Negotiation has been taking place in some way or another since the dawn of time. From barter and trade systems to the inception of currency, people have found ways to “cut a deal.”
But how does negotiation from the past stack up to the negotiation techniques of today? While business has certainly changed, the success of negotiations still relies on some key factors.
We share three of our favorite successful business negotiation examples, why they worked, and what can be learned from each one.
Table of Contents
#1: The Pullman Carnegie Negotiation of 1867
#2: The Teddy Roosevelt Reelection Campaign of 1912
#3: Richard Branson’s Necker Island Deal
Would These Successful Business Negotiation Examples Have the Same Outcome Today?
Using Real-Life Examples of Negotiation, The Maker Group Will Help Your Team Go From Good to Great
3 Famous Negotiation Examples
When looking for negotiation examples online, there are a few that typically pop up as being the most iconic or successful negotiations in recent history.
But many of these examples ended in legal negotiation, rather than business or contract negotiation, for example:
- Apple vs. Samsung – Samsung was originally ordered to pay $1 billion to Apple for patent violations but ended up having to pay more than $500 million.
Or…
- Starbucks vs. Kraft – After a three-year battle, Starbucks was ordered to pay $2.75 billion to Kraft for breaching its agreement.
One might beg the question, were they really good negotiation examples, or examples of negotiations gone wrong?
We decided to dig a little deeper to find three successful business negotiation examples that didn’t end in a legal battle.
#1: The Pullman Carnegie Negotiation of 1867
Back in the 1860s, Andrew Carnegie and George Pullman were feuding over supremacy in the railroad sleeping-car business. The Central Transportation Company (controlled by Carnegie) was fighting with The Pullman Company (controlled by Pullman) to get the monopoly on the sleeping-car business of the Union Pacific Railroad.
Both companies were fighting each other, slashing prices, and eliminating any chance of profit.
Carnegie and Pullman had both gone to New York to meet with the board of directors with the Union Pacific when one evening at the St. Nicolas Hotel, Carnegie opened a conversation with Pullman by saying, “Good evening, Mr. Pullman, aren’t we making a couple of fools of ourselves?”
“What do you mean?” Pullman demanded. Carnegie then expressed that he had been contemplating a merger of their two interests. He pictured, in glowing terms, the mutual benefits of working together as opposed to against each other
Pullman listened intently but was not convinced. Finally, he asked, “What would you call the new company?” and Carnegie promptly replied, “Why, the Pullman Pacific Car Company, of course.”
Pullman suddenly brightened and said, “Come into my room, let’s talk it over.”
That talk made industrial history
What Lesson Can Be Learned From This Negotiation Example?
Foster a Win-Win Outcome
Sometimes it takes one party to put aside their ego to reach a mutually beneficial outcome.
Generally speaking, people like to win. When you can put aside your ego by giving the other party the symbols of success, it allows you to concentrate on the more important details of the negotiation.
When Carnegie suggested that the company be named after Pullman, he knew it would give both Pullman, and the public, the impression that Pullman had won the sleeping-car battle. But really, Carnegie simply decided that profits and success were more important to him than the name of the company.
#2: The Teddy Roosevelt Re-Election Campaign of 1912
In 1912, Teddy Roosevelt decided to make another run for president of the United States. As a crucial part of his campaign, Roosevelt was to make one final whistle-stop railroad trip through key states.
In these states, Roosevelt would make a quick speech designed to inspire the audience and leave behind pamphlets that had a “presidential” photograph of Roosevelt on the cover and his inspirational speech on the inside.
Some three million copies had been printed and were safely tucked away in the boxcars when just days before the train was scheduled to leave, campaign workers made a potentially costly discovery. Each pamphlet had a small line of print associated with the photo that read, “Moffett Studios, Chicago.”
Moffett held the copyright which meant that each unauthorized use could cost the campaign one dollar. The potential $3 million cost of distributing all of the pamphlets greatly exceeded the campaign’s available resources.
Panicked campaign workers were left with two choices. Distribute the pamphlets without Moffett’s permission and risk getting sued for a ruinous amount, or hold on to the pamphlets and risk losing the election.
The workers agreed that negotiating with Moffett might be their only chance, so they sent an operative to speak with him. But much to their chagrin, they discovered that he was a bitter, old man on the brink of bankruptcy and desperate for money.
The campaign staff was feeling hopeless. With three million pamphlets already packed into the boxcars and no time to redo them, they felt the campaign was all but lost.
In a final act of desperation, the workers approached Roosevelt’s campaign manager, George Perkins, who, at the time, was a partner to J.P. Morgan. Perkins had negotiated many complex deals and knew exactly what to do.
Wasting no time, Perkins immediately summoned his stenographer and had the following cable dispatched to Moffett Studios in Chicago:
“We are planning to distribute millions of pamphlets with Roosevelt’s picture on the cover. It will be great publicity for the studio whose photograph we choose. How much will you pay us to use yours? Respond immediately.”
