For the first MEG meet-up in August, our roundtable discussion topic was Brinkmanship.
Brinkmanship can be about demanding the impossible to leverage a deal, or exerting financial pressure on someone who is already tied into doing business with you.
Does it work, does it matter whether it is ethical, or is it, ultimately, bad for business?
How Brinkmanship Works
As a negotiating technique, brinkmanship works by one party pursuing a set of terms so aggressively that the other party is left with the stark choice of either agreeing or walking away.
As a term, it has its origins in politics and a 1956 interview with a former US Secretary of State, John Dulles. However, its most famous deployment came a few years later with the Cuban Missile Crisis of 1962.
In contemporary politics, President Trump is an enthusiastic proponent. Closer to home, the current Brexit stand-off is now looking like a classic case of brinkmanship.
But in business, should brinkmanship really be necessary or even acceptable?
Perilous Payment Terms
Payment is a typical pressure point when it comes to brinkmanship. There are people who routinely abuse payment terms, and there are some larger organisations and companies that have lengthy payment terms built in to their systems.
Late payment is sometimes used as a kind of breadcrumb trail, allowing clients to tie their suppliers in by always lagging behind in payment for one project as another commences.
This feels like calculated behaviour, designed to ensure an unbalanced relationship.
Exerting Emotional Pressure
Another aspect of business behaviour that is tied to exerting pressure is not so much financial as emotional.
This is where the sales language typically becomes challenging or even belittling:
“Are you really committed to your own success? Do you want your business to fail?”
It might not be taking you to the brink financially, but it is attempting to exert emotional pressure which may then make you feel in a similar to actually being under financial pressure.
High Pressure Strategies
There are sectors where a form of brinkmanship is necessary, or even part of the process.
In certain legal situations, for example, the prospect of one side issuing proceedings or going to court can be an effective means of securing a settlement to avoid further expense and time.
However, this kind of brinkmanship is only effective in a situation where all the parties concerned are thinking and acting rationally.
The danger is that emotion takes over, which can then cause problems.
Emotion in Brinkmanship and Business
There’s a famous quote from The Godfather:
“It’s not personal, it’s just business.”
In this context, “just business” leads to multiple, brutal assassinations.
Often, the problem in business is that it involves emotions, and people cannot help but take things personally.
But if you are attempting to negotiate terms, emotion is likely to make you act or respond recklessly or stupidly.
Furthermore, those who routinely resort to brinkmanship know this, and will attempt to manipulate your emotions as part of their strategy.
Brinkmanship is harmful to goodwill, and it can ultimately mean no business at all, if negotiations break down.
Getting stuck in the middle of it, can feel like you have become trapped in an abusive relationship.
The best approach to protect yourself is to be systematic, and to try and hold your emotions in check.
- Only commit once the deal is signed, and do not let the other party know your internal deadlines. Instead, be accommodating and flexible, and demonstrate your patience.
- Review the price regularly, and be transparent about additional costs if the client asks for additional work or add-ons during the project.
- Do not give the impression that you are desperate for this one crucial deal. Your client needs to think that business is booming for you, even if it isn’t.
- Promote your unique selling proposition to enhance your competitive edge. Your client may threaten to go elsewhere, but will they get the same return from someone else?
And if these things don’t work?
Either you call the other party’s bluff, accept their terms (if this deal really isn’t something you can afford to lose), or respond with some brinkmanship of your own.
Remember though, that brinkmanship is a high-risk tactic, whoever is employing it.