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Plan B when Negotiations Fail, Andrew Gottschalk
Issue 12 | June 2010
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Business Development
& Licensing Journal
For the Pharmaceutical Licensing Groups
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Plan B: when
negotiations fail
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Plan B: when
negotiations fail
The negotiating establishment could be directing us into a cul-de-sac, where we
assume that plan A will be sufficient. Many, if not most, negotiations fail: we need a
plan B. So how do we go about putting one together?
By Andrew Gottschalk, Consultant, Group AG
M
ore than half of all negotiations
do not reach a successful
conclusion. There are several
reasons why negotiations fail, so the first
step in putting together plan B is establishing
the reason for failure. This begins with
feedback. Start by analysing the encounters
and determine, from your perspective,
which were most effective and ineffective.
Talk to your counterparty. If you are stuck
on recrimination and blame try to move
on before making contact. As the actors
involved, don’t be surprised if there is a
significant overlap in your perceptions of
the process. This first component is based
on Wittgenstein’s observation that thinking
about a line entails thinking about two
sides. Both representatives may have been
characterised by good intent and competent
behaviour but the drivers of the outcome
may have been elsewhere, for example the
stakeholders, the mandate or an external
event (the collapse of Lehman Brothers and
the subsequent financial crisis).
Find a mentor
The second component of plan B is to find a
negotiating mentor. They can help us develop
new perspectives and learn both about the
negotiating process and the organisational
contexts within which it is located. We
must remember that negotiating has been
described as a process by which we have
to learn to stop saying ‘no’ and start saying
‘yes’. Our challenge is how we deal with
our personal sense of frustration and failure
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“This is Plan B and there
is no Plan C”
about both structural and dynamic aspects of
the negotiations that we have just concluded.
This could be about the process: for
example, we made some significant
behavioural errors, it took longer than
planned or we engaged some colleagues
unnecessarily. Alternatively our dissatisfaction
could come from the deal: a specific clause
that we fear will not survive the rigours
of internal scrutiny and implementation.
So perhaps we should challenge the basic
premises that we build into our negotiating
that we will ‘get to yes.’ This is where a
mentor can begin to help.
About the author
Andrew Gottschalk has consulted on a range of
negotiation problems for many major companies
and organisations on four continents. He
negotiates, consults on negotiation problems and
runs negotiation skill development programmes
for numerous executives from public and private
sectors. He has ‘sharp end’ experience as a
commercial and industrial relations negotiator in
the motor vehicle and electronics industries.
T: +44 (0)20 7273 5385
>>
E: Andrew@group-ag.com
Issue 12 | June 2010 11
A lack of time constrains our opportunities
for negotiating inside our own organisation
and building the critical internal alliances
needed for implementation.
>>
In working with your mentor you should,
in addition, explore two issues that may,
without either party being fully aware,
have determined your failure to reach an
agreement. The first is buyer’s remorse.
Progress towards an agreement appeared
to be too fast and driven by anxiety and
an apparent lack of information either
party backed off. The second is different
perceptions (and tolerance) of risk and
uncertainty. Negotiations between scientists
and investors often fail because the latter
needs to manage a risk portfolio that appears
unrealistic to the counterparty who is with
total commitment ‘living the risk’.
Manage your time investment
Often our failure can be traced to insufficient
time or an over-investment that was driven
by a disproportionately high ego involvement.
A lack of time often constrains our
opportunities for negotiating inside our own
organisation and building the critical internal
alliances needed for implementation. It also
Fig 1: Some reasons why negotiations fail
T
alking too much
Not listening effectively
eing too guarded, effectively masking
B
your interests and revealing nothing to the
counterparty
A
llowing the encounters to focus on
positions and standpoints
ssue linkage is determined unilaterally by one
I
party and a rigid agenda enforced
Laying out all of your arguments
at the start
lipping your approach between hard and soft
F
and quick and slow
T
reating subjective statements as facts
aking this a single-issue process
M
Not trying to understand the ‘why’ behind the
response of your counterparty
aving a single solution when considering a
H
particular element of the deal
12 Business Development & Licensing Journal
legitimises some stakeholder concerns that
‘business development is doing deals and
then selling them’.
