The Art of War in the Boardroom

I saw an amazing scenario play out in the boardroom. It was about the art of war, testosterone games, power shift and David vs Goliath. Here is what happened.

Company A and Company B get together to do a joint venture. Company A is established in the marketplace, and has existing infrastructure for a revenue base. However Company A's revenues are declining and in need of revitalization. Company A also needs a technology refresh, and sense that there is a paradigm shift away from the way that it traditionally does business, because of the internet.

Company B has new products, new technology but no infrastructure. Utilizing Company A's infrastructure will allow it to get to market quickly. Company B also has corporate licences and contacts that allow it to operate in spaces that

Company A would dearly love to operate in. So it looks like company B has the strong upper hand in the negotiations.

In my past, I have had an esteemed army general tell me that the boardroom is the last venue for warfare among civilized men. This was the case.

The joint venture was just in the embryonic stage between Company A and Company B. However, the marketplace demanded that Company B deploy its technology into the marketplace on Company A's infrastructure before details of the joint venture could be hammered out. That is what happened. Now Company A sees Company B on its network, and Company B appears to not be in a hurry to resolve things.

Company A needs a strategy. They realize that that they do not have the upper hand in the joint venture negotiations, so they are determined to get it. Since there is no agreement in place between the companies, they treat Company B like a business customer, and send Company B an invoice at market prices for goods and services contributed to Company B's roll-out into the marketplace. They know that this will infuriate Company B. That is exactly what happens. Then they call a meeting with Company B to discuss the joint venture, knowing that the invoice will be a major topic of discussion.

Company B feels that they are dealing from a position of strength. After all, they have the technology, the new products, the licences and the contacts. They are going to put Company A in their place. And from their position of strength, they will make Company A eat their invoice, their pride, and make them take a subordinate position in the joint venture. After all, they see this invoice as a pathetic attempt to get a few dollars out of the situation.

At the boardroom table, the stage is set. There are the usual trivialities, pleasantries and such without any reference to the underlying offensive invoice. Then Company B decides that they will address the Joint Venture, but use the invoice as a reference to what they do not want to happen in the joint venture. After all, partners are not supposed to make a profit off each other.

The dance begins. One of the director's of Company B leads the charge and begins the preamble to pointing out that the invoice is out of line. He has his strategy mapped out, and thinks he is on the way to mastering the situation.

A director of Company A starts to play his hand. He immediately states that the director of Company B is dancing and he knows that the invoice is the bone of contention. Company B feels that they have the opening to go right into the attack over the invoice. Company A takes away their ammunition by stating that the invoice was merely a tool to get the joint venture rolling along. This stops Company B in their tracks. They cannot assess whether this is true or not.

Company A immediately presses their advantage. They point out that the joint venture is not in place and they have incurred some real expenses and paid staff. They also point out past favours that they have done pro bono for Company B. They further pull the pins from under Company B by asking what nominal they want to pay to reimburse the out-of-pocket expenses seeing that there is no agreement on the joint venture yet. This leaves Company A hemming and hawing. They try to stall saying that they do not have a copy of the invoice in front of them.

Company A immediately produces copies of the invoice and presses very hard on the number for an immediate settlement of the invoice. This amount of aggression drives the Director of Company B into the red zone of anger.

Voices rise. Company A director matches the escalation and the volume increase with a reasonable request "How much do you want to pay?". Company B director is now past the point of rational. However he cannot name a figure. He cannot even think clearly now.

What Company A has done, is first of all established the point of legitimacy of the invoice in the heat of the argument, even though it was questionable in the first place. They have also gained the upper hand, because Company B could not come up with a rational response to what the actual figure should be for the re-imbursement of the expenses. Both parties knew that the original invoice was a phony strawman, yet Company B fails to take Company A to task for it. They played Company A's game.

Immediately, Company A, realizing that they have won the skirmish, back off and ask the director to get back to them with a reasonable figure. They say that the invoice is settled. Now they get on to the discussion of the joint venture.

Company B's stature in the proceedings is diminished. Their chief negotiator knows that he is been bested. But he will look like a prick if he maintains an agressive stance in the negotiations, now that Company A has generously offered him an out in the naming of a figure for the invoice. It was a masterful stroke.

Company A now negotiates the joint venture as an equal partner again, even though they were behind the eight ball. It was an amazing demonstration of the Art of War in a business setting.

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