Harvard Business Review

In Negotiations, Play Stupid to Win Smart


Posted on Harvard Business Review: November 30, 2010 11:01 AM

In my last blog, I shared with you one of my partner's sayings that he learned from his uncle, "play stupid, and win smart." His uncle was a skilled poker player with an uncanny ability to hide his emotions. Other players bought into his "play stupid" routine, and he'd later disarm them with his winning hands.

This is a real skill, since in general, the brain lags the mouth. Our impulse is to speak our minds, talk first, think and act later.

As a natural extrovert, I never fully appreciated the importance of this play stupid, win smart philosophy until I reflected and noted common patterns in business negotiations and other high stakes tasks where pausing before reacting would have made a significant difference in the outcome. This has made me more cognizant to try (and this is difficult because emotions often override logic) to follow this DVR-inspired approach in important and sensitive business situations:

1. Pause. Consider business situations as a mini movie in production in which you are the director. When you have any new and sudden disruption to filming (i.e. new information, a new competitive entrant, a new shift in available resources, etc.), the first call to action should be to take a pause.
2. Play. Let the movie play out in your head and think about the various scenarios and how you can use the new information or situation to your advantage.
3. Mute. Remind yourself to hit your internal mute button so that you keep your thinking to yourself unless there is a compelling reason to share. Think like a poker player and ask if there is any upside to sharing what you know with the counter-party. There usually isn't.
4. Rewind and Record Again. Appropriately reset your actions and hit "record" again to move toward your desired "win smart" ending.

The act of pausing to contemplate the various scenarios that are likely to play out is critical. As in physics, every action has a equal and opposite reaction. The key is to avoid any unwanted consequences.

In a recent negotiation with a company, it came to our attention that another party had put an offer on the table. It turned out that the other party was a group with whom we were actually planning to partner on the deal. We had proposed the opportunity to them shortly before the negotiation. My knee-jerk response was to call up the person with whom I had been dealing and offer some harsh criticism on what they had done and to effectively tell them that we were done working with them. Period.

But I paused to to ask myself how that course of action would benefit me. In truth, the only benefit would have been to make me feel better right at that moment. Unfortunately this seems to be a common mistake that people make in their "talk first" decision-making process in order to feel better in the moment—but it doesn't move them toward their goal.

Playing the movie forward and carefully considering the likely outcomes, I realized that remaining silent and using the knowledge to our advantage was a far better approach than flying off the handle. Why? Scenario A: Get mad, other party has no chance to explain themselves and our reaction will hinder the probability of working with them; Scenario B: Get mad before thinking about what alternative partners might do the deal with us, which may lead to no deal at all; Scenario C: Get mad, tell the other party we can do the deal on our own, which would have made them bid up the price on the deal to try to win it for themselves. We'd be putting the dog in the corner, so to speak, and they'd be left to bark or bite.

By remaining silent, we could effectively play stupid and win smart. Having that knowledge gave us two pieces of valuable insight: first the other party showed how much they really wanted to do the deal, and second, their behavior to try and get the deal on their own illustrated a lack of professional protocol and gave us an early and helpful signal that this might not be the type of partner with whom we wanted to work. We quickly mobilized another partner on the deal and we proposed a joint deal at the original agreed-to price, which was accepted.

It is too easy to forget the desired goal in moments of emotion. Here the goal was to win the deal at a reasonable price and silence and restraint were our best friends toward winning smart.

Copyright © 2012 Harvard Business School Publishing. All rights reserved. Harvard Business Publishing is an affiliate of Harvard Business School.

Anthony (Tony) Tjan is CEO, Managing Partner and Founder of Cue Ball, a venture and early growth equity firm investing in the information media and consumer sectors. Tjan holds an A.B. degree from Harvard College, M.B.A from Harvard Business School and was a Fellow at the Harvard Kennedy School of Government. You can follow Tony Tjan on Twitter at www.twitter.com/anthonytjan

We Almost Lost the Nasdaq
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus