Derek Arden – Negotiation Tactics
[NOTES BY – JILL ENGLISH]
About 20 years ago, Derek went to Harvard for a course on negotiation, where he benefitted from both
the teaching and watching people and sharing stories. In this session, he would share some of his
experiences of what he thought of as ‘Shark Tank’ negotiation strategies and invited his listeners to
consider whether what happened was ethical or unethical and whether lying was acceptable.
‘Cooking the books’ has been shown to be unethical, with organisations such as Patisserie Valerie found
to have holes in their accounts.
In an interview with Dame Brenda Dean (Chief Executive of the SOGAT print union), she revealed that
Rupert Murdoch, the media magnate, had bugged the lifts in the offices at Holborn Circus. He also had
the home telephone numbers of senior executives of companies, including banks and had been known
to call them in the early hours of the morning.
It is a little-known fact that good negotiators can earn up to twice the salary of an average negotiator.
This has been the courage to him to gather enough money to leave the bank & focus on a career in
In her book Mindset, Carol Dweck says you cannot be in business unless you are good negotiator.
1) Playing hardball
Working for Barclay’s one day a manager called Mike came in to see Derek just after 5 pm, looking worried and pale, saying we are about to lose a 10 million pound loan and we didn’t take the security insurance. I will have to leave it with you tell the boss because I’m on holiday from this evening. Derek had thought Mike was joking, but he wasn’t and was out of time.
Derek went to see the boss and told him about the problem that they could lose all that money and there was no insurance. The boss was a big cigar-smoking, whiskey-swilling, alpha male, he took no prisoners. “Go and see them. Where’s Mike?” Derek explained that Mike was playing golf with CEOs of banks in Cornwall. “Get him back.” Mike came straight back, do time even to put on his suit.
They went to France and they got the money back. The meeting was in Paris with the clients who threatened to default on the debt. The room was bugged, the Barclays team were set up, the clients played games with timing, they were offering to pay just £1 million of the 10 they owed. They spoke among themselves in French.
The Barclays team did not let on, they had a French speaker with them who understood the French business practices and that the French liked to play hardball.
The hardball was returned with a straight bat, clear about the desired outcome, not allowing themselves to be rushed to a conclusion.
The message – meet face to face and be ready for underhand practices
2) The Flinch
A client used to do a lot of work with a retailer in the north-west and was called to a meeting at the Littlewoods offices in Liverpool. In advance of the meeting, one of the parties to the negotiation phoned Derek’s assistant and said that if Derek thought he could apply a price rise, he could get back on the train at Lime Street.
Derek recognised the ‘good guy, bad guy’ approach and asked his boss for direction. His boss said, “Go and tell them the increase is 6%.
Derek went to the meeting with Martyn, who told Derek that when he had met with the Littlewoods negotiator before, he would flinch and overreact whatever the price specified was – and told Derek not to laugh when he did it
There were four in the retailer’s team, meeting with Derek and Martyn. They were facing each other on each side of the table, with the sun shining in Derek and Martyn’s face.
The price has to rise by 6%. The overreaction was violent, the negotiator threw back his head with such force, he banged it hard against the wall. Derek struggled not to laugh, though it must have hurt.
They stuck to their guns and eventually settled on an increase of 4.5%. He observed that retailers certainly knew how to negotiate.
The message – the flinch is negotiating theatrics – anticipate and stick to your plan
3) Check the contracts yourself
Derek’s team were called to meet with a retailer in Baker Street (or round the corner in Marylebone Road). The financiers, the bank he was working for, had said they wouldn’t fund the full amount the company had requested £60m They would only do £30m which was still a lot of money.
Derek had been called in for a rollicking by the Finance Director, who expected the bank to fund the full amount. £60m. No, it wasn’t on.
When they came to the draft contract – Derek read the contract very carefully and £60 million was inserted, even though the sum agreed was £30 million, so the loan figure sent to every bank had been wrong.
The lawyers or the company had put in the larger amount. Was it a mistake, or was it deliberate.?
The message – don’t leave it to your lawyers to check, – read the contract yourself – and get the “drains up” to check everything – you have more skin in the game than the lawyer.
Derek ran a training course for a major consulting engineering company in Dubai, UAE and there was a lady on the course who did a lot of negotiating and some of it was particularly difficult. I learned that in the UAE there are lots of alpha males and alpha females who expect using bullying tactics to get their own way.
She had attended a meeting in Abu Dhabi and found herself the sole negotiator opposite a team of thirty-three. This was on a big construction project and her company were the lead construction engineers. The thirty-three strong team even argued falsely that because the company had done something wrong in the drawings, her company were responsible for the deaths of five construction workers.
With thirty-three pretty seasoned negotiators against just one representative of the company that is about as
intimidating as it gets. I wondered why she hadn’t taken someone with her?
She replied that there was the reason for coming on the course. To understand these types of issues better
The message – always have at least one other person with you – then there is physical, emotional and
moral support, easier to take a time out to speak to colleagues.
Derek told a story about a Chief Operating Officer called Geoff for a construction company where Derek
was a consultant negotiation advisor.
Geoff was called at 7:25 am one morning when he was getting off a train at Paddington station. The client wanted a letter saying that their company (Co.A) didn’t owe Geoff’s PLC any money. This must have been for an audit or a new transaction’s due diligence. We suspect they were speaking to all previous creditors from past years and trying the same trick on written off debts.
