Twitter’s Business Negotiation Process Playbook with Elon Musk - “All Warfare is Based on Deception” By Sun Tzu
It might sound cynical, or even chilling, to suggest that all business negotiation processes are based on deception. However, the reality is that this is true to a great extent based on Sun Tzu’s Art of the War, which is where the phrase “All Warfare is Based on Deception” originally came from. This phrase is literally the playbook that Twitter has been using to its advantage in its negotiations with Elon Musk, Tesla and SpaceX’s CEO.
Alarm bells were already ringing when Twitter executives vehemently pushed for Elon Musk to go forward with his initial offer of USD54.2 per share to take Twitter private. It wasn’t that long ago when Musk first made known his intention of purchasing twitter, when twitter’s senior employees and management demonstrated strong objections against Musk’s Bid. Many think that the initial objection was due to Musk’s opposing political beliefs, hence it was a strange turnaround when Twitter began pushing for Musk to complete his takeover, especially after Musk began to backtrack.
The primary reason why Musk backtracked is due to the amount of bots he discovered in twitter. Musk claimed that Twitter initially stated the amount of bots to be approximately 5% amongst all its users, yet upon closer inspection, the amount of bots seem to be closer to 25-30% amongst its user base. If this were to be the case, this is an apparent use of deception by Twitter for advancing its business interests. What makes the use of deception in this scenario interesting however, is when Twitter began falsifying claims about its user base. It is reasonable to assume that Twitter did not anticipate the takeover of its platform in the short to mid future, hence Twitter wasn’t planning to intentionally deceive Musk. Despite this, this deception, if proven to be true, has originally worked to the huge advantage of Twitter, as inflated user numbers would invariably inflate the share price, forcing bidders like Musk to put out higher than needed offers. This incident has huge implications for business negotiations - the probability of successful and unsuccessful negotiations can be determined a long time before official negotiations commence, and deception plays a huge role in the preparation process and the lead up to the official negotiations. To be more specific in Twitter’s hypothetical scenario, albeit unintentional, had it not deceived about its user base for years, Musk would not have made an offer for USD54.2 per share - the offer would have been significantly lower.
Deceit and outright lying are, of course, two different things, yet the main point of this article is to showcase how businesses can employ Sun Tzu’s deception tactics ethically to gain an advantage before and during the negotiating process.
Sun Tzu’s School of Deception Rule Number #1 - When We Are Able to Attack, We Must Seem Unable
This has been one of the guiding principles of success for me and my clients’ businesses. The amount of wisdom in this rule in guiding business negotiations is unfathomable, yet so simple. A lot of businesses fall into the trap of showing aggression when they don’t need to. The consequences of doing so, unbeknownst to even a lot of negotiators, is that you are handing over unnecessary information to your opponent for free. Negotiations are all about possessing and processing the right information, whilst withholding critical information from the opponent, yet businesses often forget about this simple rule when confronted with offers they feel insulted by.
Aside from releasing unnecessary, yet potentially critical information to opponents when businesses react aggressively, substantial leverage may be lost. When Sun Tzu says “we must seem unable”, what he really is saying is that we should prompt the opponent to start a fight by pretending to be weak. This allows us to gain the psychological advantage in the battlefield when the opponent realizes that we aren’t as weak as they thought.
Psychology is everything in ancient wars, and so are business negotiations. It is important to constantly remind ourselves that reality is constructed and interpreted by what we think is happening, which is a hindrance if we have a lack of or limited information. However, the same applies to the opponent in negotiations, hence Sun Tzu emphasizes the significance of psychological control over the enemy. When we construct a false image to the opponent, or in plainer terms, deceiving our opponent (in ethical ways of course), we control the psychological element of negotiations. Here, deceit doesn’t necessarily have to be in the form of making up false numbers to obtain “illegal” advantages in negotiations, but Sun Tzu refers more to hiding our true strength by showing strategic weakness. In a business setting, this could mean showing initial desperation to negotiate, thereby reducing one’s overall leverage strategically to give a false sense of security to the opponent, encouraging the opponent to “attack”. When the opponent bites the bait, it would then be wise for one to finally show his/her true colours by revealing critical information, knowing full well it would devastate the opponent’s psychological confidence. This is the way how numerous Ancient Chinese Generals attained victory.
