I love the field of negotiation because it involves the oh-so-human dancing of opposites.
Superficially it seems so rational, goal-oriented, predictable and reliable. Hey, it’s about money, dollars and cents, all neatly quantifiable. Give a little, get a little; Win some and lose some, right?
But if you observe people long enough, especially when they negotiate, you’ll see deeper forces at play, tectonic plates shifting in the emotional magma, potentially causing havoc.
For instance, if we violate a person’s sense of fair play and integrity, by asking them for a special advantage or by offering a nontraditional inducement, perfectly acceptable and expected in other cultures, we may be thrown out on our ears.
Suddenly, “It’s not about the money!” In other words, knowing certain cultural and psychological boundaries can help us to avoid the foul lines in our negotiations.
But not always, especially with strategists that are adept at using “The Drunkard’s Walk.” This is a ploy that introduces randomness into negotiations, so there is no way to predict what someone’s next move will be from observing and analyzing their last.
In formal terms, The Drunkard’s Walk is a Markov Chain, “A sequence of random variables X1, X2, X3, … with the Markov property, namely that, given the present state, the future and past states are independent.” (See: Wikipedia: “Markov Chains.”)
EXAMPLE: I was selling a piece of real estate and only one family expressed interest. Because prices were falling, it was clear to me that their agent was advising patience, in the sincere belief I’d lower mine. Therefore, no offer was made by this couple, and none was forthcoming. The belief was that I was rational, predictable, and the price could only head in one direction: downward.
Have you ever watched a drunkard walk? They stagger, not only forwards, but side to side and backwards, without notice. There is no way to predict from the prior step which step will follow.
Getting back to the example, what did I do? I RAISED MY LISTING PRICE BY $100,000! Within 24 hours, the couple made an offer.
I’ve come to call my car mechanic a negotiation muse, because he is a true marvel and a limitless source of inspiration to me. A while back, I asked him how much it would cost to replace the air conditioning console in my dash.
He checked his distributor and told me it would be $500 for the part. I checked the Internet and found it for $200, new, with a one-year warranty.
After that, we went back…