Losses And Gains Balance Out Each Other

Published in the San Diego Union-Tribune, January 25, 2016

It’s Dec. 31, midnight. I am ready to negotiate the past year and make my peace with god, man and my wife, Barbara (you can decide which one will be the toughest). In keeping with my theme this year to explore negotiation techniques, styles and outcomes, I would like to offer a way of thinking: Net it out.

Like all of us, I had some ups and some downs. The Wall Street Journal tells me to take losses in 2015 to offset capital gains (this assumes I had any). But within that construct, I think there is a very effective way to think about negotiation, and to some extent, life.

One of the characteristics of a negotiation is to give something early in the dealing with the reasonable and legitimate expectation that later on, the other side will remember and “reciprocate” in some way on another point.

However, that is not always the case. And when the other side is oblivious to the fact you “gave” something, and in turn starts over, as if from square one, with no reciprocity, it can be infuriating. This is a style of negotiation – famously used by the Russians at various times – that leads people to scream in dismay. This is the “that’s not fair” lament.

I have come to the conclusion that “netting it out” is the right model for most negotiations. I was involved in a situation where a company with which I had been involved a long time ago was stiffing a small, local vendor. They would not pay his legitimate bill. So I personally put up the legal fees, sent a cease/desist letter and got him paid.

But, here is the kicker. I had another company that also owed the same vendor and couldn’t pay him – not wouldn’t, but couldn’t – since they ran out of money. His attitude was fabulous – “Thanks for getting me paid on one of the bills. I can forgive the other one.” Netted it out.

I have partners – lots of them. In one case this year, I nearly came to blows with one of them, swore I would never talk to him again, “dead to me.” But then a couple of months passed, other deals we were in together became bountiful, all good, and to a very large extent on account of his efforts – net it out. We are back together, bigger and better than ever.

I tell a story about a tax adviser. He sold me some lousy insurance 20 years ago, and I lost money. But he did one incredible thing with a Roth IRA that covered the loss multiple times. And this year we had lunch after not talking to each other for 10 years. I really only remembered the good deal, the good times. Net it out. The “ups” were more than my “downs.”

I have had the same investment adviser for 41 years (a high school chum), and this year, he not only stumbled, he fell off a cliff. My initial instinct was to bail, but over the previous 40 years, he has crushed the ball. I was “ahead of the game.” So history and loyalty and track record prevailed. I signed up for the duration.

But – stay with me here, this one is important – would you net it out, if after you added up both columns, you were net negative? And so we come to a much larger concept: forgiveness. This year, I want to see myself in the context of the whole world, not just my world. And so I need to look at Syrian refugees, and homelessness in West Virginia, and gun assaults and death in San Bernardino.

One of my failed companies this year tried hard to address the problem of micro-philanthropy for millennials. Good intentions, lousy execution. We may have thought of ourselves as doing God’s work, but you still need the code to actually work before you go broke.

In the end I think there is a confluence in negotiation style – of the black hat, but worn on a forgiving, and slightly balding head. I want to net it out, even when my column is in the red.

Forgiveness, in the long run, pencils out

Rule No. 449

Forgiveness – not only of the other person, but also of yourself.

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