. How is the digital nature of our society now really playing into this?

Mladen Kresic: It’s actually a paradoxical effect; in a sense, it requires more preparation, better teamwork, better planning in advance of having an actual negotiation and setting the rules of engagement. Yet, the pace of communications causes us to actually take less time to prepare and coordinate the team. So it’s something that everybody who does deals and who’s going to be on a conference call, for example, with the other side needs to be critically aware of and take the time to prep the team — including the rules of engagement — who’s going to speak, when and so on.

If somebody interrupts, you can still have instant messaging on to warn each other or communicate with the team, but it’s just too late to say, “You shouldn’t have said that.” [Laughs] It doesn’t work.

Dan Loney: You can’t pull it back once it’s out there.

Mladen Kresic: That’s exactly right, which also speaks to one of the suggestions I always tell people, which is: Slow down. Most people who are negotiating deals tend to be Triple A personalities, relatively confident and aggressive. So we tell them “Slow down.” It gives you the ability to think, it gives you the ability to communicate more clearly and you’re less likely to say something that you’re not going to be able to take back.

Dan Loney: In part of the book you talk about whether negotiation is an art or a science, or maybe a combination of both. Explain where you lay in this category.

Mladen Kresic: Negotiation is an art to a great extent because personalities are different; you can take the same facts, throw different people into the equation — and we have tested this, because we run workshops on the subject — and the result is going to be different because of the different personalities and how they value things, and so on. From a standpoint of individuality, I think it is a great art. There’s a lot of creativity in negotiating towards different solutions and so on.

On the other hand, science applies because there’s a method and a process. You can figure out the cost of things, the prices and their margins, you can study the other side. A lot of behavior is predictable, there’s psychology involved that’s also a science. There are elements of both.

Dan Loney: In all the things that you have done, do you consider yourself to be a very good communicator?

Mladen Kresic: Well, I hope I’m a good communicator. I work on it. Really, there are three elements to effective, persuasive communication. One is clarity: A lot of times when we are deep into a negotiation our adrenaline is going. We fail to stop and slow down to make sure that we’re speaking clearly, that we’re articulating things in a way that the other side understands us. It doesn’t matter what we say, it matters what they understand.

The other part of good communication: You’ve got to have credibility, because people shut off if you’re not credible. They won’t listen.

The last part we talk about in terms of effective, persuasive communication is that there needs to be something in it for the other side — a value element. The three critical pieces of being a good communicator and a persuasive communicator are to be clear or to be understood, to be believed (credible) and to be valued because you provide something that impacts the other side.

Dan Loney: If you don’t have that believability, you’re kind of dead in the water, aren’t you?

Mladen Kresic: Spot on. There’s a whole interrelationship between what we think about as credibility and the concept of leverage in negotiations. If you’re not credible, the only leverage that you can apply is negative leverage — in other words, forcing somebody to do something. Because when you’re not credible, they’re not really listening.

Dan Loney: 844-WHARTON is the number to call, 844-942-7866 if you’d like to ask a question of Mladen Kresic, who is the author of the book, Negotiate Wisely in Business and Technology.

You also talk about the fact that if people are good negotiators, it is important for them to understand why they are good. You just can’t assume that because you have success, that it’s going to continue to happen your entire life.

Mladen Kresic: A lot of people who negotiate effectively are instinctive in nature. In fact, instinct is extremely important. It’s a product of your experience. We’re born as negotiators; kids are great negotiators because they know how to hit the hot buttons, they know how to divide and conquer, they know how to be persistent and all those things. But the problem with relying solely on instinct as a good negotiator is that instinct, by its nature, is reactive, not proactive. So one of the things that we try to do when we work with people who are very good negotiators is break down those things they use as instinctive negotiations and put them in a framework where they can be more proactive.

Dan Loney: Are there common roadblocks that pop up when they’re trying to be successful in negotiations?

Mladen Kresic: A very common roadblock is this whole notion of teamwork, where people have different motivations and react in a way that somebody who may be leading the negotiation finds counterproductive. And lack of communication is obviously a critical roadblock. We work with a lot of teams that are dispersed around the world, and getting them on board with a strategy becomes a challenge. It takes a little bit more time, a little bit more persistence, a little bit more effort.

The other thing is that everybody today, probably more than in the history of mankind, is under time pressure. You’re expected to do things yesterday, constantly. This often causes irrational, emotional behavior that is itself another roadblock.

Dan Loney: But if you understand that’s part of the formula, it can help you kind of work your way around the process and not get pushed down by it, correct?

Mladen Kresic: [Laughs] We always say, “Don’t be surprised by the predictable.” These things are predictable. It’s up to us to prepare and factor in the specifics on any particular deal, and those kinds of things are predictable.

Dan Loney: With the growth of technology — getting back to something we were saying before — how do you think negotiation is going to change going forward because of all the pieces we have in play?

Mladen Kresic: Things are already happening where different modalities have to be factored in, less and less involves people doing things in person. Interestingly enough, a few years ago the only things that were available as alternatives to doing things in person would be video conferencing, telephone negotiations or exchange of positions via email. Today we’re sort of circling back because video conferencing is becoming so good and of such high quality that you can conduct almost in-person activity even though you could be halfway across the globe. In some sense, I think we’re circling back to a somewhat more traditional approach.

The counter to that, I think, is that young people are much more used to communicating with the alternative modalities, including texting and so on. One of the things we’re going to have to factor in is how do we prepare better so that people do not make the kinds of mistakes that we talked about before, like speaking out of turn and so on — if they are texting their counterparts on the other side, that it’s not undermining but also working with the team.

Dan Loney: All the technology advances we’ve had, with video conferencing and such, it is basically like the hand to hand conversation, except you could be 1,000 miles away and it could be a bottom-line savings for the company, as well.

Mladen Kresic: Sure. And those are valuable things. We do things today, my team and I, where we are often not in person and it saves a tremendous amount of travel cost and it actually saves time — and time is money.

Dan Loney: The book is Negotiate Wisely in Business and Technology, Mladen Kresic is the co-author with Harvey Rosen. Mladen, thanks very much for coming on today. The book is available and out in bookstores and online, as well?

Mladen Kresic: It is primarily online, at Amazon and other outlets and we look forward to hearing from people who have been reading it and enjoying the outcomes.

Dan Loney: Great, thank you very much for coming on today.

Mladen Kresic: Dan, thank you so much for having me. It’s a pleasure.