Geoff remembered an amount of money that had been written off some 8 years before – £8m. The company offered £1m in full and final settlement contingent on the offer being accepted by 8.00 am.
Geoff’s PLC had written this debt off, so by accounting that year it would have been an extra £1m. (sounds crazy but that is how it could be looked at)
Geoff said, “I can’t do that” – they went back several times, saying we can’t raise it any more than £4 million, Geoff just repeated “no”.
Co A kept using the time tactic, the higher authority tactic, the can’t you make a decision tactic.
In the end, Geoff got the full amount of the money back by playing hard ball
and saying NO
The message – just keep saying No.
In Harvey McKay, ‘Swim with the Sharks (without getting eaten’. He recommends sometimes just saying no, and watch the company up the anti
4) Pop concerts prepare for three concerts but only release one at a time
Glastonbury tickets go on sale and are sold out in 1 minute – after which tickets appear for sale on other internet sites/platforms (like ViaGoGo) at inflated prices.
Concert-goers are forced to pay over the odds for apparently scarce tickets.
Major concert venues like Wembley will have 3 concerts in the diary for a summer concert.
Say ‘Take That’ or someone similar, They will say there is only one concert, to make sure they sell out the first concert.
Then and only then – only release tickets for the next one. SCARCITY principle.
The message – be aware of shark tank tactics with marketing and only pay if you really want to go.
5) Books in the book charts
These are not real rankings, number 1 etc.
The publishers pay for placement in booksellers to boost sales and the premium shop space is only rented further if the sales warrant it.
This is “social proof” sales tactics. The book is paid for by the publisher to be in the charts and then
more people by the book.
In the same way, products are placed at the end of supermarket aisles (premium space) at the cost of
the manufacturer to attract more purchases.
The message – there are many shark tank tactics.
Derek is not suggesting you use them, just remember, they will be used on you.
Ali referred to a time when Derek had supported her with negotiations with a medical insurer. The insurer was telling her to reduce consultation times from 45 to 30 minutes.
She was encouraged to tell the insurers she was not prepared to compromise her clinical practice.
It is important to stand up for principles but without confrontation. Taking a timeout to talk to a mentor
or coach and make common sense suggestions.
Questions / Comments
Will – there are those who visit a store, check the QR code on a product against prices on Amazon, shows the information in the store and ask them to match the price.
Derek – Referring to the documentary, Sunderland ‘til I die, Derek watched the negotiations about the transfer fee for Will Grigg who moved from Wigan on the last day of the transfer window.
It had been reported in the papers that Sunderland planned to buy a striker.
They offered Wigan the asking price of £1 million.
The reply was ‘we are not authorised to accept that”.
Sunderland offered increasingly high transfer fees until the price was agreed at £3 million in the last 30
minutes of the transfer window – for a player worth in theory £1 million. Grigg is not scoring at the level
expected of a star striker and is booed by the fans.
Sunderland effectively stitched themselves up by announcing in advance their intention to buy a striker.
Information is power – ask more questions.
Martin observed that he began his career in banking with the values learned from his parents, school, etc. In 37 years in banking and especially as he became more senior, he found himself in situations where there was a conflict between his values and the company values.
Derek agreed – that’s difficult to deal with and many people can’t cope with that. You cannot be convincing if pursuing the corporate objectives in conflict with your values – and your body language gives you away.
Martin – You can’t negotiate if you feel you have nowhere to go and have no power.
Derek – you always have options. You have the option to resign or to whistle-blow.
If you don’t have one, create one.
Mark – Barclays sent Mark on a one week negotiating course at the Harvard Business School. He had travelled business class, it was brilliant – during the week with 175 people in the lecture theatre he had negotiated and argued with about 30% of the people there.
One exercise was to buy eggs. There was half an hour to read the brief and try and buy the eggs. Within two minutes of the start of the exercise, one of the guys in the team went to the girl who had the eggs slammed down a paper, said you better read that and read that now.
The girl did so, went pale, shook hands with him and within two minutes she had sold her eggs for $100 thousand.
In other negotiating teams, the eggs had sold for millions, her deal was the worst for sellers and clearly wasn’t a win-win. Had she spoken to others in the negotiation team she would have discovered that each of them needed different parts of the eggs and would have been prepared to pay for the parts they needed?
If she had not panicked and had a sensible conversation she would have done better and the team would each have bought what they wanted.
The message – the team needs to work as a team and stop the one with the biggest ego from
preventing them from operating as a team.
Rob – asked – how to negotiate with a person who has what you want and they don’t talk to you?
Derek – if possible, go and see them.
We had a situation where someone would only deal by e-mail and wouldn’t see us – he was in Belfast. Tell him you are coming and get on a plane. If he won’t formally meet engineer an opportunity to bump into him. It depends on the context and how important it is – if you can’t walk away, you have to find a way.
I’ve done this. Waited until I saw the person emerge from their building, said hello, introduced myself, admired what they did, had their book – that can be hard to resist.
The only way he was able to get Patricia Fripp here to talk was if he promised to pick her up from the
airport and drive her to her brother’s home – why wouldn’t he want to have the best female sales coach
in his car for a couple of hours of conversation!
Derek says he would coach anyone – if they met him for half an hour in Starbucks in Guildford – the
person who wants the meeting needs to travel to see the person they want to meet. It depends how
important that is.
You can take a horse to water but can’t make it drink (unless you salt its oats).