Complex deals involve high stakes, but many small-scale deals play out on other multiple fronts.
Typically, managers have to orchestrate complex internal negotiations across individuals and departments in order to secure support and senior executive approval. They must also forge critical alliances and work out contracts with strategic partners.
In this webinar, IMD Professor of Leadership and Negotiation Sameh Abadir drew from decades of experience to show how to overcome decision-making biases, optimize resources and talents, and make proper concessions and trade-offs, amongst other skills.
Understanding motivations and giving up control
From Novartis to Procter & Gamble, he provided solid examples to show the effect of behavioral economics on difficult negotiations and engaging stakeholders.
According to Professor Abadir, human nature makes up a large part of the equation. Deciding whether people are smart – essentially an innate quality – or kind – a behavioral choice – or both, is important for influencing your actions when making a deal.
“There are rare people who are super smart, super kind and also super humble,” he remarked. “But most people are not this agile.”
Not allowing people to “lose face” is another important aspect of negotiation. Evident in both ancient and contemporary examples, the vast majority of people act to preserve their dignity. Referencing both the peace agreement of Kadesh in 1259 BC and the Cuban missile crisis in the 1962, Professor Abadir reminded the participants that President John F. Kennedy knew this well.
“He was guided by a desire not to disgrace Khrushchev, nor humiliate the Soviet republic,” said Professor Abadir.
Another key learning was to accept that we don’t have control over everything, and that without this realization we might fall into the bias of overconfidence.
Touching on why some companies fail, Professor Abadir stated: “Corporate arrogance – we should ban the word arrogance from our behavior. Humility is good at all times.”
He also noted that the world’s finest negotiators were not pushy, but rather soft-spoken and humble.
Decoding weak signals
Developing the capacity to look for weak signals and to decode them is also a priority.
“Some people remember everything,” said Professor Abadir. “They even remember what type of luggage tag you have on your bag.”
These skilled individuals have the ability to see how a puzzle comes together while the pieces are still scattered. People sensitive to weak signals have significant value in negotiation, and Professor Abadir recommended all managers find at least one person with these skills to provide these essential observations.
He reminded the audience that psychology and economics are very powerful forces in negation, and that no buyer wants to overpay just as no seller wants to undersell.
“The brain, heart and guts have to work together,” said Professor Abadir, explaining that different parts of our brain are activated by unfair vs fair offers. “Once the areas of the brain associated with disgust and conflict mode are activated, negotiation is lost.”
Divide and conquer
To bridge complex negotiations, other tips include splitting good news to ask for different trade-offs, and putting all bad news together in a single concession – resulting in many small wins but one lump-sum loss.
Tackling the concept of kindness once more, Professor Abadir joked: “Turkeys don’t vote for Thanksgiving. Build this fairness brand all through your career so that when you sit at the table, you’re kind to people but fair to the issues.”
Last but not least, he left the audience with the suggestion only a thin line exists between being prepared and being ready: “Go with a smile on your face and a gun in your pocket.”
To learn more about complex deal-making, watch an interview with Professor Sameh Abadir and Mr Magdi Batato, Executive Vice President, Head of Operations, Nestlé, here.