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Negotiation, mind games and guessing – a myth exploded

Andy Archibald, Scotwork UK

By Andy Archibald, Senior Consultant at Scotwork UK

It has been a long time coming but next year will mark a significant change in the way that the public sector buys in a whole host of situations.

Transforming Public Procurement is designed to simplify and modernise the way procurement and commercial teams negotiate, ultimately providing more freedom to generate different (and hopefully better) outcomes.

The changes will create opportunities and challenges for negotiators in the public sector, including, among many, the critical decision about what information is disclosed and when.

Information in negotiations is critical – when negotiating, thinking about how to manage expectations by sharing information, while at the same time gathering useful information from the other parties to help later in the process, is a core skill.

For almost 50 years, Scotwork have been negotiation consultants and trainers for many of the world’s leading organisations. During this time, we have been gathering data on the key capabilities of organisations and one of the key insights we can share is that information is a real source of power… but is rarely used well.

This has been ratified by my own experience of working in the public sector and consulting with many clients’ negotiators.

Years ago, I heard a story about a wannabe traveller walking into a travel agent shop.

“Good afternoon. How might I help you” began the travel agent.

“I want to book a holiday” responded the traveller.

“Great!” says the travel agent. “Where would you like to go?”

“Guess” the traveller instructs the travel agent.

“I beg your pardon?” replied the confused travel agent.

“I want you to guess!” confirmed the traveller.

This story may or may not have actually happened. But I see this happen all the time in negotiations, where negotiators on both sides of the table withhold crucial information (i.e. what they want), hoping that the other side will somehow guess.

Negotiators hold on to information for typically two reasons – it’s too difficult to say or they believe holding on to information gives them more power and it will lead to a better outcome.

The first reason is understandable, because negotiations can be uncomfortable and often we may need to ‘feel’ our way into it and figure out what is possible. But the second is a stretch, to say the least.

To give an example, in a recent negotiation I was advising on, the buyer negotiating with a supplier had a situation where the primary objective was to secure a 30% saving on an invoice as well as a favourable price going forward on a longer-term agreement with a significant volume. There were multiple ways in which an agreement could have been reached but crucial to the outcome was the buyer telling the seller specifically what they wanted.

But the buyer did the opposite, withholding what they wanted and forcing the seller to guess. With each guess, the seller did move incrementally towards what the buyer wanted but at a snail’s pace.

“They (the sellers) are not giving us what we want!” said the buyer when I asked why progress was so slow.

I probed further, ultimately asking if the buyer had told the seller what they wanted.

“No, of course not. They might give us more!”

That might be right and the buyer might get more than what they want if they make the seller guess. And who knows, maybe I’ll score the winning goal in a World Cup final. But probably not. The negotiation did, however, achieve one thing, and that was a lot of wasted time on both sides.

Fortunately, this was a simulated negotiation with a public sector client upskilling their procurement team and it therefore gave me a unique opportunity to also get the seller’s perspective. Unsurprisingly, they confirmed they would never have guessed the buyer needed a 30% discount and had instead just thought the buyer wanted a slightly better deal. And while it didn’t guarantee the seller would have given the buyer everything they wanted, they would have considered it had it been shared early on in the negotiation and there was a credible reason why (i.e. more than just wanting a better deal).

Many will explain away this behaviour by saying they’d never do the same in the real world. But that’s not true. Negotiators behave the exact same way in the real world as they do in a classroom, forcing the other side to guess what they want.

Negotiation does not involve mind reading, and asking the other side to guess your preferred outcome rarely has the desired effect. The first part of the negotiation puzzle is to be clear on what you want and tell your counterpart(s) what it is and why.

It may not guarantee you get it, but it sets up the negotiated outcome in the right way.

For further information, please visit www.scotwork.co.uk

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