I am not a huge fan of Disneyland and Disneyworld. My wife and kids love them, but I hate long lines and just don’t love rollercoasters and its other rides (largely because I don’t feel great after and it takes me a while to recover).
But I do admire how Disney runs its business, especially its extensive training efforts and customer service.
I was thus excited to read Disney Chairman and CEO Bob Iger’s bestselling autobiography The Ride of a Lifetime: Lessons Learned from 15 years as CEO of the Walt Disney Company and to glean some important negotiation lessons.
In last week’s column, I described five:
- Put your ego in your back pocket and focus on your long-term goals;
- Treat your counterparts with respect and let them walk away with it intact;
- Don’t discount the true power of sincerity and enthusiasm and real connections;
- Rapport-build on issues unrelated to the business issues; and
- Build a reputation for integrity (what your counterparts say about you after the deal).
Here are some more, plus my own thoughts.
- Iger negotiated the $4.05 billion purchase of Lucasfilm from George Lucas – the creator of all things Star Wars – and wrote of the negotiation: ”[t]he worst thing you can do when entering into a negotiation is to suggest or promise something because you know the other person wants to hear it, only to have to reverse course later. You have to be clear about where you stand from the beginning. I knew if I misled George [about the overall range of the purchase price], simply to begin the bargaining process, or to keep the conversation going, it would ultimately backfire on me.”
ML: Iger knew Lucas initially had unrealistic expectations of the value of Lucasfilm given Disney’s previous purchase price of Pixar. So, rather than initially validate it and then negotiate down just to get going, Iger was blunt at the start. Importantly, however, he “explained why” and how the Pixar deal differed from a market perspective (focusing on my Third Golden Rule: Employ “Fair” Objective Criteria).
- After agreeing on a purchase price, Iger said “[t]hen the more difficult negotiations began over what George’s creative involvement would be. . . . [George] wanted to retain that [creative] control without becoming an employee. It would have been a dereliction of my responsibilities to spend more than $4 billion and then say, essentially, This is still yours. Go ahead and make whatever movies you want to make on whatever timeline you can make them. . . . We went over and over the same ground – George saying he couldn’t just hand over his legacy, me saying we couldn’t buy it and not control it – and twice walked away from the table and called the deal off (We walked the first time and George walked the second.)”
ML: Price is not always the most critical issue, and walking away from the table over a crucial issue doesn’t necessarily mean the negotiations are over. Sometimes walking just signals that the issue at hand is vital.
- Iger wrote that “[i]t was an upcoming change in capital gains laws that eventually salvaged the negotiations. If we didn’t close the deal by the end of 2012, George, who owned Lucasfilm outright, would take a roughly $500 million hit on the sale. If he was going to sell to us, there was some financial urgency to come to an agreement quickly.” [This pushed them to resolve the control issue, with Lucas agreeing to consult with Disney on its Star Wars efforts.]
ML: Independent inflexible deadlines with significant financial consequences often drive the negotiation agenda.
- Regarding his offer-concession strategy in outbidding Comcast to purchase 21st Century Fox from Rupert Murdoch for $38 per share, which translated to over $71 billion, Iger wrote: “[a]s for the $38 price, I suspected that Comcast could possibly go higher than what they’d already bid [which was $35/share], and that if we went to $35, they’d go to $36. If we went to $36, they’d go to $37, at each stage convincing themselves that it’s only a little more, until eventually we’d go up to $40 per share. Whereas if we started at $38, they’d have to think hard about going up at least $3 per share.” He was right, as Comcast dropped out after Disney bid $38.
ML: Pay close attention to the psychology involved in the offer-concession stage of the process and put yourselves in the shoes of how your counterpart might make its offer-concession decisions. In short, game it out, then decide your move.
- Finally, in his summary of business lessons learned, Iger wrote “In any negotiation, be clear about where you stand from the beginning. There’s no short-term gain that’s worth the long-term erosion of trust that occurs when you go back on the expectation you created early on.”
- He also wrote “Most deals are personal. This is even more true if you’re negotiating with someone over something he or she has created. You have to know what you want out of any deal, but to get there you also need to be aware of what’s at stake for the other person.”
ML: Know your long-term goals and objectives and also, always, be aware of your counterparts’ goals and interests.
Latz’s Lesson: Address unrealistic expectations with independent standards, know that price may not be the real dealbreaker, use deadlines to your advantage, game for the psychological element in your offer-concession moves, and be aware of your and your counterparts’ goals and interests.
* Marty Latz is the founder of Latz Negotiation, a national negotiation training and consulting company that helps individuals and organizations achieve better results with best practices based on the experts’ research. He can be reached at 480.951.3222 or Marty@LatzNegotiation.com.