Almost immediately, a return telegraph was received from Moffett that read:
“We’ve never done this before, but under the circumstances, we’d be pleased to offer you $250.”
Reportedly, Perkins accepted the offer — without attempting to get more from Moffett.
What Lessons Can Be Learned From This Negotiation Example?
Information Is Power
The more you know, the more power you have. The more power you have, the more options there are at your disposal.
When Perkins learned that Moffett was on the brink of bankruptcy, he immediately saw an opportunity to turn the problem into a solution for both parties.
Perspective Is Important
Roosevelt’s campaign workers were so panicked that they failed to stop and consider Moffett’s perspective. They had no idea what Moffett would be willing to do, nor did they consider the fact that Moffett probably had no idea what they had already done.
Taking a step back and considering the perspective of the other party can give you the upper hand in negotiations. Presenting what seemed like an opportunity for Moffett ended up benefiting both parties in the long run.
Creativity In Deal-Making
By focusing almost exclusively on the “price” or “cost” of their potential blunder, the campaign staff failed to consider other variables in the deal such as publicity for the studio and what that would be worth to him.
#3: Richard Branson’s Necker Island Deal
In the 1970s when Richard Branson first heard about the Virgin Islands, he quickly became intrigued. After all, he had started a company called Virgin a few years earlier.
In a blog post about purchasing Necker Island, Branson wrote, “I had no idea where they were located or that they were actually called the British Virgin Islands, but one Thursday in 1978, I was told that they existed and that I could potentially own one.”
He recalls picking up the phone and calling the realtor, “We were still in the early days of Virgin Records, and I by no means had the cash to buy an island. Luckily, the realtor didn’t know this and offered me an all-expenses paid trip to see the Islands that weekend. I agreed to go on one condition — if I could bring a guest.” He was trying to impress a girl at the time.
The realtor had the 74-acre Caribbean island listed for $6 million, but Branson didn’t have anywhere near that amount. But he didn’t give up. “Keen to impress my new love, I offered the highest amount I could afford: $100,000. As you can imagine, the realtor was less than impressed and left us high and dry to find our own way back home.”
However, a year later the owner of Necker Island had not received an offer and was desperate to sell at that point. Branson recalls, “Virgin Records was in a much better position than it had been a year before, so I quickly agreed to a purchase price of $180,000.” This was a discount of about 97 percent off the original asking price.
“The only condition was that I would need to build a resort on the Island within four years,” says Branson. The island retreat is now a major attraction for celebrities and entrepreneurs from around the world.
And what happened to the girl he was trying to impress back in 1978? Well, the gambit worked: “I married her there 11 years later,” says Branson.
What Lessons Can Be Learned From This Negotiation Example?
The Anchor Offer
Famous economist John Maynard Keynes once said, “When the final result is expected to be a compromise, it is often prudent to start from an extreme position.”
Using an anchor offer from an extreme position, Branson was able to redraw where the middle ground of the negotiation would be.
Moral Compass
Richard Branson didn’t let his moral compass get in the way of his decision-making process while negotiating. He knew $100k was insultingly unfair, but he made the offer anyway.
Comfortable Discomfort
Branson was most likely quite uncomfortable when making such a low offer, but he did it anyway.
It’s awkward for many people to make extreme anchor offers or play hardball when negotiating, but all effective negotiators must get comfortable with being uncomfortable.
The Power of Silence
Sometimes the best thing you can do is stay quiet and wait for the other party to speak.
Branson waited a year after his initial offer, and despite really wanting the island, he knew he would have to wait for the seller to come back to him with a counteroffer.
Would These Successful Business Negotiation Examples Have the Same Outcome Today?
While it’s impossible to know if these specific negotiations would turn out the same today, what we do know is that the fundamentals of negotiation haven’t changed that much because people haven’t changed that much.
In most business negotiation examples, certain strategies and skills are universally recognized as necessary to succeed. Some of these include:
- Relationship-building
- Communication and listening
- Insight and perspective
- Collaboration
- Problem-solving
- Research and planning
- Persuasion; and
Negotiation doesn’t come naturally to everyone, but luckily, it is a skill that can be taught. Making a plan to improve your negotiation skills should involve training and a lot of practice.
Remember, the negotiation examples above all included business-savvy negotiators with years of experience learning from both their mistakes and studying the successes of others around them.
Using Real-Life Examples of Negotiation, The Maker Group Will Help Your Team Go From Good to Great
In business, who wouldn’t want to go down in history as an example of success? Our everyday negotiations might not put us on the list of the top ten most successful business negotiation examples, but they can certainly get you where you want to be with your company.
The Maker Group can help. Our team of skilled and experienced commercial negotiators can show your team how to excel at the negotiating table using real-life examples of negotiation success.
We’ve developed an 8-step negotiation process that’s backed by proven behavioral frameworks to maximize the potential of any team.
For more information, or to schedule a call with a member of our team, contact us today.
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