Nolan Martin :
Hello and welcome to the NEGOTIATEx podcast. My name is Nolan Martin. Joining me is Aram Donigian. And Aram, we have our first returning guest, would you like to kick it off?
Aram Donigian:
I will. It is a pleasure to welcome back to the NEGOTIATEx podcast, internationally renowned negotiation expert speaker, advisor, and award winning author, Keld Jensen. We first hosted Keld on the program last fall. We’re excited to have him back to discuss his most recent book, The Elements of Negotiation: 103 Tactics for Everyone to Win in Each Deal. Folks, that is not 104. It is not 102. It is 103 tactics that you need to win in each deal.
A former tech CEO, Keld advises governments and major corporations through his SMARTNERSHIP negotiation organization. He is also an Associated Professor and has appeared in hundreds of international TV appearances, as well as a regular contributor to major business publications worldwide. In 2024, Keld was just recently ranked number four in the prestigious Global Gurus Top 30. Keld, we haven’t had one through three on yet. So you’re the highest ranking guru that we’ve had on the program. Thanks, Keld, for joining us again today.
Keld Jensen:
Well, I’m honored. I just learned I was the first returning guest, so that’s a great honor. Thank you for having me guys.
NM:
Absolutely.
AD:
Thanks for being back.
NM:
And that’s episode 75 for anybody that wants to go back and watch that episode first. Kicking this off, Keld, last time we discussed your SMARTNERSHIP approach extensively. What motivated you to write the Elements of Negotiation and how does it build upon or diverge from the ideas you presented in your previous work?
Crafting The Strategy Toolbox: A Necessity For Effective Decision-Making [02:28]
KJ:
Great question. The last couple of books I wrote was a little bit more holistic about, you know, high level thinking, strategy choices, and less of a toolbox. So this time around, I felt there was a need to create a toolbox, give people some real tools, how to create, what I’m claiming that we need to do when we talk about strategy. So that was really the urge to write this one. And another thing is that, to be honest, and I might be offending somebody already, and the show is only three minutes old, but I think there are too many books that share opinions. And opinions can be great if they are rock solid and based on research and science. But it’s really important that we are aware of what is opinion and what is fact. So I felt there was a need to bring out some tools and some content that has a solid background.
AD:
Nice. You know, Keld, in my first class talking about toolbox, my first class that I teach each term, I bring in an actual toolbox and I pull out a hammer. And I say, if this is the only tool that you have when it comes to negotiating, every problem becomes a nail. And then I then, and then you might yell at, and because we’re gonna get into your toolbox, I start pulling out other tool tools and I say, hey, listen, sometimes you need a pipe wrench to tighten up the pipe. Can’t use a hammer on that. Trust me, I’ve tried, you can’t do that. I’ll pull out a paper brush. Sometimes things just need that little appearance touch up, right?
KJ:
I love that.
AD:
Listen, I’d love to get into the book a little bit. In the book, it’s called the elements of negotiation, you emphasize the significance of nonverbal communication. How has your understanding of nonverbal cues evolved and why is this where you decided to focus first in the new book?
Revisiting Nonverbal Communication: The Unseen Force In Effective Negotiation [04:30]
KJ:
I haven’t actually been talking about nonverbal communication and all of that for many years. I wrote my first book within that field actually back in 2009 and released another one in 2015 called Positive Impact, that is all about nonverbal communication because I’ve always been a strong believer in understanding communication as part of the route to becoming a great negotiator.
And as I said, I haven’t really touched upon that field for the last 10 years, so I thought we need to bring it in because obviously that’s an important tool back to a toolbox it’s an important tool. It’s important to highlight to every negotiator that yes, we have economics and we have trust and we have relationships and we have tactics and strategies, but how you behave and how you’re being interpreted nonverbally has a huge impact on how you negotiate as well.
And another thing, just to take another step back, actually, when I started this whole thing back in 1998, I started for several years just preaching negotiation and I had lots of students and clients leaving and go out there and failing miserably. And I was sitting there thinking this is really weird because I think the tool resharing is actually pretty good. So I dived in and figured out that a lot of them were actually failing on communication. So it wasn’t because I didn’t understand the content of negotiation, how to negotiate or create the tactics and the strategies, all that, they were just bad at communication.
So understanding how to present, understand how to use visual aids, understand how to control and read body language. All of that is, is one of the pieces to the many pieces that is required to be a great negotiator.
