3 Reasons Why Zero-Sum Thinking Kills Deals

When approaching a negotiation, many people frame the possible positive outcomes, as directly proportional to how much they hold their ground. In other words, in order for them to do well in a deal, the other party must loose something. The reverse is typically true too, and the prospect of the opposing party doing well means, to most negotiators, that they are losing the negotiation. This zero-sum perspective is toxic to negotiation, and more often than not, leads to worse outcomes for all involved.

While there are many more ways in which zero-sum thinking can negatively impact negotiations, I’ll focus on three for this post.

1. “The Mythical Fixed-Pie”

I must immediately note that this specific concept comes from the research of Max H. Bazerman and Margert A. Neale, the distinguished Northwestern University researchers, and authors of the book Negotiating Rationally, which expounds upon this in much greater depth than I’ll cover here. Read it if you’re serious about successful negotiation. It must also be noted that zero-sum is a concept which came from game theory, a mathematical/economic notion described by John von Neumann and Oskar Morgenstern in 1944. Bazerman and Neal’s book discusses this mythical fixed pie in terms of two distinct types of negotiation: distributive negotiation and integrative negotiation. The former (distributive) is characterized by the Fixed Pie AKA Zero-Sum perspective, and is generally considered a primary distinguishing factor between simple negotiations and more complex ones. Distributive negotiation is the classic situation where in order for one person to win, the other must loose – think marketplace haggling. Ex. A widget is for sale for $25. The prospective buyer offers $10, then the seller counters with $20, then they mutually settle at $15. This tit for tat is incredibly common, and is the typical depth of most negotiators. The latter concept in the same chapter of the book (integrative) debunks the myth of zero-sum, and suggests that most negotiations are far more complicated than this. Even in the widget example, consider that the seller may be willing to offer a lower price, if the buyer agrees to buy more widgets, or commits to promoting the widgets publicly in some way, maybe a widget tattoo on the forehead.  Consider simply asking yourself, is there a win/win scenario possible here? This simple shift, may elevate oneself out of the mindset that the pie is fixed, and is great step to closing more deals.

2. Zero-Sum And Fixed Pie Thinking, Locks You In A Creative Box

If a negotiator enters into a possible deal with the illusion that there’s a fixed outcome, then tit for tat is likely inevitable. If however a negotiator can see through this illusion, the possibilities for alternative and mutually beneficial results open up. Positive results in a negotiation can come from surprising and even completely unrelated sources. Consider this anecdote from within our company. We were asked to contact a landowner who had been approached multiple times with long-term lease offers and had refused to even talk with the developer interested in his land. We suspected this landowner fit the definition of a holdout our even obstructionist, but we decided to set those assumptions aside and called him just to talk. The first conversation had nothing to do with real estate, it was just an introduction and a session dedicated to listening to his perspective, his thoughts, ideas, and feelings. In the end, this owner was really looking for someone to listen to him. He didn’t care much about the land, had no insight into what a solar project meant, but he had curiosity and enjoyed the human element more than the numbers. After 3 letters, and more than 18 lengthy phone conversations, the owner came to be excited that his land was going to be a part of a new solar project and he decide to sell. While this outcome is a best case scenario, it’s also a moment to reflect on a critical takeaway; truth and authenticity. This specific strategy will only work if the communication is completely honest. That doesn’t mean full and naive disclosure to the detriment of the end goal, but a frank, genuine and honest development of a relationship, can get results.

3. Zero-Sum Entrenchment Is Negotiation Warfare

Digging mental trenches, amassing data-based weaponry, then marching to align yourself against the other party in a negotiation, is tantamount to warfare. This negotiation warfare leaves many deals dying or dead on the battlefield. This failure in critical thinking is a product of business tradition, collective societal habits and is ultimately a function of archaic human biology. We are hardwired to fight or flee! In order to circumvent this wiring, one must make a conscious and intentional choice NOT to take up an adversarial position when entering into a negotiation. Rather, look to engage the other party in a mutual discussion, utilizing critical thinking in place of your baser fight or flee instincts. This approach can feel incredibly empowering. It allows you to look objectively at a situation incorporating the facts as a foundation for discussion, rather than weaponry aimed at your opponent. A calm measured perspective on one side of the negotiating table can frequently elicit a similar response on the other side, even if the other side isn’t familiar with this approach. (Mirror neurons I suspect have something to do with this reciprocation, although I’m not a scientist, so don’t quote me).

 

 

Avoiding fixed-pie and zero-sum thinking, as Bazerman and Neal suggest, has had a profound impact on my ability to effectively close deals. However, my specific education in this space is not limited to this text, and no one’s should be. Avoiding zero-sum thinking is an important factor, but it’s far from the end of the negotiating story. Many other books like: Getting to Yes, by Roger Fisher and William L. Ury, Ultimate Sales Machine, by Chet Holmes, lots of Malcom Gladwell books, and SO many others are vital to a robust reading background. I just started a new book by Deepak Malhotra of Harvard Business School, called Negotiating The Impossible, which, thus far, is fantastic.  Additionally, I have always done my best to consume as much as possible from college classes on communication, business and psychology to better understand effective negotiating and communication. Also, don’t forget to ask and explore the minds of colleagues from the office, and bosses along your career journey, as they all have insight. Granted, non-professional insight can range from total useless garbage, to invaluable deal-closing gems of awesomeness, so use discretion. Finally, I have worked for years, applying what I’ve learned in many sales and real estate positions. Read stuff, ask questions, then try it out! Education plus practice is an effective strategy, but learning from many horrific mistakes is an even more important piece of the puzzle. Nothing informs you on what constitutes best negotiation practices, like having a deal blow up in your face. Dust yourself off, trust the methodology and as Chet Holmes says, and I’m paraphrasing, “be pigheadedly stubborn.”

By | 2018-06-13T19:57:03+00:00 June 13th, 2018|Uncategorized|20 Comments

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