Negotiators must know interests – their own and the other side’s

(5 March, 2019) If you want to resolve a dispute through negotiation or mediation, you need to start with a clear and realistic idea of what you intend achieving and why.

That Donald Trump can’t get some real agreement with Kim Jong-un reflects, surely,
the US President’s lack of clarity on American interests in this part of Asia
and on the sort of deal with North Korea that would advance those interests.

Of course the US doesn’t want it or allies to be targeted by North Korean nukes – that’s
a given anywhere in the world. But what is America’s underlying strategy in
North Asia, other than clinging to the status quo on air and naval bases, and
fronting up to China militarily and economically?  Surely those are old,
Cold War-tactics, unlikely to serve US interests into the future amid the
massive economic and political changes occurring across this region.

Perhaps the Trump-Kim Jong-un meeting in Hanoi was just grand standing for the world’s
media. Certainly there was no sign of a deeper, modern US strategy at play.

For successful negotiation, you also need to start with a well-informed idea about
how you’re seen by the other side, what they are looking for and what they are
likely to give up for it.  Expect little of this to be explicit when the
parties first sit down, especially when geopolitics is at stake.

The Trump vs Kim Jong-un show begs the question:  Does the US not get just how much
it’s viewed with suspicion and fear?  North Korea was invaded and then
bombed to smithereens by the Americans in 1950-52. This after the US divided
the Korean Peninsula in 1948 in a fit of paranoia over the Russian and Chinese
communists. True, North Korea has also suffered from its own appalling
governance in the 70 years since. But much about this impoverished and closed
country must be explained by its treatment by the US (and its allies) during
the War and the continuation of (largely non-violent) belligerence.

What does North Korea want?  Obviously it wants economic security and growth – and
yes, re-unification with the South. Koreans on both sides of the 38th Parallel
want their country whole again. As the Vietnamese and the Germans showed,
re-unification of divided nations is usually a precursor to rapid economic
development, open borders and stability – and surely those things on the Korean
Peninsula are in America’s interests. It’s reasonable to assume that the Kim
Jong-un dictatorship would lose relevance (or collapse) in the face of a
well-planned, US-facilitated strategy to see the Koreas unified.

Absent such interests-based and long-term thinking by the US, Kim Jong un will hold
onto nuclear weapons of course. He has no incentive to give them up without
tangible offers on trade and investment. To North Korean ears, Trump’s outrage
over their new nukes is probably more of the belligerence they feel so
accustomed to. (Kim Jong-un’s rhetoric can be unpleasant too, but the power
asymmetry is what really matters).

Trump is demonstrating another fundamental truth about good negotiation – you don’t get
far by simply charming or bullying the other side.

Thanks to two great reads in 2018: Michael Pembroke’s “Korea” and Graham Allison’s
“Destined to War”. And a re-reading of Fisher & Ury’s “Getting to Yes” (of
course).

Ready for the next revolution?

(18 July, 2017) By world standards, New Zealand has very good information & communications technology (ICT). We rank highly on ICT infrastructure and skills - and our business environment is second only to Singapore when it comes to facilitating innovation using ICT and other technologies.

But as a country, we are not that good at securing economic and social advantage from these things. ICT affordability is a big issue – one that could start holding New Zealand back as the world enters the "Fourth Industrial Revolution".

All this from the World Economic Forum's (WEF) 2016 Global Information Technology Report – a unique assemblage of 139-country league tables and of economic and political concepts that, together, indicate levels of "networked readiness".

Readiness, that is, for the Fourth Industrial Revolution – a revolution in how human beings produce and consume stuff (and much more) as new digital, biological and physical technologies converge rapidly in the 21st Century.

The WEF foresees a global transformation coming out of the ICT created by the previous revolution – the digital one which gave us the Internet and massive amounts of cheap computing power – and by the ongoing march of bioscience (eg genetics) and engineering (eg robotics). "This transformation is not defined by any particular set of emerging technologies, but rather by the transition to new systems that are being built on the infrastructure of the digital revolution."

Countries will benefit, or fall behind, depending on their success in leveraging ICT to create and/or adopt the new systems of greatest value in the global economy. ICT is so important because of how it increasingly facilitates and accelerates new biological and physical technologies. "Networked readiness" is short-hand for a country's ability to benefit from this global transformation.

Each year the WEF ranks the 139 on a networked readiness index (NRI). In 2016, New Zealand is ranked 17th – one ahead of Australia but well behind the US (5th) and the UK (8th). Singapore is number one (again) and of course, the Scandinavians are well up there, along with Japan, Korea and Germany.