AD:
You mentioned obviously the ways in which we can control and be aware of our own body language. How do I manage, you mentioned the interpretation of that. How do I manage that as a tool?
Continuous Learning & Practice: Key To Mastering Negotiation Skills [06:23]
KJ:
That’s a great question. I would say the first thing we need to understand is that it’s really hard to change people, especially other people. The only individual we have a chance to make some changes to is ourself. And that’s actually really hard as well. Becoming better at communication and obviously body language and presenting and communicating it’s just like negotiation. I hate to say this but it’s not enough to buy and read my book or any other author’s books. You have to practice, you have to take trainings.
And while I have this opportunity I just want to raise the flag that through studies, you know, i’m very well connected to world commerce and contracting and they’re doing a lot of research together with me and on their own end and what we discover over and over again, and you may agree with that is that a terrible huge amount of professional have never actually ever received formal training in negotiation.
The last study I just saw a couple of weeks ago actually claimed that 55% of contract managers in North America have never ever participated in any formal training in negotiation. If that number is true, let’s just say it’s not true. It’s only 30%. I’m still shocked. I didn’t know what to say for hours when I heard that. And one recommendation I want to share with everybody is please listen to great podcasts like this one. Buy, and read books, not only from me, but other established authors and take trainings.
It’s not enough to read the book, take the training, spend the two, three days that you need. And it’s not enough doing it, once every 20 years as well. I met a manager recently who said, yes, I do appreciate negotiation training is very important. I had great training 18 years ago, and I still remember parts of that training. And I was thinking, oh my God, because it’s something that you have to do over and over again. We actually have clients that do repeat training every year for the same group of people simply because they need to know they need to be really sharp at what they do.
And we’re human beings we forget and I’m pretty sure we’re just watching the olympics, right? I’m sure that every of those top athletes we saw there, they’re not only practicing once every 18th year. They’re practicing every bloody day to become the best in the world. So it’s practice, practice, practice.
NM:
Absolutely. And to reiterate there on the practices, even recording yourself and watching it to become aware to identify your own nonverbal cues is something that you can really do to hone your skills as a negotiator.
KJ:
Oh, yes. I completely agree.
NM:
Is there a particular reason why you have body language as the first element?
The Integral Role Of Mathematics In Effective Negotiation [08:56]
KJ:
I think it’s very fundamental back to what I said earlier. You can practice negotiation skills all you want, but if your communication sucks you’re not going to be successful. So that was one of my reasons to put it in there. It’s very hard to prioritize to say which piece to the puzzle is the most important to become a great negotiator. I don’t think I have the answer to that, but definitely nonverbal communication is an important one.
NM:
Moving on to chapter two there. I know it centers on the role of knowledge and understanding negotiation as an art and science, and in it, you have element eight, which is the crucial role of mathematics, which is scary for both Aram and I. Can you elaborate on the role mathematics plays in a negotiation?
KJ:
The fun part is it’s scary to so many people and a lot of people dislike the whole understanding of mathematics in negotiation. Okay, let me ask you guys a question. Why do two organizations negotiate with each other? Company A and company B, they negotiate with each other to create and distribute value. End of story. That’s the only reason two companies have ever negotiated with each other.
How do you create and distribute value? We have to understand value. So understanding mathematics is really vital. I created the concept Necroeconomics, that is just short for negotiation economics, that is basically identifying the asymmetric value between two parties.
You know, it’s very easy very quickly. Talking about delivery cost, if your cost of delivery is 2%, my cost of delivery is 4%. Obviously, I shouldn’t handle delivery because my cost of transportation is higher than yours. So we can figure out that in necroeconomics the asymmetric value is the difference between your cost and my value or my cost. This is actually not rocket science but we have to realize that in a commercial negotiation not understanding the mathematics of the variables we are negotiating is a disaster.
Now I have some good news and that is the negotiator don’t have to be a mathematical expert herself, he or she just need a controller in the room that they can throw the mathematics to and say, figure out whether this makes sense or it doesn’t make sense. And what I’m telling every single of my clients is that you need a controller in your negotiation team. If you are not a mathematical genius yourself, and I’m not either, you need somebody who is, and that can figure these numbers out.
And, I had just to share a scary story with you guys. I was an advisor for a company in Europe a few months ago, and they want to go. I was an advisor sitting outside. I was not participating in the actual negotiation, just acting as a coach. And when they came out, they looked very happy. And I said, are you satisfied? Did you reach an agreement? They said yes, we reached an agreement and signed the contract. And then I asked them, how do the financial looks like?
