In 2012, when I became Chairman of Nokia, the former ruler of mobile phones was rumored to be on the verge of bankruptcy. Three years later, Nokia had transformed itself to a global leader in wireless infrastructure.
We accomplished one of the most successful corporate reinventions by negotiating three enormous transactions in just 18 months: the purchase of complete ownership of Nokia Siemens Networks, the sale of the handset business to Microsoft, and the acquisition of Alcatel-Lucent.
What makes for a successful negotiation? There are 13 key factors:
- See yourself as a referee, not a player. M&A negotiations tend to be somewhat adversarial. If I play my role well, the opposing teams will play the same game, follow the same rules, and act in such a way that the sport becomes enjoyable. If the process has been conducted well, the teams will even be happy to engage again.
- Strive to create an environment of trust. Be honest, take the long-term view and don’t try to win. Rather, aim for an outcome that can satisfy both parties.
- Maximize face time to build relationships and find common ground. When you construct the right kind of relationship, people want to do right by you, even in adversarial situations. Even before you meet around the negotiation table, seek to understand the other party’s point of view. Asking a lot of questions always pays off. The more you know about the other party, the better your chances of constructing a deal everyone can agree to.
- Keep the negotiations teams small and the feel of the discussion intimate. You want a productive discussion, not a dramatic performance. Trust is best created in a smaller group with regular one-on-one sessions between the individuals.
- Team up a negotiator with his or her natural counterpart. I’ve found the “3×3” approach is optimal: the two CEOs, the two chief financial officers, and the two chief legal officers. For truly transformational deals, it may make sense to go to a “4×4” model and involve the chairmen, assuming you feel you might gain an advantage in the negotiations by doing so.
- Try to get the two main principals in sync. If we’re both thinking about the big picture, instead of focusing only on a single game, we are much more likely to achieve a win-win outcome.
- Plan your negotiation tactics in advance. Prepare for all scenarios, even the most unlikely.
- Be systematic and clear in what you ask. Know your limits, know your deal breakers, and know when to give in.
- Keep your board with you every step of the way. That way you know — and will have agreed on — exactly what is acceptable. Of course, just because you have a clear mandate to close a deal according to the instructions you and the board have defined does not mean that you need to divulge that authority to the other team. Sometimes it’s useful to be able to say, “Let me come back to you after I’ve discussed this with the board.”
- Keep up momentum in the negotiations. Make sure that there is always a next step agreed to by both parties.
- Ask boldly for what you need. Explain the rationale clearly. Don’t be afraid to push the envelope, but focus your energy on doing so in a way most likely to produce your desired outcome.
- Obstacles are an opportunity to create trust. Trust keeps the lines of communication open, even when negotiations break down, and enables you to restart proceedings. Trust is the oil that makes everything run more smoothly.
- Leave your ego at the door.
The underlying lesson: Don’t be captive to traditional ways of negotiating and doing deals. Use your brains to do what makes sense according to the circumstances. Be bold and humble, eager and patient. Combine intuition with rigorous analysis and a hefty dose of caution. Prepare for every alternative and you will never be surprised.Orginally published on Quora.