Chapter 44
How Americans Negotiate
The American Art of the Deal
New York real estate investor Donald Trump wrote a best-selling book, The Art of the Deal, that detailed many of his early real estate negotiations. The title and the premise of the book illuminate the overriding concern of most American negotiators—the cutting of the deal. We do live in a very deal-conscious environment.
I suppose that sociologists would tell you that we concentrate more on cutting the deal than other nations because we are such a mobile and diverse society that we have little sense of roots. Instead of trusting the people and the way things are done, as is common around the world, we place all of our trust in creating an unbreakable deal. “Will it hold up in court?” we demand, as though anyone who doesn’t consider the possibility of having to defend the deal in court is naive.
Sociologists would also point out that this is a recent change in the fabric of our society. During the first half of the 20th century, we still looked to community pressures to enforce our obligations. To renege on a deal was unthinkable because of the dishonor that it would bring us in our community. We also had our religious community to police any thoughts of reneging on a commitment. It would be unthinkable to let down our priest, minister, or rabbi. Also, before television commandeered our leisure time, we belonged to many community organizations. We did not stray far because the members of our Lions, Kiwanis, or Optimist club—or the members of our PTA, Masonic or Elks lodge—might ostracize us. Sadly, that way of life is lost to us as we start the 21st century. Now what is left to us is the deal and an all-too-common resort to the courts to enforce the deal at all costs. The deal is finite, the deal is static, and the deal has been made and cannot be changed.
Most non-Americans completely reject our dependence on the deal. Should they choose to sign a contract at all, it is simply an expression of an understanding that existed on a particular date. It is a formal expression of a relationship that now exists between the parties. As with any other relationship, it must mold itself to changing conditions.
Most Americans are astounded to learn that you can sign a contract in Korea and have it mean nothing six months later. “But we signed a contract,” the Americans howl.
“Yes,” their Korean counterpart patiently explains, “we signed a contract based on the conditions that existed six months ago when we signed it. Those conditions no longer exist, so the contract we signed is meaningless.”
“Foul,” cries the American. “You are trying to cheat me.” Not at all. What seems to us to be disreputable action is not to them, and we should not attempt to paint it as such. It is merely their way of doing things.
Americans are often delighted to find that they had so little trouble getting their Arabian trading partners to sign a contract. Then they are horrified to find out that in the Arab world signing the contract announces the start of the negotiations, not the end. A signed contract means less in their culture than a letter of intent does in ours. I am not putting this down, and you should not either. What we should do is recognize that different nationalities and cultures have different ways of doing things and it behooves us to learn, understand, and appreciate those ways.
It will come as no surprise to you to learn that Americans resort to legal action more quickly and frequently than any other people on Earth. This would be laughable to a businessman in India where the civil legal system is close to nonexistent. It would take five years to have a civil case heard, and most realistic people suggest that you forget it because it’s questionable that the system will even be functioning five years from now. Even the chief justice of India has said in public that the system is about to collapse. So Indians must rely on their faith in the person with whom they are doing business. I remember trying to explain to an Indian the American custom of the bride and groom signing a pre-nuptial agreement before they marry.
He was incredulous. Why on earth would you marry someone that you did not trust, he wanted to know. What I couldn’t make him understand was that wanting to put an agreement in legally acceptable written form does not denote distrust to an American.
In America, legal action is so common that companies continue to do business with a company that is suing them. We see it as a normal way to resolve a dispute and no reason for rancor. In most foreign countries, there is such a loss of face involved in being sued by another company that they will refuse to deal in any way with a company that is suing them.
The word context describes the degree of importance attached to the relationship between the parties, as opposed to the details of the contract. When the relationship is paramount, we call it a high context negotiation. When the deal is the thing, we call it a low context negotiation. Different nationalities place greater or lesser importance on context—the environment in which the proposal is made. These cultures are listed from high context to low context: The Orient, Middle East, Russia, Spain, Italy, France, England, United States, Scandinavia, Germany, Switzerland.