More effective time management should
also allow us to build in more face-to-face
meetings with our counterparty in which
exploring the context becomes the agenda
rather than trying to negotiate the detail of
the deal. We may, unwittingly, have drifted
to an over-reliance on telephone, email and
video-conferences because of time and
budgetary constraints and this will require
a significant correction in our subsequent
negotiations.
Jointly understanding, designing and
managing the timescale of the negotiations
to achieve joint benefits is an obvious
first step towards a successful outcome.
Domination and unilateralism will not
contribute either to a robust deal or to
strengthening the relationship.
Don’t sweat the data
The management of information, both
in preparing to negotiate and in the
negotiations themselves, is a significant
issue that is driven by strategic and tactical
concerns. Often we are unaware that we
have ignored the process consequences both
in communicating with and listening to our
counterparty. Plan B requires that we radically
reappraise our stance on information to
ensure that both parties can manage their
risk profiles and avoid the winners’ curse that
could return to damage the implementation
of a future deal. In behavioural terms the
implication is to allocate more time to
questioning, listening and the establishment
of a dialogue.
Build scenarios and test them. A key
component of our work involves scanning
our external environment for opportunities
within the context of a strategic plan.
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Strategic plans vary considerably in terms of
sophistication and clarity partly to ensure buyin from reluctant stakeholders.
In order to link our scanning to our
strategic plan we should build a robust
scenario that describes potentially good
and bad outcomes over a clear timescale (a
minimum of two years and a maximum of
five). From this scenario we can identify at an
earlier point in the negotiations if we need
to adjourn for a significant period of time or
formally exit the negotiations.
In order to ensure that the negotiations
remain grounded I would suggest these
scenarios are shared with your counterparty.
It will drag both of you away from positional
haggling and move you towards interest-based
outcomes. The scenarios also become the
criteria for evaluating options for mutual gain.
Re-visit your stakeholders
Developing a clear understanding of the
changing needs and aspirations of the
stakeholders is an essential component
of plan B. In our previous negotiations
we may have misinterpreted their silence
as acquiescence or, more dangerously, as
support for our position and objectives.
As news from the ‘negotiating front’
filtered out they shifted to explicit and
active opposition that resulted in either
representative being required to communicate
demands that triggered a failure in the
negotiations or in rejecting proposals that
would previously have been accepted.
We may have made an even more serious
mistake by starting to negotiate without
prior discussions with our stakeholders in the
hope that our deal would sell itself. As a joint
activity with your counterparty you should
identify your stakeholders and track changes
in their stance. If you fail to invest in this task
your own failure becomes an almost certainty.
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“My support, sponsorship and a gobetween, really?”
The process by which negotiating
mandates emerge or fail to emerge should be
of sufficient interest to employ a small army
of researchers. However, we often begin our
negotiations with the hope that a mandate
will be forthcoming. Different organisational
cultures adopt very different processes and
procedures to deliver on their mandates.
The family organisational culture operates
on the basis that the trusted inner core of
long-serving senior executives does not
require a mandate, because they know
intuitively what will or will not be acceptable.
Other lower order participants have to wait
until they have a brief opportunity to present
their case at court.
In the larger, meritocratic and hierarchical
Eiffel Tower organisation, the process of
securing a mandate will require greater
formalisation and potential writing skills
not seen in most commercial transactions.
However, it is these organisations that
surprisingly may be more open to the
emergence of new stakeholder groups
that jostle for influence and control with
democratically elected officials.
For the negotiator there are two choices:
invest significant time securing your mandate
>>
In our previous
negotiations we may
have misinterpreted
the silence of
stakeholders as
support for our
position and
objectives.
Issue 12 | June 2010 13
“May I go ahead of you?”
>>
before negotiating or only attempt to engage
in ‘talks about talks’ that seek to identify
issues, concerns and needs.
These exploratory talks should also seek
to identify who will represent the parties and
the level of authority. Then the negotiator
needs to disappear into the organisation to
lobby, cajole or plead for a mandate that
contains clear authority to negotiate and an
indicator of the acceptable key terms.
Realign and repair internal support
Plan B requires
that we actively repair
our internal support.