Sun Tzu’s rule here is highly relatable to the psychological theory of anchoring, which states that humans are influenced, whether consciously or unconsciously, by the initial ballpark figure given out during negotiations. By manipulating the opponent’s state of mind, conditioning the opponent to underestimate your true strength, the psychological blow to the opponent when you show your true colours can be devastating. This can be a lot more effective than had you shown your aggression at the onset of negotiations.
Based on my personal experiences of dealing with Chinese and Indian negotiators, many of them employ Sun Tzu’s tactic, whether consciously or unconsciously. Perhaps it’s Asian culture to be more subtle, but more times than not, they often tend to be agreeable and submissive initially before revealing their true thoughts. This can often cause panic and shock if you are unprepared for their “attack”, yet this is the exact emotion they are hoping to elicit from you. By creating “Shock”, it is human nature to become engulfed in a state of chaos, leading to sub-par decision making. For instance, when the UK was negotiating the handover of Hong Kong back to China, the then PM Margaret Thatcher was completely thrown off guard in Beijing when met with brazen threats from the Chinese about military repercussions, had Hong Kong not been returned on time. Thatcher was originally hoping to negotiate more favorable conditions for the UK only under which Hong Kong can be returned on time, but she underestimated the resolve of the Chinese regarding an unconditional return. Had the Chinese made known its aggressive stance at the beginning of negotiations, it is highly doubtful that the UK would be thrown off guard to such an extent that they would fully accept the Chinese’s demands shortly thereafter.
Sun Tzu’s School of Deception Rule Number #2 - Subdue the Enemy Without Fighting
This is often regarded as the supreme war tactic, yet this can be used in business negotiations regardless of one’s strength. Sun Tzu’s famous words to be more exact, is that winning one hundred victories in one hundred battles is not the acme of skill. Rather, winning whilst never having to fight is the supreme attribute of a great general.
Business leaders often fall under the trap of fighting aggressively for victory during the negotiation process. They often forget that there is often a possibility of winning without having to fight at all, if all cards are played correctly. A good example of winning without fighting (or only with very little fighting), is the United States when it crushed the Soviet Union without actually fighting a direct war.
In my personal experience, clients can be gained without a great deal of negotiations, even if they show aggression at first. There are clients who often anchor aggressively, hoping you will base your offer on their anchor, hoping you will submit to their demands without putting up much of a fight. However, in most cases, too much aggression can mean weakness. There are numerous instances where my clients constructed a false picture of their power and resources during initial negotiations, and I cannot stress enough how vital it is to use your gut feeling to understand whether your opponent is really that strong. When encountering aggressive clients, I often resort to asking meaningful questions, hoping to find hints or pieces of evidence to take apart their pitch. Combine this with strategic ambiguity, that is showing little emotion or reaction to aggressive pitches, it is often enough to break your opponent’s confidence and in luckier instances, cause your opponent to submit without doing much. The psychology behind this is that aggressors are often taken aback by unexpected calmness, and if you stick to your act well, they will begin to wonder if they misjudged the situation. If you can immediately recognize their self doubt and “go in for the kill” at the right time, that is showing sudden aggression, making sudden demands when they least expect, you may be able to carve out a win easily.
Deceit, whether we like it or not, is something that we all use, at least inadvertently, during negotiations. “Messing with your opponent’s mind” is the purpose behind the use of deceit to take control of the all important psychological battle during negotiations, so that one can “go in for the kill” when the opponent is in a state of confusion. Obviously, Musk is a smart person to not get caught in Twitter’s outright lie, if accusations are proven true, but he could have paid more attention to Twitter’s bot problem before he made his aggressive bid to takeover Twitter. Musk acted too aggressively at the wrong time it seems.
