From the April 2000 issue of Entrepreneur

During the Cuban missile crisis, as negotiators deadlocked and millions watched in terror, a member of the Russian negotiating team is said to have posed the following riddle: "What is the difference between capitalism and communism?" The answer: "In capitalism, man exploits man. In communism, it is the other way around!"

A sense of humor is a tremendous asset to any dealmaker. Oh, we may think business negotiation is just about numbers, schedules, contracts and the like, but it's really about psychology, rapport and trust. Here, humor is one of our best tools.

When negotiations begin, everyone is a little nervous. It's natural. There may be a lot at stake and no matter how skilled, prepared and well-positioned you are, you might find yourself outmanuevered. With tensions running high, there's no better social lubricant than humor. As Victor Borge once said, "Laughter is the shortest distance between two people."

As discussions grind on, humor brings perspective and can stimulate creative solutions, like this one: "I wanted a new TV. My wife wanted a new car. So we compromised. We got the TV, but keep it in the garage." We've already seen how laughter can bust an impasse. But did you also know it can actually help you cut a better deal? In one study, researchers found that buyers who smiled and offered to throw in their pet frog (funny, right?) as part of their final offers got better prices than their humorless counterparts.

And when deals derail, humor can soften an aggravated adversary. When Louis Armstrong was called on the carpet for violating his exclusive contract with one record company by performing for another, he offered the following apology: "It wasn't me . . . and I'll never do it again!"

Now I'm not suggesting you approach your next deal like open mike night at the local comedy club. If you're too much of a kidder, you may come off as glib, clownish or simply unprofessional. And, of course, there are times when silent rage or a well-orchestrated outburst is the better approach. But in my opinion, people will do more for you if they like you, and they'll like you more if you can smile and laugh.

So, as Herb Cohen says, "take your negotiations seriously, but not too seriously." When things get tense, don't wait until all parties are hissing through their teeth. Take a chance. Crack a joke. If you don't think you're funny, cultivate your sense of humor. Learn to laugh at yourself. Become an active humor consumer at bookstores, on TV, at movie theaters or on the Internet. Start a file of items you think are funny and share them. Practice telling jokes. Quotes, lists, analogies, comebacks and even standard one-liners are types of humor anyone can use. Just make sure you avoid the sarcastic, ethnic and insulting kinds.

Personal anecdotes are great because they're true, uniquely yours and generally easy to tell. Here's one of mine: I once worked with an Academy Award-winning producer who was the scion of a wealthy and prominent family. Somehow, someone had hired a consultant for one of his pictures who was not only glib, arrogant and dishonest, but was running the picture way over budget. We needed to settle him out of his contract quickly and quietly, but I was so mad I could hardly think straight.

My client put things into perspective by putting me in stitches. "Marc," he said, "just offer him a hundred bucks . . . mostly cash!" Later that day, I settled everything smoothly.

So remember these words from Ken Kesey's One Flew Over the Cuckoo's Nest: "When you lose your sense of humor, you lose your footing."


A speaker and attorney in Los Angeles, Marc Diener is the author of Deal Power: 6 Foolproof Steps to Making Deals of Any Size (Owl Books/Henry Holt). You can reach him at MarcDiener@aol.com.