Evolution in Negotiation

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“Something is better than nothing to a purely logical mind. Give the problem to a human, and you must deal with three million years of evolution.”

–  David McRaney, in his book, “You Are Not So Smart…”

The “problem” in question is the old “Ultimatum Game.”  You win a million dollars in the lottery, but there’s a catch.  You have to offer a complete stranger a share of the money, and if they say no to your offer, you both get nothing.

How much do you offer?

It’s Chapter 20 in the book, and it’s base learning for negotiators.  We might make a completely rational offer from our perspective and get nothing in return — because we’re negotiating with humans.  The fallacy in the all-or-nothing approach to negotiation is behind why so many companies are trying to procurement-ize* everything. “If we can get to a completely objective analysis of the product or service, we’ll just choose the best deal.”

Unless whatever we’re buying is a complete commodity — most of which are ruled by standards, by the way — there is no completely objective analysis.

Otherwise, no one would buy Mercedes Benzes, Tiffany jewelry, or Rolex watches.  My accountant must be better than your accountant, because he charges double the hourly rate, right?  Or, maybe my accountant is better than your accountant because I got the same deductions you did for 30% less in fees.  Maybe we just like the way our car gets us to work, our jewelry sparkles or our watch makes us feel.  Maybe we like it that our accountant gets us a better table at the charity function or plays at a golf course we like better.

What matters is knowing what matters to the other party — and trying to get them as much of that thing as we can, without sacrificing too much of what we want or need from the transaction.

The person on the other side of the negotiation is human, just like we are, and they’re probably not a lot more or a lot less evolved than we are.  So, let’s ask one another questions.  Let’s connect.  Let’s collaborate.  Let’s keep logic in its place and seek deals that make us both better.

 

*If you’re selling a value-add service or product — and you’re dealing with procurement on the buyer’s side.  Run.  Don’t walk.  Run.  Get out.  Focus on someone who wants to buy value, not minimize it.

 


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