The Luck Factor in Negotiation

Preview

This article draws on material from my Negotiate 1-2-3! online resource, hosted by Harvard Business School’s Baker Library. It has two dozen modules, covering three phases of negotiation: Openings, Critical Moments, and Closing.?

Here’s the good news: Access to all this material is free. One caveat, though. We’re in the process of moving to new platform, so a few videos are not available. When you have a chance, take a look at the site. I’d greatly appreciate your feedback.?

How the stars align

Imagine that you just negotiated a great deal on a new home. That’s not surprising, given how well you managed the process from start to finish. You studied the local real estate market and discovered the seller's motives for listing the property. You even created mutual gain by allowing the seller to stay in the house for several weeks after closing, since you'll be leaving on vacation anyway. And, to top it off, your timing was impeccable. The day after papers were signed, another potential buyer appeared, offering much more than you did. Fortunately for you, they were too late.

Congratulations! But here's an unsettling question: Did you succeed because you were smart or merely because you were lucky?

Imagine a parallel universe with a carbon copy of you, plus an identical seller, and the exact same house. That "other you" prepared and negotiated exactly the same way you just did. But in this alternative world, one thing was different: The competing buyer showed up two days earlier. Because they made a higher bid, this “other you” had to pay much more to avoid losing out entirely.

Condolences to your double, of course. But remember that your doppelganger was just as masterful a negotiator as you are, only not as lucky. This misfortune could just as well have befallen on the real you instead.

Right Place/Right Time

In 1942 an Austrian émigré took a wrong turn in a New York City night club and ended up at the table of Broadway lyricist Alan Jay Lerner. The Austrian was a struggling composer named Frederick Loewe. They struck up a casual conversation, which ultimately turned into a long collaboration that produced mega-hits like?My Fair Lady,?Camelot, and?Brigadoon.

If Lerner hadn’t gone to that club that night, or if Loewe hadn't wandered by, perhaps they might have bumped into each other at some later point and gone on to make great music together—but probably not. Lucky them (and lucky us). What we can never know, of course, is the number and nature of near misses—the possible collaborators whose paths didn't quite cross and, hence, whose songs we never got to hear.

So it is in negotiation, including whom you happen to meet and when you see them. Call it chance or call it luck, but your success at fashioning collaborative agreements depends in part on whom you encounter, what they need from you at that particular time, and what they can provide you in return.

Many successful people in business and other endeavors believe that their professional achievements are a testament to their own intelligence, vision, and virtue (or some high-powered cocktail of all three). They ignore or downplay how random events or external factors beyond their control may have influenced the outcome.

That's especially true when it comes to negotiation because it provides poor feedback. High performance—doing everything right—doesn't guarantee outstanding results if fortune isn’t on your side.

What lesson should you draw, for example, if you walk away from the bargaining table empty handed? It could be that there simply was no room for agreement. Alternatively, perhaps one side overplayed its hand. Maybe neither of you was very creative. Or perhaps you had the bad luck to be matched up with someone who simply wasn't open to reason.

It boils down to recognizing what's in your control and what isn't. You may not have the luxury of choosing your negotiating partners. And you certainly can't dictate how they're feeling on a given day, how they weigh their alternatives to coming to agreement with you, or if some external event will help you or them. Thus, where you end up—with a great outcome, a merely adequate one, or no deal at all—depends significantly on your luck with respect to who's across the table, how they play the game, and whether they're open to persuasion.

Sound advice

Not knowing how the dice are going to roll complicates planning any endeavor. For some people, that uncertainty can be paralyzing. Eileen Shapiro and Howard Stevenson, authors of?Make Your Own Luck, state ?that, "Acting in the face of uncertainty is scary, because you are acting before all the facts are in—though in truth you are always acting before all the facts are in, whether you are doing what you planned to do or making a shift based on new information."

Shapiro and Stevenson write about strategy and decision-making generally, but their advice is particularly appropriate in negotiation.

• Identify your major goals, then map out multiple paths to reach them.
• Don't try to account for too many possibilities (otherwise the complexity of your map will make it impossible to comprehend).
• Assess the various tracks you might follow, not just to pick the best, but to keep other options open.
• Take a hard-headed look at how much "smagic" (their term for luck) will be needed to reach your objective.

In addition, remember to:

• Accept the luck factor in negotiation. Your results - whether good or bad - are never all of your own doing.
• Consider best- and worst-case scenarios.
• Make ongoing learning a priority as you negotiate.