10 Sep 2001  Research & Ideas

The Negotiator’s Secret: More Than Merely Effective

What turns merely effective negotiators into all-out expert negotiators? The ability to overcome six common mistakes, according to HBS professor James K. Sebenius. In this excerpt from the Harvard Business Review, he describes one of the most glaring.

 

Editor's Note— You've just taken a seat at the negotiating table. No doubt you're under a little stress. In addition to the myriad complexities of the deal itself, even the best negotiators often have to contend with their own potential to fumble in six very common ways (see sidebar).

In the Harvard Business Review excerpt below, Professor James K. Sebenius describes number six on the list, "Failing to correct for skewed vision." Negotiators are often too confident of their own position and too quick to demonize the other side, he writes. The good news: Savvy negotiators can take steps to subdue these potentially damaging biases.

You may be crystal clear on the right negotiation problem—but you can't solve it correctly without a firm understanding of both sides' interests, BATNAs, valuations, likely actions, and so on. Yet, just as a pilot's sense of the horizon at night or in a storm can be wildly inaccurate, the psychology of perception systematically leads negotiators to major errors. 3

Self-Serving Role Bias. People tend unconsciously to interpret information pertaining to their own side in a strongly self-serving way. The following experiment shows the process at work. Harvard researchers gave a large group of executives financial and industry information about one company negotiating to acquire another. The executive subjects were randomly assigned to the negotiating roles of buyer or seller; the information provided to each side was identical. After plenty of time for analysis, all subjects were asked for their private assessment of the target company's fair value—as distinct from how they might portray that value in the bargaining process. Those assigned the role of seller gave median valuations more than twice those given by the executives assigned to the buyer's role. These valuation gulfs had no basis in fact; they were driven entirely by random role assignments.

At the negotiating table, clinging firmly to the idea that one's counterpart is stubborn or extreme, for example, is likely to trigger just that behavior.
—James K. Sebenius

Even comparatively modest role biases can blow up potential deals. Suppose a plaintiff believes he has a 70 percent chance of winning a million-dollar judgment, while the defense thinks the plaintiff has only a 50 percent chance of winning. This means that, in settlement talks, the plaintiff's expected BATNA for a court battle (to get $700,000 minus legal fees) will exceed the defendant's assessment of his exposure (to pay $500,000 plus fees). Without significant risk aversion, the divergent assessments would block any out-of-court settlement. This cognitive role bias helps explain why Microsoft took such a confrontational approach in its recent struggle with the U.S. Department of Justice. The company certainly appeared overoptimistic about its chances in court. Similarly, Arthur Andersen likely exhibited overconfidence in its arbitration prospects over the terms of separation from Andersen Consulting (now Accenture). Getting too committed to your point of view—"believing your own line"—is an extremely common mistake.

Partisan Perceptions. While we systematically err in processing information critical to our own side, we are even worse at assessing the other side—especially in an adversarial situation. Extensive research has documented an unconscious mechanism that enhances one's own side, "portraying it as more talented, honest, and morally upright," while simultaneously vilifying the opposition. This often leads to exaggerated perceptions of the other side's position and overestimates of the actual substantive conflict. To an outsider, those caught up in disintegrating partnerships or marriages often appear to hold exaggerated views of each other. Such partisan perceptions can become even more virulent among people on each side of divides, such as Israelis and Palestinians, Bosnian Muslims and the Serbs, or Catholics and Protestants in Northern Ireland.

Partisan perceptions can easily become self-fulfilling prophecies. Experiments testing the effects of teachers' expectations of students, psychiatrists' diagnoses of mental patients, and platoon leaders' expectations of their trainees confirm the notion that partisan perceptions often shape behavior. At the negotiating table, clinging firmly to the idea that one's counterpart is stubborn or extreme, for example, is likely to trigger just that behavior, sharply reducing the possibility of reaching a constructive agreement.

As disagreement and conflict intensify, sophisticated negotiators should expect biased perceptions, both on their own side and the other side. Less seasoned players tend to be shocked and outraged by perceived extremism and are wholly unaware that their own views are likely colored by their roles. How to counteract these powerful biases? Just knowing that they exist helps. Seeking the views of outside, uninvolved parties is useful, too. And having people on your side prepare the strongest possible case for the other side can serve as the basis for preparatory role-playing that can generate valuable insights. A few years ago, helping a client get ready for a tough deal, I suggested that the client create a detailed "brief" for each side and have the team's best people negotiate for the other side in a reverse roleplay. The brief for my client's side was lengthy, eloquent, and persuasive. Tellingly, the brief describing the other side's situation was only two pages long and consisted mainly of reasons for conceding quickly to my client's superior arguments. Not only were my client's executives fixated on their own problem (mistake 1), their perceptions of each side were also hopelessly biased (mistake 6).

To prepare effectively, they needed to undertake significant competitive research and reality-test their views with uninvolved outsiders.

From merely effective to superior negotiation

So you have navigated the shoals of merely effective deal making to face what is truly the right problem. You have focused on the full set of interests of all parties, rather than fixating on price and positions. You have looked beyond common ground to unearth value-creating differences. You have assessed and shaped BATNAs. You have taken steps to avoid role biases and partisan perceptions. In short, you have grasped your own problem clearly and have sought to understand and influence the other side's such that what it chooses is what you want.

Plenty of errors still lie in wait: cultural gaffes, an irritating style, inadvertent signals of disrespect or untrustworthiness, miscommunication, bad timing, revealing too much or too little, a poorly designed agenda, sequencing mistakes, negotiating with the wrong person on the other side, personalizing issues, and so on. Even if you manage to avoid these mistakes as well, you may still run into difficulties by approaching the negotiation far too narrowly, taking too many of the elements of the "problem" as fixed.

The very best negotiators take a broader approach to setting up and solving the right problem. With a keen sense of the potential value to be created as their guiding beacon, these negotiators are game-changing entrepreneurs. They envision the most promising architecture and take action to bring it into being. These virtuoso negotiators not only play the game as given at the table, they are masters at setting it up and changing it away from the table to maximize the chances for better results.

To advance the full set of their interests, they understand and shape the other side's choice—deal versus no deal—such that the other chooses what they want. As Francois de Callieres, an eighteenth-century commentator, once put it, negotiation masters possess "the supreme art of making every man offer him as a gift that which it was his chief design to secure"

The Six Mistakes

Sometimes a negotiator is his or her own worst enemy. Here are six common blunders, according to HBS professor James K. Sebenius:

  1. Neglecting the other side's problem.
  2. Letting price bulldoze other interests.
  3. Letting positions drive out interests.
  4. Searching too hard for common ground.
  5. Neglecting BATNAs (acronym for "best alternative to negotiated agreement").
  6. Failing to correct for skewed vision.

3. See Robert J. Robinson, "Errors in Social Judgement: Implications for Negotiation and Conflict Resolution, Part 1: Biased Assimilation of Information," Harvard Business School, 1997, and Robert J. Robinson, "Errors in Social Judgement: Implications for Negotiation and Conflict Resolution, Part 11: Partisan Perceptions," Harvard Business School, 1997.

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Excerpted with permission from "Six Habits of Merely Effective Negotiators," Harvard Business Review, Vol. 79, No. 4, April 2001.