When Your Head and Your Gut Slug it Out
from "Settle It Now Negotiation Blog" by Victoria Pynchon

Mr. Thrifty, who has not made an appearance in this blog for some time, trusts his head more than his gut. Not to engage in gender stereotypes, but when I err, I tend to err on the side of trusting my intuition too much.

I therefore dedicate this post to Mr. Thrifty, who flew off to Philadelphia this morning because his expert witness bailed on him. This gives me the opportunity not only to cruise the Harvard Business School Working Knowledge Web Page, but also to note the trend that's leading us toward the eventual creation of one national accounting; one consulting; and, one law firm.

It also permits me to remind my readers of the brilliant speech written by Paddy Chayefsky for the movie Network, in which protagonist Howard Beale is lectured on that one vast and ecumenical holding company, for whom all men will [someday] work to serve a common profit, in which all men will hold a share of stock. But I digress.

Knowing When NOT to Trust Your Intuition

In their recent article, "When Not to Trust Your Gut," Harvard Business School Professors Max H. Bazerman and Deepak Malhotra tell us that negotiators are often wrong when they believe themselves able to distinguish between situations in which they can safely rely on intuition from those that require more careful thought.

Intuition and rationality in negotiation

The people who study these things and assign categories to the results, distinguish between what they call System 1 and System 2 thought. System 1 thought describes our intuition: quick, automatic, effortless, and influenced by emotion. By comparison, System 2 thought is slower, more conscious, effortful, and logical. When you are carefully considering options, you are using System 2 thinking. When you are simply acting on intuition, you are using System 1 thinking.

Intuition -- System 1 thinking -- increases among all negotiators when a situation is complex and the parties reach a state of cognitive overload. Because these circumstances tend to impair our ability to process information (anxiety being the number one killer of careful, step-by-step rational thought) we shift away from System 2 thought toward System 1 thought when the negotiation going gets tough. And that, say the Professors, is a bad thing.

Four strategies for more rational negotiations

When you find yourself prey to pressure, anxiety, stress and intellectual overwhelm, Bazerman and Malhotra offer the following four strategies.

Strategy 1: Make a System 2 list.

Planning, Planning, Planning. We've stressed the need for negotiation planning before. It's not surprising that Bazerman and Malhotra suggest it as a critical first step in assuring that our negotiations are rational when they most need to be. As Mr. Thrifty tells me at least once a week -- MAKE A LIST!!!! -- the simplest and most effective planning device.

It's no surprise that our Harvard Professors recommend making a list of those negotiation situations that call for extra vigilance. When you carefully prepare for those stress inducing, intellect challenging negotiations, they counsel, you are setting yourself up to engage in System 2 thought when it's most critical to do so.

These negotiations, they say, should be scheduled for times when, and at places where, you best engage in System 2 thinking. If you're an early riser, don't schedule that complex commercial litigation negotiation after the close of buisness. And don't begin the negotiation over breakfast, lunch or dinner. Meet in a conference room and wear a suit. Open up that white board hiding behind the oak veneer panels on the wall and have plenty of the right kind of pens to map the progress of the negotiation as well as your principal talking points.

Give yourself structure and gravity of purpose. They will keep you on a rational track.

Strategy 2: Don't let time pressure affect your decisions.

Intuitive System 1 thought often takes over when negotiators are facing intense time pressure. If you believe you need another day to think about your decision, by all means take it. Ignore (courteously) those "one day only" threats. If your negotiating partners were willing to settle for $x at 8 p.m., they'll be ready to do so at 10 tomorrow morning as well. As Robert Rubin, Chairman of Citigroup Executive Committee and former Secretary of the Treasury reminds us, "when others sense your willingness to walk away, your hand is strengthened. Sometimes you are better off not getting to yes."

Strategy 3: Partition the negotiation across multiple sessions.

Bazerman and Malhotra remind us that completing an entire negotiation in one session is typically unnecessary—and sometimes impossible. Even when you're well prepared, a negotiation that is the slightest bit complex will raise new information, unforeseen issues, and tactics that you did not anticipate.

If you're using a mediator to assist you in negotiating the best deal, tell him or her the reasons why you do not want to close the deal today. Remind the mediator that it took you months, maybe years, to bring your negotiating partner to the table. Enlist the neutral's aid in creating a structure and process for future negotiations that will keep everyone's feet to the fire without getting your own burned.

During the negotiation itself, Bazerman and Malhotra recommend scheduling breaks every hour or two to give yourself time to evaluate and organize unexpected information and to organize your own thoughts. They also suggest that you consider negotiating over multiple days when talks are likely to be particularly intricate and multi-dimensional. They continue:

You might exchange preliminary information by e-mail on Day 1, have initial discussions over the phone on Day 2, and meet in person on Days 3 and 4 for substantive negotiations. By giving yourself time to think things through, you'll be in a better position to apply System 2 thought throughout the negotiation process.

Strategy 4: Adopt an outsider lens.

Your litigation counsel ought to be expert at viewing your case from your opponent's point of view. You should adopt a similar habit. As Bazerman and Malhotra stress,

many intelligent people stake their reputations, large sums of money, and years of their lives on negotiations based largely on intuition and overconfidence. The strong urge to view the world—and ourselves—in a positive light can powerfully affect our decision making in negotiation.

To guard against this rosy lens problem, rely upon your litigation counsel to tell you the difficult news you may not want to hear -- your chances of winning over the course of the lawsuit have generally become worse rather than better. Hiring a mediator, an expert or a consultant, can also provide you with the reality testing necessary to make the best, rather than the easiest, decision.

As Bazerman and Malhotra stress, when your deal is complex or emotionally charged, others will identify factors that you have ignored, weight negative information more appropriately, and maintain an objective view in ways that you cannot.

Together, these strategies should help you identify when to incorporate careful, reasoned analysis into your negotiation judgments.

About Bazerman and Malhotra

Max H. Bazerman is the Jesse Isidor Straus Professor at the Harvard Business School. He is formally affiliated with the Kennedy School of Government, the Psychology Department, the Institute for Quantitative Social Sciences, the Harvard University Center on the Environment, and the Program on Negotiation. Bazerman's research focuses on decision making in negotiation, and improving decision making in organizations, nations, and society.

Deepak Malhotra is an assistant professor in the Negotiations, Organizations, and Markets Unit at Harvard Business School. He teaches Negotiation in the MBA program and in a wide variety of executive programs. Malhotra's research focuses on negotiation strategy, trust development, international and ethnic dispute resolution, and conflict escalation.

The HBWK article on which this post was based was excerpted at HBWK with permission from "It's Not Intuitive: Strategies for Negotiating More Rationally," Negotiation, Vol. 9, No. 5, May 2006.

About The Author

Victoria Pynchon: Judicate West Panelist (www.adjudicateinc.com) 25 years complex commercial litigation and trial experience; instructor, National Institute for Trial Advocacy and Anderson School of Business, U.C.L.A. Entrepreneurship Institute (Summer 2006 - Negotiation Seminar); J.D. U.C. Davis, Order of the Coif; LLM. Straus Institute for Dispute Resolution; Federal District and Superior Court Panelist; Extensive Co-Mediation Experience with Judges Alexander Williams, III and Victoria Chaney of the L.A. Superior and L.A. Complex Litigation Courts, respectively. For full profile see http://www.settlenow.com.  See her mediation blog "Settle It Now Negotiation Blog" at http://settleitnow.blogspot.com/.

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