And they said, we have no clue. We’re going to do the calculations right now. And that is terrible. And I’m just emphasizing this real story because it happens. A lot of people actually don’t understand the mathematics behind what they’re asking. For instance, let me give you another quick example. I’m just spending time with this because it’s so crucial. I was with the procurement director recently, and he said, we’re going out and we are demanding to extend the line of credit with all our suppliers. We’re going from 30 days to 90 days. And I say, okay, that might be a great idea. What is the benefit to you of doing that?
He said, I don’t know. It just sounds nice, doesn’t it? And I said, now you’re a complete idiot. Because if your value of doing that is below the cost of the supplier, it makes no sense. It’s an absolutely zero sum negotiation where your benefit is just happening at the expense of the counterpart. And by the way, you could actually turn this around completely because if your cost of capital is 4% and the supplier’s cost of capital is 9%, you actually have a wiggle room of 5%, where you can actually propose to pay up front and get a discount of up to 5% and the counterpart would accept that.
So anyway, sorry about that long answer. It’s just really important, back to the important pieces, to be a great negotiator. Understanding the concept of necroeconomics and mathematics is essential. So if you are in commercial negotiation, I’m a commercial negotiator. If you’re in commercial negotiation, either you need to understand what’s going on, or you need a controller in the room. If you don’t know that, please stay away. You shouldn’t negotiate any commercial negotiation whatsoever.
NM:
Absolutely. And when we talk to even small companies, they always say, hey, I don’t have any power talking to big companies. Well, thank goodness for the quarterly call reports where they can see the status of the company and what they’re focused on. So if they need to, hey, identify that the company is strapped for cash, or they’re trying to just make improvements on certain aspects that’s important to the CFO. They can identify that and they may be able to play to it.
AD:
I think what you were saying about mathematics and its importance helps prevent from a couple of traps, one being missing total costs and just getting focused on price as a component of value and cost. The other thing is this idea that, oh, we’ll make it up on the next one. We’ll make it up later. And if you haven’t, if you haven’t worked that out. That’s probably not gonna happen. You’re probably gonna find yourself wishing to make it up time and time again.
Keld you also talked element nine is on negotiating in a foreign language why is this so important to corporate leaders? And what are the exact kind of breakdowns of this element that are important to know?
The Impact Of Language & Culture In International Negotiations [14:25]
KJ:
Yeah, that’s a good one as I think when you live in the US, you have a tendency to think that the whole world speak English and a lot do but you also have to remember that those of us, including myself, where English is the second language, we may sometimes struggle with the language, not because we’re dumb, but because we have to handle another language as well, right?
When we are negotiating, it’s really important to understand the culture. And I often say that in order to really understand the culture and how people are thinking, you need to have an insight into the language as well. You may not need to speak it fluently, but you need to understand the terms and the ideas and how the language is built up.
One thing you can do when you’re studying culture and languages. It’s just looking at difference between Britain and France, and that when you dive into language will actually give you some understanding of why they are negotiating so differently and for instance why the Brexit was a horrible negotiation because the French negotiators were representing the EU and the British negotiator was obviously representing Britain and it was a culture class right there, partly because of the language, so just back to your first question why is communication chapter one?
Language is such a huge thing as well. And, I don’t really want to stress anybody by giving them the understanding that this is just horrible, complicated, that’s not really what I want to do, but there are so many things that we really need to think about in preparing a negotiation and language is just one of those many things as well.
And then I want to raise a flag as well and say, you know, often, when you are representing a smaller language, for instance, I’m a native Dane, dual citizen to both Denmark and the US, lived there for many years, but Danish is a small language. So there’s a tendency that you think that, hey, nobody speaks Danish. So you as a negotiation team, in a break in the negotiation, you just sit there and convert in your own language, whether that is, Danish or whatever language it might be.
And you don’t think that the American sitting on the other side, understand anybody speaking Danish, but perhaps they purposely brought somebody in the team who understand Danish and perhaps they’re not telling you they have that individual sitting there and just picking up in any information. There’s so many small items that is important to address regarding language as well.
AD:
Yeah. And I feel like going back to what you were saying about non verbals earlier, this is where I can get myself into a lot of trouble. If I’m not aware, not just of the language and the culture, but the nonverbals and one of my unintentionally communicating that is very American or Western but maybe detrimental in this instance.
