Why “soft skills” and extroverted personality matter little in business negotiations
Google the term “Negotiation” and you will find a plethora of academic and FBI negotiators that claim to have the code to cracking negotiation. Many of these publications are built on real, proven principles of behavioral science – used to subconsciously nudge the other side to your desired outcome. The problem with these strategies is that they work well in a controlled experiment or one-off negotiation; they aren’t designed for the business world. Chris Voss – the author of “Never Split the Difference” – has proven his capabilities in some of the most high stakes negotiations in existence. However, the recommended strategies outlined in this approach are often clunky to deploy in vendor negotiations and are based solely on awkward soft skill tactics. Specifically, recommendations to “alter your voice”, “use non-round numbers”, and other the behavioral “tips/tricks” the book reinforces are not sound advice to success in repeated negotiations.
Here is why the common sources of negotiation advice are wrong for business:
The way we negotiate in 2024: The day of the door to door salesman and coming to an agreement in the first face to face meeting is gone. Today’s negotiations are much more complex, involving a series of stakeholders and modalities (face to face, virtual, e-mail) that must be accounted for.
Businesses require repeatability: Compounding, IMO, is one of the wonders of the modern world. “The slight edge” is vitally important in businesses; small successes compounding over time to lead to massive revenue growth, market capitalization, etc. As a leader of a business, I don’t really care if one individual can optimize one deal. I care that my entire organization can do it repeatedly, over time, in a sustainable manner. I’ve yet to hear anyone tell me a repeatable process using “DJ AM” voice.
Soft skills and rolodex are unsustainable – Leaning on behavioral changes like altering your voice or touting your rolodex may lead to some quick wins, but they are unsustainable. In fact, they can be downright dangerous to a business, specifically touting a deep rolodex in sales. Great negotiation has to be rooted in differentiation and creating stickiness, and if a sale happens without that (due to a good rolodex connection), it will likely churn. This is the danger I see with fractional sales arms; They get some quick wins due to connections, generate perceived success without great product / market fit and differentiation and ultimately lead to stalling of a go-to-market rollout.
Before I go on, I think it is important to make a distinction between what us in industry call a “single shot” vs. “multi-shot” negotiation.
Typical negotiation advice is built for single shot negotiations. In short, these are negotiations where I only interact with the counterparty once; Relationships do not matter. The simple analogy is a car dealership. There are tips, some of them in the books referenced above, that work in these cases. They tend to be much more aggressive and contentious; what you typically think of when you think of negotiation. More importantly, they work. There is a specific Toyota dealer in Colorado who I am convinced would have me arrested if I stepped within 50 feet of the dealership.
But in business, relationships do matter. I have to work with the counterparty many times in the future, hopefully enhancing that relationship each round.
Enter “multi-shot” negotiation.
For multi-shot negotiation, we need to shift the way we view negotiation from something soft skill based to something rooted in science.
What science, specifically? Marketing, strategy, behavioral economics, behavioral science, data science, and game theory.
The beauty of this paradigm shift is that I can engineer systems with science. Just as a chemical engineer takes the science of chemistry, physics, thermodynamics and material balance to design a system, so too can I with negotiation science. More importantly, I can engineer the process to repeatedly and solve business problems.
This solves all 3 of the problems above.
If you are still with me to this point, a logical question remains: What would an engineered negotiation system look like?
We will dive into the first part next week.