Madness and the delicate art of exercising power in negotiating

Madness and the delicate art of exercising power in negotiating

INSEAD | Business | Sat, July 20 2013, 3:46 PM

Unpredictability can be an asset in making people do what you want as a leader and a negotiator. In October, 1969, the Nixon White House indicated to the Soviets that the “madman was loose” as the US military ostentatiously flew bombers packed with thermonuclear weapons near the Soviet border for three consecutive days. It was part of the then-president’s “Madman” strategy, designed to make the leaders of other countries, especially the Soviet Union, think that the American president was quite literally emotionally unstable and disjointed. Senior U.S. officials, such as Secretary of State Henry Kissinger, not only portrayed Nixon as irrational and volatile to his Soviet counterparts, but made them think that Nixon was totally unpredictable. The sudden decision to bring the bombers home reinforced the “madman’s” unpredictable nature and baffled the Soviets.It was a dangerous tactic, designed to manipulate the Soviets. Yet, history – or at least Kissinger’s historical reminiscences – proves it worked. Specifically, the Nixon administration believed their tactics opened the door to arms control deals of the early 1970s.

Although many historians have theorized that such inconsistency gave politicians and heads of state the upper hand in dealing with other leaders, whether they would work in the cooler analytical business world has been unclear. Until now. The advantages of being “unpredictable” or “emotionally inconsistent” in business negotiations are tested in a paper by INSEAD Assistant Professor of Organizational Behavior Marwan Sinaceur.

“We found through three different methods that when you alternate between anger and another emotion over time, you were more likely to extract concessions from the recipient than when you expressed anger consistently,” said Sinaceur in an interview on his paper The advantages of being unpredictable: How emotional inconsistency extracts concessions in negotiation published in the Journal of Experimental Social Psychology.

Blowing hot and cold over time is an effective negotiation strategy.

Don’t get mad…

“This is a novel finding because most of the research on emotional tactics in negotiations had found that when you expressed anger, you were likely to get ahead or likely to extract concessions from the other because you are perceived as tougher and more likely to walk away. So the counter-intuition of this finding is that to some extent by your expressing less anger overall… you can get more from your recipient than if you were to express anger consistently. Importantly, you also are perceived as a nicer person.”

Sinaceur proved his findings in three different experiments, ranging from face-to-face to computer simulated negotiations and scenarios. Across all studies, recipients of alternating emotions (such as your going from positive to negative, then to positive again) felt less control over the outcome.

“This means if you express emotional inconsistency to me, I’m going to perceive you as more unpredictable. As a result, I’ll feel less control and uncertain about your next move. By me feeling less control, I’m going to think ‘look, I’d better make further concessions because the counterpart seems to be very unpredictable and if I want to increase the likelihood of getting the deal and resolve this uncertainty, I have an excuse to give in,’” Sinaceur said.

“Usually people don’t like uncertainty, so when the recipient sees that you are behaving in an unpredictable way, they feel that they’re not in control of what is happening in the negotiation.”

Manage impressions over time

Being emotionally inconsistent can therefore yield concessions from your opponent and give you the upper hand. But how should you apply the aura of mystery to your negotiation? Sinaceur says one shouldn’t start with expressing anger from the beginning of the negotiations.

“There is a difference between expressing anger, then happiness then anger then happiness versus expressing happiness then anger, then happiness then anger. We found that the latter strategy is more effective in making others comply. Overall, it is better to start expressing happiness earlier in the negotiation so that you create positive impressions first. Then, but only then, you can express dissatisfaction when the discussion about the issues gets real and tough. Do not shoot too early. Do not start with anger!,” he said.

“Clearly, if you express happiness and positiveness at the beginning of a negotiation people are going to feel less threatened and, eventually, they’ll disclose more information to you. Start nice, make people trust you first, make people talk and confide in you before you get tougher. That’s critical. Express anger only later in the negotiation, in fact only at the very end of the negotiations. And do so parsimoniously.

“The less anger you express, the more impactful it will be! If you express anger late and with parsimony, people are more likely to infer that you’re expressing anger because there is a specific issue at hand and you’re not happy about this or that. It’s not because you are a jerk or you are chronically moody as may be inferred if you were to get angry from the beginning of the negotiation,” Sinaceur added.

“Finally, even when you express anger at the very end, you can do so in a non-aggressive way by not directly accusing or blaming your counterpart. Express your dissatisfaction with the issue at hand rather than getting angry and humiliating the other person. So express dissatisfaction at the issue; do not blame your counterpart. You can even express dissatisfaction with a positive spin.

A taste of your own medicine

So for recipients of unpredictable negotiations, how can you protect yourself from the advances of the “madman/woman”?

Sinaceur has some tips.

“So now the question is, if people act unpredictably towards you and you’re going to feel less control and feel more uncertain, how can you manage that? A first tip is to take a break away from the negotiation so you’re not facing or talking with your partner anymore,” he said.

This will help you literally cool down and step back from the situation. Secondly, Sinaceur advises to think back to your original objectives and targets of the negotiation. Make sure you set your targets before beginning. Thirdly, Sinaceur advises keeping in mind that your opponent could be putting on a show with their emotions to leverage concessions. This is easier said than done.

“Much research suggests that we overestimate our ability to detect whether somebody is faking his/her emotions or not, so keeping in mind that we may not read another’s emotions accurately is beneficial. If somebody expresses anger, it may be strategic: they may not really be feeling angry. Also, somebody expressing anger might in fact be in a weak position,” Sinaceur said.

“Perhaps the angry expresser is just worried about something. So trying to keep calm and not wanting to close things right away will help you deal with the situation. Buy time to think and investigate before you react. Don’t feel pressured to react right away to another’s moves. Sometimes the best reaction toward another’s aggressive moves is to keep still without your speaking your mind. You can defuse the other’s aggression by non-verbally acting in a way that shows (e.g., keeping silent, smiling) that you’re not impressed.”

Marwan Sinaceur is an Associate Professor of Organizational Behavior at INSEAD.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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