We may remain
unscathed by the
consequence of the
failure of negotiations
but they could have
been bady burned.
Plan B requires that we actively repair our
internal support (our manager, our colleagues
and others) who worked with us. We may
remain unscathed by the consequence of
the failure of the negotiations but they could
have been badly burnt. Goodwill, credibility
and resources that were invested have not
yielded a return.
Restoring what has been lost will take
time and effort. Accounts of what happened
are required, along with explanations of the
outcome. They may need to be prepared
and delivered on a one-to-one basis. Time
also has to be given to listening to feedback
and obtaining other insights, even if some of
these are direct, or thinly veiled, criticisms.
In realigning your internal support it is
important to ensure you understand the
concession constraints and opportunities
under which you will be placed in subsequent
negotiations. More fundamentally you have
the opportunity to review both your strategic
and tactical options with those whose trust
you need to enjoy.
14 Business Development & Licensing Journal
Find a sponsor/go-between
There appears to be an assumption the
business development negotiator is a heroic
figure who can be relied on to work alone. In
particular when working outside our national
cultures we need to find a colleague who will
take on two distinct but inter-related roles:
that of internal sponsor and go-between.
As sponsor they have an interest in the
parties concluding a robust deal that can be
implemented, yields equitable outcomes over
time and strengthens long-term relationships.
They should also have a strong commitment
to the negotiator as an individual.
As a go-between they need to have the
ability to carry communications between the
parties, in all directions, that clarify strategic
intent and motives. In some instances, at
the behest of their colleague engaged in
the negotiations, they can take on a more
specific mission. In other instances it can be
to illicit perspectives and information about
actions that could be misunderstood or be
misinterpreted and result in an unintended
failure to reach an agreement.
As an aside, the role of mentor and
sponsor/go-between should not be
combined. The former is a vital component
of individual career development whereas the
latter is a situational specific role.
Establish channels of communication
We must find ways of establishing nonnegotiation-based channels of communication.
But there is a difficulty: how do we justify the
investment of time and how will these contacts
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In many instances negotiators limit the
number of issues they work on because they
fear that too much complexity will kill the
deal. Their alternative, anorexic simplicity,
leaves too much for misinterpretation.
or attempted contacts be interpreted by both
our organisation and the counterparty? Before
this component is discarded we should identify
at least one ‘clean’ venue: the Pharmaceutical
Licensing Group.
Best realistic alternative
You may have developed a BATNA (the best
alternative to a negotiated agreement as
recommended by the Harvard method) but in
many instances we must secure our objectives
through the negotiating process. If the issue
is ‘make or buy’ your BATNA is a simple and
vital prop. However if the commercial and
organisational dynamics demand renewed
engagement with the same party in the
near term, plan B has to contain additional
elements.
The first may be almost too obvious,
that in developing plan B and potentially
re-engaging in negotiations with our
previous counterparty or in others in the
same pharmaceutical area we are signalling
an organisational commitment to reaching
a deal. Is re-engagement or starting with a
new counterparty a sign of having little or no
negotiating power? Perhaps the answer is in
the affirmative unless we have taken
two steps.
The first is to review the number of issues
and the tactical and process linkages that we
saw and used previously. In many instances
negotiators seek to limit the number of
issues they work on because they fear that
complexity will kill the deal. Their alternative,
anorexic simplicity, leaves too much for
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misinterpretation after the architects of the
deal have departed the scene.
The second is to ensure that the issues
adequately capture the interests and needs of
all of the stakeholders who are represented
‘at the table’ and within the organisation.
We should ensure that the process and
the timeline by which we work through
the issues allows both representatives to
engage in the internal negotiating process
that ensures the relationship and deal
implementation.
Plan B requires that we re-assess our
previous decisions with regard to information
management and concession planning. In the
short term we can achieve greater leverage by
ensuring a more liberal approach. Information
is relatively accessible and without it decisionmaking is skewed. Plan on how you will
manage the mutual disclosure process because
if it is managed effectively you build the
credibility and trust that are the cornerstones
of the deal that both parties want.
Finally, of course, the last components you
will need for a successful plan B are luck,
aspirin and pinch of salt.
Issue 12 | June 2010 15