Scrutiny of the NRI calculations suggests we would rank higher but for a very poor score on ICT affordability – one of 10 "pillars" that make up networked readiness. New Zealand is 95th least affordable because of internationally high fixed line broadband tariffs and prepaid mobile charges, and because of weak competition in Internet services and telephony markets. (Australia is deemed to have far more competitive markets but is still only 57th on affordability.)

On the other hand, New Zealand is well placed (10th) on infrastructure, thanks to relatively high scores for electricity supply, secure Internet servers per capita and access to international bandwidth.

Where we look best is integrity of political and regulatory systems, and conduciveness of business environment: In world terms, we have an excellent legal system, effective law makers, rapid processes for starting a business, availability of venture capital and well educated people.

Is New Zealand ready for the Fourth Industrial Revolution? To a large extent, yes. But the report also suggests that ICT affordability might be our impediment to a bright, new technology fortune. To what extent should we blame this on costs associated with the age-old constraints of small size and distance from bigger markets, or on the high margins of ICT providers?



The WEF Global Information Technology Report was published on 6 July. See www.weforum.org/reports



Getting the trust you deserve

(10 May 2016) New Zealanders are suspicious of big business, as confirmed in recent surveys.

Colmar Brunton found 43% of us have little or no trust in corporations (only 11% have complete or lots of trust)^. Another survey, the Edelman Trust Barometer, ranks New Zealand below the global average for trust in business as a national institution – we are 51% trusting while the world is 53%*.

Does it matter? That we are not too trusting might indicate that New Zealanders are savvy and questioning. We don't take companies – or for that matter, the institutions of government or media – at face value. They must earn our trust.

Ultimately, though, high levels of distrust will damage an economy or political system. People need trust to buy products. Businesses need trust to engage with each other. And investors certainly need it to invest in companies and capital markets. (In politics, distrust manifests as apathy or at the other extreme, in support for demagogues who promise an alternative to government-as-usual.)

Curiously, the surveys also suggest that Kiwis want to trust business. Edelman found 77% of us believe that companies can make profit and, at same time, improve economic and social conditions. It also found 80% want CEOs to concern themselves with social issues as well as financial performance. (Chief among such issues in New Zealand is income inequality. The same in Australia.)

The Colmar Brunton survey showed much higher trust in small businesses: Only 9% of us have little or no trust in them, while 30% have complete or lots (and the other 60% have at least some trust). What is it about larger and more complex companies that troubles Kiwis? The same issues just don't arise when businesses are small.

Of course New Zealand corporations very rarely poison consumers, defraud trading partners or misappropriate investors' money. They are not fundamentally untrustworthy.

So what is going on? The answer lies largely in companies' failure to build strong understanding among customers, employees, investors and the public in general – understanding of how the particular company creates value for its stakeholders in economic, social and environmental terms.

That kind of understanding – and the credibility and trust that grows from it – requires talking to stakeholders in ways that are truly meaningful to them. It requires anticipating and answering their questions about your business. (Kiwis are, indeed, savvy and questioning.)

I am talking about Integrated Reporting – the concept and practice of corporations explaining themselves with greater clarity, conciseness and coherence. Explaining how they use their resources (or capitals) sustainability. Explaining what they set out to do, how and with what results. Giving a realistic view of the future that informs and inspires stakeholders.

Integrated Reporting encompasses the other "new" reporting concepts – sustainability, corporate social responsibility (CSR) and ethical governance. It is not rocket science but does require a fresh perspective on the business, and rigor in identifying and reporting the right information.

Some New Zealand corporations are doing it in full or in part. Prof. Mervyn King – former Governor of the Bank of England and champion of the global Integrated Reporting movement – came here in 2013 and said we were well on the way.

But Prof. King suggested more Kiwi companies needed to break down their internal silos of thinking and information control in order to really start Integrated Reporting. He was in no doubt about the advantages, with higher investor confidence and lower cost of capital chief among them.

Integrated Reporting is for each corporation to adopt and apply as best suites its business, operating environment and stakeholders. Ironically perhaps, the first step is for the company to demonstrate its trust in stakeholders – to know that the latter will find your business story and performance credible and worthy of support!

It's the 2016 reporting season. Time for companies to work more on building the trust they deserve.

^ See Colmar Brunton's "Who do we trust" survey report for the Institute of Governance & Policy Studies, Victoria University. March 2016.

* See the Acumen Edelman Trust Barometer – New Zealand Report 2016. March 2016.

 

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