Hard Power in Negotiations
Part of the Creating Power Series
4 articles exploring power creation in negotiations, beginning with hard power then looking at soft power and smart power. Each uses a CSN client case study to show the negotiation power in action.
Introduction
How do you create negotiation power? Especially when the other party might have more leverage.
A starting point is defining power. Joseph Nye, a political scientist, placed power into three broad categories:
Hard power: Using superior resources to impose your will. The traditional concept of power: making others do what they otherwise wouldn’t. Change behaviour or face consequences.
Soft Power: Using influence and persuasion to change peoples’ preferences, and so change their behaviour. Influencing hearts and minds, to agenda setting.
Smart power: Power created by most effectively combining hard and soft power.
How can hard, soft and smart definitions of power explain negotiation dynamics and outcomes? Below is the first of three CSN case studies, examining the role of each power in turn. A fourth summary article will complete the analysis.
Case Study: Hard Power & The Charity Turnaround.
A leading cancer charity’s partnerships team were devastated. One of their largest corporate deals, worth many millions, had collapsed just days from signature. 12 months of negotiations appeared wasted, with 18% of their divisional income lost. They assumed they had no power to turn it around.
Power Analysis
Our analysis quickly challenged that conclusion. We found many sources of power which, if employed collectively and effectively, might turn the negotiation around.
They had converted their exceptionally high income into becoming a scientific super-power, establishing marquee facilities and operating from pure research through to drug manufacturing. A formidable combination of size, range, complexity and mission.
This resource and science power made their name synonymous with fighting cancer, bringing uniquely powerful brand and reputation power. Another way of stating this is moral power,
They also had commercial power. Their income derived from sophisticated commercial and fundraising partnerships with large institutions. There was much they could teach the private sector. Add to this emotional power. Who doesn’t know someone affected by cancer?
Negotiation Strategy I: Setting the Ground
Resource, scientific, brand, moral and commercial power were all in abundance, much of it ‘hard’ power. Yet the charity initially didn’t see it, perhaps even reluctant to recognise all their power. A strategy was needed to convert this natural hard power into negotiation power.
We started with scientific power. A long-standing meeting between the two organization’s scientists, just days away, was assumed cancelled. Why? The charity could showcase their potential, applying internal pressure at the corporate from corporates, whilst signalling to them the deal wasn’t over.
The agenda was adjusted to showcase their latest scientific advances, which could lead to innovative partnerships (including with competitors). A successful day ensued that shifted power immediately. Meanwhile the commercial team cut off all communications in preparation for the next stage.
That stage was carefully curated communications with, firstly, the commercial executive responsible for cancelling the deal and then their CEO. That first executive email briefly, and plainly, set out the facts in the likely event that the executive sought to deny them further down the line.
Negotiation Strategy II: Single message, multiple interests
The second mail, from CEO to CEO, had three people in mind. If you negotiate with a company long enough, you learn their real power structures. It became clear, after some analysis, that the corporate’s organisation was effectively run by their CEO, CFO and CMO.
The message was designed to address the anticipated interests of all three. This included their relative balancing of risk and opportunity. It expressed shock, then moved quickly to the original partnership vision. One of giants, and equals, on a noble mission together.
Each element of the charity’s ‘hard power’ was then woven into the narratives. Opportunity lost was balanced with rhetorical questions such as ‘How should we explain to our board when the funds have already been allocated to scientific projects?’ A reputational, perhaps even legal, nightmare.
Emotional power was then turned into moral power by bringing up expected standards. The opposite of ‘this is just how corporations work’: this is not how we work, or we expect others too.
Moral power was finally turned into morale power. They were reminded that their staff overwhelmingly voted in favour of the charity for fundraising. People, and productivity, power.
Result
Within a week their CEO apologised and recommitted fully to the partnership.
Reflection on Hard Power
Hard power isn’t typically associated with charities, but this one had it in abundance. It hadn’t fully recognized, let alone fully used, it. Perhaps it was a little reluctant or saw it as ‘what corporates do’. This power comes in many forms, and each organization has its own most potent combination of it.
Clearly soft power played a part too, but its hard power was essential too. The hard power of consequences if the corporate didn’t change their behaviour. Communicating that power effectively was central to turning the negotiation around, along with the possibilities that might ensue too.
Article 2 is on soft power, with a start-up creating it to negotiate on equal terms with multinational.
Centre for Strategic Negotiations (CSN) offers a new approach to maximize the value of negotiations
More information and high-level case studies here