A friend of mine is in a business partnership. I will call her “Jane”. Over the past few months, Jane has continuously expressed to me her frustration and dissatisfaction with her partners, as it seems that they do not care much for the business aspect of running a partnership. They are slow to bill the clients and even slower to collect the money. The fact that monthly expenses exist and must be paid do not seem of much concern to them.

After hearing this same story more than once, I suggested to Jane that she get a “divorce”; she ends the partnership. She responds that she hesitates to do so due to other factors. So, the story continues to be retold many more times until finally, the other partners do things that equate to the “straw that breaks the camel’s back.”

So, Jane decided then and there to end the partnership, announcing to the partners that the partnership was dissolved, effective immediately. Only afterwards, did Jane start thinking about what comes next and what exactly are the consequences of what she just told her partners. UGH!

I relay this tale because it exemplifies how not to negotiate. Only after she announced the dissolution to her partners but not before- did Jane bother to pull out the partnership agreement to determine what she could and could not do pursuant to the agreement. Even then, she barely read it. While she has agreed to meet with her now former partners to discuss the future, she has done no homework, and no research on her options. Rather, she plans to simply “wing it”, using her gut and intuition to figure out how to reach her not so clearly defined goals.

In an April 16, 2013 blog post on the Program on Negotiation at Harvard Law School website, the blogger discusses that each of us uses two different systems of thought: System 1 is our “intuition: quick, automatic, effortless and influenced by emotion” whereas System 2 thought “… is slower, more conscious, effortful and logical.” (http://www.pon.harvard.edu/daily/negotiation-skills-daily/strategies-for-negotiating-more-rationally/print/). So, when one acts purely on intuition, one is using System 1 thought whereas if one carefully evaluates a situation and makes a decision based on thinking it through, one is using System 2 thought. So, while one may use System 1 to decide where to go for lunch, one should be using System 2 to decide whether to take a job offer, or in Jane’s case, whether to dissolve a partnership.

The blog points out that Jane is typical; most people use System 1 rather than System 2 thought during negotiations because they feel cognitively overloaded, and to think slowly and carefully takes time which is precious these days. However, they make a big mistake by using intuition rather than logical thought. People like Jane, negotiating important issues, must make the time to think through the issues and allow for sufficient time to negotiate all of the issues. If the negotiations must be in multiple sessions over a number of days or weeks, then so be it. By rushing into negotiations and rushing through the negotiations, much will be missed, mistakes will be made and much will be “left on the table”.

Only with adequate preparation and giving sufficient time to negotiate, can one negotiate rationally. Further, the blogger suggests that in preparing for such negotiations, one looks at the issues with both “an insider lens” and “an outsider lens”:

• A negotiator typically uses an insider lens for making judgments when deeply immersed in a particular context or situation; the insider lens relies on intuitive System 1 thinking.

• By contrast, the typical negotiator adopts an outsider lens when removed or detached from a particular situation; the outsider lens uses rational System 2 thinking.(Id.)

Finally, the blogger notes that most of us have an “overconfidence bias” in that we are overly confident about our “… odds of success despite being proven wrong in the past. In other words, most of us fail to learn from experience.” (Id.)

So-the moral of my tale: when facing serious negotiations (i.e., something more than where to have lunch) - don’t wing it and depend on your System 1 intuition; rather make the time to prepare, reflect, think about the consequences of your actions and your alternatives. Only by using System 2 thinking will you be fully prepared!

…. Just something to think about!

by Phyllis G. Pollack

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Phyllis G. Pollack is a full time neutral in Los Angeles where, as President of PGP Mediation, she focuses on business, real estate, contract and “lemon law” disputes. She may be reached at Phone: 213-630-8810 / phyllis@pgpmediation.com / Website: www.pgpmediation.com