Risky Business: Trump’s Negotiating Style
The Invisible Risks and Rewards of Negotiating Like Trump
Peter D. Johnston
If you’re about to jump out of a plane, the risks are obvious.
If you’re negotiating a deal, the risks are often less obvious, if not invisible all together. Just as hard to see can be who holds these risks at the end of the day, from either a deal or no-deal, because these people might not even be in the room.
The subprime mortgage crisis a decade ago was an example of how risks appeared to be calibrated and wisely dispersed among investors in pooled real estate deals, making these risks invisible to most—until everything blew up at once and we all visibly suffered.
Donald Trump is all too familiar with risk-giving, and taking, especially in real estate deals. He spontaneously calculates the upside and downside to any risk. His negotiation book and track-record confirm that protecting himself personally is a priority should anything go wrong. This theme of self-protection first and letting others bear most of the risk, while he hangs on to as much upside as possible, permeates his dealing-making, including premarital agreements with his wives. We see this same approach applied with everyone from his investors and appointees, to foreign counterparts, the American people and Nancy Pelosi.
In business, he’s come and gone from a host of ventures, including six bankruptcies—leaving losses with suppliers, investors, employees and communities who bet on him—while still managing to reap significant management fees for himself.
Many criticize this approach, but it is perhaps Trump’s greatest skill, the ability to inoculate himself against worst outcomes in his uneven deal-making. It’s also how capitalism and corporations thrive—by encouraging risk-taking with limited liability. Critics claim that many of Trump’s ventures “failed,” but that all depends on one’s perspective.
The reality is this: if you’re wearing a parachute, jumping out of a plane isn’t nearly as risky.
We are now witnessing President Trump’s limited liability approach to negotiating his life and responsibilities in the public sphere. He is clearly challenged in this more complex deal-making environment where patience, collaboration and coalition-building are critical to brokering deals that can involve hundreds of parties with widely varying interests, well beyond money alone. But the reason Trump’s still standing, despite struggles that would cripple others, is how he handles risk.
With Kirstjen Nielsen among dozens of appointees he’s pushed out, Trump, as president, knows there’s little risk to him in undoing his hiring mistakes. In a corporate setting, he might be on the hook for millions of dollars, face wrongful dismissal suits and be under fire from his board. But these presidential appointees agree to shoulder all the risk, getting nothing extra when they leave. So Trump benefits by churning until he finds those most loyal to him alone, while Americans bear the risk of just that, as well as less experienced replacements.
With Robert Mueller’s report complete, we know several of the president’s former colleagues are headed to jail, and 25 Russian nationals face charges, while Trump claims he’s totally exonerated. Regardless, we know he benefited from Russian support, Putin himself has said this. In negotiations, we refer to coalitions not requiring explicit agreement as “de facto” coalitions, arising from interests already being aligned implicitly. One way or another, it appears Trump has survived, potentially aided by the highest degree of risk inoculation possible—that of the presidency.
With North Korea, Trump rolled the dice, initially ratcheting up threats with Kim Jong-un, then hoping his charm could land him a no-nukes commitment, allowing him to declare victory. It now appears Kim was using Trump to buy time and keep building his nuclear capacities, his international profile and a firmer grip on his own people. From Trump’s perspective, nothing ventured, nothing lost. He’s turned his attention elsewhere for now.
With the Chinese, Trump plays tough for his base, hitting a key partner with tariffs and starting a trade war. Trump’s businesses are better protected than most from such wars because selling goods across borders isn’t important to the hotel industry. Other U.S. industries are at risk though, including cars, soybeans and tech. But here’s the bigger risk for all: North Korea is likely farther down the path to being fully armed because America has lost China as a well-placed ally to help reign in Kim’s nuclear ambitions.
With the rest of the world, Trump’s retrenchment on NATO, open trade, democratic values and climate change have come as China, Russia and India are expanding their influence, stepping in where America has stepped away. The invisible risks for the United States: time will tell. The downside for Trump personally: not much. The upside: he’s doing what he said he’d do.
With Nancy Pelosi, Trump shut down the government, putting millions at risk related to food, security and air travel. The consensus: Pelosi won, Trump gained nothing. Really? What did he risk? Nowhere near what some employees and citizens lost. What did he gain? His base’s ongoing respect and a chance to test Pelosi. He didn’t get his wall, but he gave himself a chance, and he learned what didn’t work. Another gain: reminding Washington he’ll take unconventional risks to get his way, increasing his leverage in future negotiations.
Trump is protected across all his dealings in four critical ways.
First, he just doesn’t care about the same things others concern themselves with, whether breaking norms, hurting feelings, or encouraging rapprochement with the Russians. These differing interests mean he wouldn’t even see much of what he does, or says, as risky.
Second, he generates intense loyalty from his family, staff, and base, and is a quick study of their needs, vulnerabilities and worst fears, using these to his advantage. These supporters are his last line of defense against all adversaries, including anyone seeking to impeach him.
Third, if Michael Cohen’s testimony is to be believed, Trump lowers his risks by how he communicates, drawing on third-party loyalists to do his bidding, not saying things better left unsaid, using legal threats and gag agreements, and restricting access to sensitive information such as his taxes—making it harder to finger Trump directly.
Finally, President Trump can take risks because he’s always had a decent back-up plan: return to New York, and keep doing real estate deals while living in luxury.
Taking risks is just part of who Trump is. Under Myers-Briggs’ 16 personality types, Trump is an ESTP—“a Promoter”—those inclined to take risks and not care about conventions or niceties. Promoters are charming, tough-minded, exhilarated by brinkmanship and hate losing.
To avoid losing, one piece of advice that Trump shares with readers of his negotiation book is this: “…you’re generally better off sticking with what you know.”[1]
And therein lies perhaps the president’s biggest risk and potential regret: once all the poker chips have been played, by Congress, the New York Southern District, the courts, and voters, might Trump rue the day he stepped beyond the known bounds of the business world?
Possibly, but probably not.
After all, his finely woven parachute lies waiting, even if others in the United States and abroad will have to remain in their seats as the plane that Trump once commandeered flies into a turbulent future—and the invisible legacy of his past risk-taking.
About the Author: Peter D. Johnston is a negotiation advisor to corporations and governments, and author of “Negotiating with Giants” and “Weapons of Peace.”
[1] Random House, first edition, 1987, page 21. The specific quote, referring to an experience that taught him a few things, is as follows: “The second is that you’re generally better off sticking with what you know.”