You ever found that, ever found in any examples of just, kind of unconscious action sewing up and derailing the negotiation.
Cultural Sensitivity In Negotiations: Adapting To Global Etiquette & Practices [17:18]
KJ:
Oh, yes, I’m doing quite a lot of work in the Middle East. I know we talked about earlier, Nolan, you’ve been to the Middle East, there are different behaviors there. We have in our team, we have the, one of our partners is a woman. She was offended last year because you know we met with an Arab and he didn’t want to shake her hand and I said don’t take it personally it’s nothing to do with you. It’s just a culture thing.
And again back to what you just said we have to be careful not just trying to adapt our culture in the whole world because the world Is global and it’s probably smaller than ever but still there are tremendous, huge differences that we need to understand and respect by the way because I’m not saying we’re necessarily right and everybody else is wrong so we just have to understand those small cues and how we interpret that. And the counterpart may not be aware of our special cues and behaviors. Just dress, in general, Americans, and I’m generalizing to have a tendency to dress down or be more relaxed business wise than a lot of international counterparts.
So if you show up in a t-shirt and you’re meeting a Japanese counterpart that is sitting in a perfect suit with a white shirt and a dark tie, that creates a weird balance already there.
NM:
I’d love to ask you about the importance of learning education and training and how you differentiate between those three elements.
Navigating The Path To Negotiation Mastery: Understanding Competence Levels [18:34]
KJ:
That’s a great question. I would pack it this way. I meet quite a lot during a year of unconsciously incompetent negotiators. So they are negotiating, they’re doing it a lot and they have been doing it for many years, but they don’t know what they don’t know.
The first thing you need to do is move them from that unconsciously incompetent into being consciously incompetent, which is actually horrible because suddenly you realize from one day to the other that what I thought it was good at, I’m not. And then you can slowly build them up again to move them into being conscious competence.
And then finally, if you really want to reach that expert level, you have to be unconsciously competent, right? So that’s a trip that is not happening overnight. That is an effort. That is a process. That is an investment, and it’s a choice. So when we talk about learning versus training back to what we discussed earlier, the training part is really where you as you said, for instance, with communication, record yourself, a wonderful advice. Look at yourself. Do I really look like that? I can’t be me. I’m not that overweight. That’s not my voice. Is it? Yes, it is. It’s all so you have to realize that.
And the same thing goes with negotiation. Now, one thing I’ve learned, and I’m sure you guys are doing the same, but I’ve been training so many people and I can stand up there and lecture for hours and hours and every people, everybody sit there and not disagree or agree or whatever. And then I throw them into a simulation that we record, so they’re sitting negotiating with each other, a simulation prepared for them.
Then we do some editing and then we show them the highlights of that negotiation. And, that’s when they actually learn. That is the realization, oh, that didn’t work. That is what I’m supposed to do. That is what I’m not supposed to do. So having people doing it themselves and then getting feedback is the real thing when we move them from being unconsciously incompetent. They have to burn their fingers, so to speak, that’s essential.
AD:
One of your elements is the use of AI in your negotiations. You’ve done a lot of work on this. You didn’t put it in the chapter with tools. I’m curious, two part question, Keld. First of all, since we had John last, where’s your thinking gone with the use of AI in negotiations? Part two is, you didn’t put it in with other tools. Why was that?
The Impact Of AI On Negotiation: Enhancing Efficiency, Transparency & Strategic Execution [20:57]
KJ:
Yeah, the first one is I am a huge optimist and big fan of AI. I think AI, in many cases, can perform and conduct negotiations better than us as human beings. Is AI going to replace us as negotiators? That I do not know. I think that AI is a wonderful tool, just like a spreadsheet or calculator or notebook or a phone.
It’s a tool that we should embrace and acknowledge and use. I use AI every single day for every negotiation I’m involved in, and I use it mainly to break down data because as human beings we can’t cope with huge amount of data and AI can. I don’t know. I don’t remember whether we talked about it last time, but since last time we have released a peer reviewed research paper where we studied the use of ChatGPT and very quickly what we did is that we had global teams, lots of teams negotiating with each other and we compared three different negotiations.
One negotiation where both teams were not using any kind of AI tool. One negotiation where one side was using AI and the counterpart was not. And the third negotiation where both sides were using AI. We gave them a simulation. They had time to prepare and then conduct their negotiation. And the conclusion based on all these repeated simulations was amazing.
