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Avoiding Over-Confidence in Negotiation

Keith Stacey
Confidence In Negotiation The Gift That Keeps On Giving (1)

Confidence, when coupled with confirmation bias and a capacity for self-deception, is something to watch out for.


Many important negotiations occur internally in a company. Changes in strategy and commitment to capital projects are two examples which spring to mind. I’ll share with you, two examples of disastrous company decisions!


The first is the launch of New Coke in April 1985. The change to a recipe that had been in use for 99 years was in response to extensive blind tasting between Pepsi and Coke, where consumers stated they preferred the sweeter Pepsi formula. (These tests had become a staple of Pepsi’s advertising campaign to outsell Coke.)


The consumers’ response to the announcement of change to coke, was outrage.


Ordinary people bought the new coke just to pour down drains, price wars were waged to acquire remaining stocks of old Coke and by October the company admitted their error and re-introduced the original formula as Classic Coke.


Soon New Coke was no longer and the Coke recipe remains unchanged to this day.


In examining the thinking behind the decision, Andrew McAfee in his book The Geek Way uses the term argumentation.


He pointed out that within Coca Cola there had been insufficient discussion, debate or argument about the change in recipe.


Was a blind taste test the best way to glean sufficient evidence to change the formula?


People don’t consume coke in small sips. So, the blind test experiences in tasting coke were totally different to the lived experience of your average coke drinker. What an amazing insight. Of course!!!


As subsequent analysis showed, they do not drink for the taste at all, but for what the drink means to them as to be a part of the American experience.


An essential part of all negotiations is the ARGUE step. Because the word has connotations of bad temper and loud exchanges, many misunderstand the purpose of this vital process. In negotiation we argue to understand, to communicate all we know to the other party and to learn from them what we need to know in order to craft a mutually acceptable solution. We do not argue to point score, to prove the other party wrong or persuade them to adopt our world view.


Too many organisations in McAfee’s view, place too much store in the views of one person. He refers to them as HiPPO’s (Highest Paid Person in the Organisation). How often have we seen that happen in companies? But who’s going to call it out?


Intelligent people learn from their mistakes, but wise people also learn from other people’s mistakes.


Onto my second example:


In 2009 Carlton United reduced the alcohol content of their iconic VB brand from 4.9% to 4.6% without consulting (loyal) drinkers. People noticed. There was a massive backlash and VB lost market share to XXXX beer. The company was forced to reverse course in 2012, but VB has never regained its former status.


Tip: To protect against over-confidence consult as widely as possible, welcome debate and dissenting views, and watch out for deference to more senior decision makers.


The ARGUE step is a vital self-correcting mechanism to avoid over-confidence and self-delusion.


Happy negotiating!

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