“In the United States, all business not transacted over the telephone is accomplished in conjunction with alcohol or food,” wrote the late Canadian economist John Kenneth Galbraith. Whatever you think about Galbraith’s politics or role as a public intellectual, he was right about that. Even in our digital world, high-stakes negotiations—not just in the US but also around the world—most often take place far away from an official setting in informal face-to-face meetings. That’s at least part of the reason for the existence of golf courses, industry conferences, and state dinners.
Small wonder then that the eyes of corporate leaders in the US and China will be on the upcoming dinner between President Donald Trump and President Xi Jinping at the G20 Summit in Buenos Aires this week. The meeting follows the US midterm elections and comes amid a trade standoff that is inflicting pain on both world powers. “Informal negotiations play a major role in coming to agreement in complex situations,” says Debra Nunes, a senior client partner with Korn Ferry.
Of course, as Nunes points out, there is nothing informal about informal negotiations. It takes a lot of preparation to be casual. Whether a negotiation over international trade, a business deal, a legal dispute, or the like, there is typically a lot of background research and evaluation of requests and offers that is done beforehand. “Leaders need to be well prepared and know the consequences of what is proposed by all sides before coming to an agreement,” says Nunes. Put another way, no business or political leader goes to Davos without a set of goals to accomplish and an idea of what they are willing to trade to reach them.
To be sure, President Trump and President Xi both know what’s at stake during this week’s dinner. Tariffs imposed by both countries are weakening the global economy, resulting in stock market volatility around the world. Investors are anxious as they await a resolution to the standoff between the two countries; JPMorgan analysts note that the meeting between the two heads of state is “the greatest near-term risk” to the economic outlook.
Trust and collaboration are critical to successful negotiating, says Kevin Cashman, global leader of CEO and executive development with Korn Ferry. He says that no matter the situation, without those two elements, there’s no hope of reaching a compromise. "Do not sugarcoat your message,” says Cashman, “But also remind people about your values, purpose, and vision, as well as how you will remain consistent with these as you navigate through the issues.”