I was actually shocked about the difference. The negotiation where both teams were using AI actively and knew how to use it, were superior to both of the other negotiations. They were done way before time where all the other negotiations ran out of time, couldn’t reach an agreement. They captured and utilized all the value that we talked about a few minutes ago.
And the third thing that was a conclusion, which actually surprised me a lot, was that the transparency and honesty went through the roof when both of them were using AI. And don’t ask me why, because I’m not sure I actually know that. So it was really fascinating to see the difference between the three negotiations, the one utilizing AI and the other two where only one side were using it and none were using it. So it was fascinating.
AD:
Yeah. That really surprises me. What you said that the transparency was greater. So was the relationship enhanced as well. Did you see that as a by-product of them using AI?
KJ:
I don’t necessarily think so, it was the relationship. I think people were better prepared and that made them more relaxed. They understood their numbers back to understanding mathematics because AI can help you with that. So they were simply more relaxed, understood the variables, understood the consequences of the calculations, and thereby became a lot more relaxed.
Because I often see that when people are not properly prepared, which happens to a lot of negotiators, they become more hesitant to share information because they’re nervous about what will happen if I share that information. But if you are confident in your own position and knowing what you’ve got and the consequences of moving a variable and what we saw in these negotiations was that people in general, and we repeated this study over and over again.
So we just saw people were just way more relaxed and confident about the whole thing. So you know what the really brilliant teams did is they took the simulation I wrote. They uploaded it to ChatGPT and just asked ChatGPT, could you just break this down for us? What questions should we ask the counterpart? What is the starting position? What questions should we ask? What would be the interest? Where can we create value? And, it was just amazing what ChatGPT could generate.
Now, the great thing as a thing we all know by today is that when you use AI, you have to tell AI to act in a certain role and what you can do if you want to. You can ask ChatGPT to act like me. You can say be Keld Jensen. You understand the world of SMARTNERSHIP and necroeconomics. So negotiate like he would do and then you get the whole approach into necroeconomics and SMARTNERSHIP and transparency, and trust and all that.
Long answer to your question. I apologize, big fan of AI. However, I want to raise a warning here, and that is, it’s not a shortcut, meaning that if you are an unskilled, uneducated, inexperienced negotiator, AI is not a shortcut. Because AI is not right all the time. So you have to be able to filter what is right and wrong. And now if you are a skilled, experienced, educated negotiator and not using AI today, please start immediately because you’re already way behind. So that’s my absolute conclusion on that.
AD:
That answers my question too, in terms of why it’s not a tool and why you put it in the chapter on knowledge makes complete sense. Thanks, Keld.
NM:
Emotions can significantly influence negotiation outcomes. How does your new book address the balance between emotion and strategy? And why is this balance more critical now than ever?
The Human Element In Business: Emotions & Their Impact On Negotiations [26:03]
KJ:
I normally say that all business is human. And what I mean by that is that it’s you and I, Nolan, that are negotiating. It’s not two companies negotiating. And we love to think in this world that Company A is negotiating with Company B. And we read in Financial Times or Washington Post that these two companies made an agreement. I think that’s a load of BS. I apologize for my language because it was Maria that negotiated with Brandon. That was what happened. And that is what happened every single time.
And if Maria can’t agree with Brandon, but Brandon is replaced by Peter, perhaps they have reached an agreement. That shows over and over again that is the case. And what is it that controls you and I as human beings? That is emotions. I know we all try to claim that we are very rational, but we are not, we are irrational.
Every single study on earth documents that we are irrational. Daniel Kahneman even won the Nobel prize in economics by suggesting that we are irrational. So we are irrational. We are irrational when we step into negotiation, our relationship with the counterpart, whether we like them or trust them, has a significant impact on how our negotiation goes. So we need to understand our own emotions. We need to understand the counterpart and, let me ask you this question. I guess we all try to sit in a negotiation, right, where we get offended or annoyed or stressed or happy or whatever kind of emotion.
And I’m always asking my clients this question, all of them say yes, of course I get all of these emotions. Great. There you go. It is an emotional process. So back to all the pieces to the puzzle, the 103 elements that we have created here, emotion, just like communication or mathematics or preparation, all that is important pieces to create that perfect puzzle where we have everything included.
NM:
Hey everyone! Nolan here, I have to jump in and end today’s podcast for part A of this show. Be sure to rate, review and subscribe to the NEGOTIATEx podcast if you haven’t already. And also join us next week for part B of this awesome interview.
