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CONFLICT

Why 'Win-Win' Negotiating Is the Surest Way You'll Lose

When it comes to deal-making, you should master this simple three-step strategy of the self-made wealthy instead.

Everybody loves a win-win answer to a problem. It's great when a potentially-contentious situation ends up with everybody coming out ahead. And isn't that the way most business deals should go, too? Let's all sit down and find a way for everyone to win. What could be better?

But when I surveyed people for my new book, Business Brilliant, one group overwhelmingly disagreed with the the idea that "win-win solutions are best." That group was self-made multi-millionaires, people whose net worth exceeds $30 million.

What do these super-successful people know about win-win deal-making that nobody else does?

It turns out that if you look at the very best in negotiation thinking, the notion of "win-win" is widely regarded as a dangerous trap. Even the late Stephen Covey, author of Seven Habits of Highly Effective People and hardly an advocate of cut-throat business practices, was wary of win-win. He cautioned that the win-win ideal often tempts good-hearted people to buy into bad deals that they later come to regret, sometimes for years.

Here's why. Let's say, for example that you adopt a "win-win" attitude with someone who has an "I-must-win" outlook. Covey and others would say that your "win-win" perspective almost guarantees you'll be the only one offering concessions in order to reach agreement. Then you're not playing win-win at all. You're playing wimp-win. You're the wimp and the other guy wins.

So what should you do? Almost all guides to negotiating more or less recommend the same three-step alternative to win-win: First, write down your wished-for goals. Second, study what the opposition wants. Third, write down the number and conditions at which you will walk away. Negotiation guru Michael C. Donaldson calls these three steps "wish, want, walk."

Simple enough? Not really. Research shows that executing on each of these steps makes most people feel awful. For instance, setting high goals means you'll almost always miss those goals, but you'll achieve more than if you had set lower, more realistic goals. Most set low goals because of that enjoyable feeling you get when you succeed. People actually feel better when they ask for $50 and get $50 than when they ask for $100 and get $60, even though you're obviously better off with $60 than you are with $50.

Researching the other side's position and probing for weaknesses to exploit doesn't feel very good, either. The survey research I did showed that about 75 percent of middle-class people don't agree with exploiting weaknesses during negotiations. Among the multi-millionaires, though, 100 percent agreed! Exploiting weakness is the name of the game. 

And as far as walking away from a deal? Just 22 percent of middle-class people say they have an easy time abandoning a business deal "if it's not just right." But for multi-millionaires, it's unanimous. Take a walk if you can't get what you want: 100 percent agreement.

Of course, negotiating is a psychological game, but to be successful at it, it's important to know the obstacles inside your own head that make each step of wish, want, walk so difficult to execute. If you're like most people, you'll avoid setting a very high goal at the start of a prospective deal because you feel better about yourself if you're reasonable and realistic. You're also likely to feel reluctant to investigate and exploit the other side’s vulnerabilities because that’s not something that a nice person does. And, walking away because you haven't gotten what you want? That makes the whole process feel like a waste of time. Who wants to go home empty-handed after all that work?

If you're dealing with an experienced negotiator, that negotiator is trying to use all these psychological biases and social norms against you. He'll thank you for being reasonable (hoping to cow you into abandoning your highest goals). He'll remind you of your own weaknesses, having thoroughly studied your position. And he'll dare you to be rude enough to walk away. He'll exploit what's known as "the norm of reciprocity," by telling you how smart and considerate you are--and then he'll make a ridiculous low-ball offer. His flattery creates inside you a natural psychological urge to reciprocate by accepting the offer, when the thing you really need to do is tell him that you're ready to walk away if that's the best he can offer.

Self-made multi-millionaires know this. It's how they got where they are. Now that you know it, too, will you make use of it? Stephen Covey used to say that negotiation is all a matter of courage. When you settle for a "win-win" deal that you really don't care for, Covey said you're basically choosing to sell yourself out. You're telling your negotiating opposite, Covey wrote: "I'll be so considerate of your convictions and desires that I won't have the courage to express and actualize my own." 

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Last updated: Mar 15, 2013

LEWIS SCHIFF | Inc. Business Owners Council

Lewis Schiff is the executive director of the Inc. Business Owners Council. His latest book is Business Brilliant: Surprising Lessons From the Greatest Self-Made Business Icons.




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