Communication is also low context in the United States. By that, I mean that words and expressions mean the same regardless of where they are said. “No” means “No” whether it is whispered on a date or yelled at you by your boss. We take that for granted in this country. I’ve even seen T-shirts worn by women (who are presumably students of linguistics) that say, “What part of “No” don’t you understand?” That is not so in high context countries where, in order to understand what was said, you would have to understand who said it to whom, where the comment was made, and in what context it was made.
To give you an example of this from my experience, let’s suppose that Dwight, an American has been to see a play, and you ask him how he enjoyed it. Dwight might say, “It was quite good.” The meaning of that is very clear to an American. It means that Dwight thought the play was very good. Now let’s suppose that it was Rodney, an Englishman who went to see the play. When he says, “It was quite good,” that could mean a whole range of things. It could mean it was awful but “I’m a polite enough fellow to not say that to the author in public.” If the person who gave him the tickets asked him how he enjoyed the play, “quite good” could mean that the play was average but he appreciated being given the tickets. If Rodney’s son wrote the play, “quite good” could mean, “Outstanding, but I’m not about to give you a swelled head.”
When Scottish golfer Colin Montgomerie played in the US Open at the Olympic Club in San Francisco, a reporter from the Los Angeles Times asked him how he had managed the impressive feat of playing an entire round without being in a single sand trap. Montgomerie replied, “Well, I am quite good.” The reporter took this to be an arrogant response, and wrote it up in a blistering attack on Montgomerie’s personality. That was unfair, because what the golfer intended to convey was a wry, self-deprecating response. If he’d have known that American English is a low-context language, he would have said, “Well, I am fairly good.” It’s a thought that an American would have conveyed by saying, “It’s because I played this course once before.”
So, the first thing we should learn about negotiating with non-Americans is that the deal is not the major issue to them. They put far more trust in the relationship between the parties. Is there good blood between the parties? If there is only bad blood, no amount of legal maneuvering will make the relationship worthwhile. While you are trying to hammer out the fine points of the deal, they are spending time assessing the fine points of your character.
Getting Down to Business with Non-Americans
Now let’s concentrate on the other major mistake that we Americans make in dealing with non-Americans—we want to get down to business too quickly.
Nobody gets down to business faster than Americans do. Typically, we exchange a few pleasantries to ease any tension and then get right down to hammering out the details of the deal. We socialize afterwards. Non-Americans may take days, weeks, or even months before they feel comfortable moving from the getting-to-know-you stage to the point where they feel good about doing business.
When the Shah of Iran fell from power, the real estate company of which I was president in Southern California did a huge amount of business with Iranians (they prefer to be called Persians) who were fleeing the new regime, often with millions in cash to invest. Often I would watch our people make the mistake of trying to talk business too quickly, which caused the Iranians to distrust them. Quickly we learned that they wanted to sit and drink tea for several hours as they sized us up.
If you fly to Japan to conduct business, you may have to socialize for many days before they feel that it’s appropriate to talk business. Be careful, however, that they’re not just trying to push you up against a time deadline. At my seminars many people have told me that their joy at being treated so well soon turned to chagrin as they realized how difficult it would be to get down to business at all. They have told me horror stories of not being able to negotiate until they were in the limousine on the way back to the airport. It’s a two-hour ride out to Narita Airport, but that is negotiating under excessive time pressure. Terrified at the thought of going home empty handed, they went straight to their bottom line.
When negotiating with non-Americans, we Americans would do much better if we would slow down. We tend to speak first, then listen to the response, and observe the behavior of the other negotiators. Non-Americans tell us that we should reverse that order. We should observe first, then listen and finally speak. In fact, reacting slowly to the proposal of the other side is a mark of respect. Your silence does not indicate acceptance of their proposal, merely that you are giving it the consideration it deserves.
So, we see that Americans fall into two major traps when dealing with non-Americans. We over-emphasize the deal and don’t attach enough importance to the relationship of the parties, and we get down to business too quickly. The two are closely related, of course. Building a relationship with the other side to the point where you feel comfortable with them takes time. Enlarging on that relationship to the point where you trust the other person, and don’t have to rely on the contract being airtight, takes a great deal of time.