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Overconfidence About Future Failure or Success: Limiting Strategic Miscalculation in Business Negotiations

BY PON STAFF

Overconfidence About Future Failure

Over-precision doesn’t necessarily lead us to think we’re better negotiators than we actually are. Rather, it causes us to trust our initial instincts too much.

Sometimes we’re actually overconfident that we’ll perform worse than others. This tendency applies to competitive situations, including negotiation.

Those who underestimate their ability to be competitive usually will choose to stay out of a negotiation.

You might know that a company has cheated you out of some money, but unless you have strong evidence, you probably won’t pursue the case – even if the other side would have difficulty mounting a defense.

  • And if you think you wouldn’t win in court, you’re unlikely to push as hard as you should in your negotiations over a settlement.

Research shows that when a tight deadline is imposed on a negotiation, both sides routinely think the deadline will hurt them and benefit their counterparts. Although it’s true that time pressure will force you to concede more quickly, the deadline will exert just as much pressure on the other side – a fact that many negotiators forget.

Overconfidence About Future Success

Of course, negotiators also can be overconfident of their chances of “winning” a negotiation or competition. When a task is easy, when your side seems strong, or when you are highly motivated to succeed, you are likely to believe that you will best the other side.

In a union-management negotiation, for instance, if the union’s strike fund is flush, the union may be more motivated to hold out for its demands than if reserves are low.

Yet negotiators often fail to consider a crucial factor: how strong their side is in relation to the other side. Even a strong union could not expect a quick, favorable settlement to contract negotiations with a company that has a huge stock of surplus inventory and substantial cash reserves.

As a rule, negotiators spend too much time thinking about their own strengths and weaknesses, and not enough time thinking about the other side’s bargaining position.

Consequently, when both sides feel their case is strong, protracted and painful battles of will are likely.

Consider when this happens in legal disputes. Plaintiffs with weak cases are willing to settle, as are weak defendants.

  • But when both sides believe their cases are strong, they refuse to settle and wind up in court – ultimately a mistake for one side. 
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2 Underused Negotiation Strategies That Can Help You Come Out as a Winner in a Negotiation

A negotiation is a discussion between two parties used to help reach an agreement.

For many major purchases in our life, we will have to use negotiation skills to try and get a good deal. The same thing occurs in business. Today we will go over 2 overlooked negotiation strategies that can be used to help you get the better end of the deal.

Be Patient in Negotiations

This may seem obvious, but there are some people who hate being in negotiations, so they do all they can to get it over with. If you do this, then you are never going to get a good deal. For example, when you go to a furniture store and you tell the sales person that you need a sofa ASAP for an event on the next day, that sales person knows that no matter what he offers you, you are going to buy a sofa. If you tell that sales person you are just window shopping or are interested in a design, then that sales person is going to heavily discount the sofa, so you can buy it. Use this same theory in business negotiations as well. If you are in a position where you can take as much time as you want to complete a deal, use all of that time, because eventually the opposing party will succumb and make a deal.

Take it or Leave it Offers

Now this is a pretty risky strategy, as not only is it a tough situation to enter, but if you do offer this deal and they decline, then you are left with nothing. When using this strategy you kind’ve want to “checkmate” the opposing party. You want to put them in a situation where this is the last offer you will get. By using this, you have all of the power in the negotiation since it is up to the opposing party to now take up the offer. You can use a take it or leave it offer when there have been many offers and counteroffers between both parties. You can also use it once you realize how important this deal is to the opposing party.

Negotiations don’t have to be hard. It can be fun. You simply need to be patient and always analyze the situation the opposing party is in. If you can tell that they are becoming antsy, or rushing into a deal, use a take it or leave it offer to really force their hand to accept a deal.

To learn about how Cerius Interim Managementcan help you and for more information on interim executives, please visit our home page by clicking here.

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Why Every Sales and Marketing Team Needs a “Boundary Spanner”

by Andris A. Zoltners, PK Sinha, Sally E. Lorimer, and Dharmendra Sahay

Advances in data, technology, and analytics continue to bring new opportunities for improving sales and marketing effectiveness. Digital capabilities have evolved from descriptive (reporting what happened), to diagnostic (understanding why), to predictive (projecting what will happen if), to prescriptive (recommending what to do). But the road to realizing value continues to be bumpy.

Publications routinely highlight individual successes with systems such as CRM, reporting, and AI-enabled sales/marketing. Benefits touted include better leads and conversion rates, larger deal sizes, and increased sales productivity and growth. Yet surveys show widespread dissatisfaction with sales and marketing systems. For example, in a 2019 PCMag survey, the Net Promoter Score is negative for most major CRM providers.

Too often when these initiatives fail, companies blame a flawed strategy: poor vision or focus on inspection, not business impact. Other times, they point to implementation challenges: data quality problems, or inattention to change management. But the one aspect that is often overlooked is the profile of the person leading the effort.

In the successes we have seen, in almost every case, there is a very special profile of the person leading the effort. This Most Valuable Player of technology implementations is a boundary spanner.

Boundary spanners cut across business and technology in their experience. They have empathy for the commercial mindset (“Get it done. Produce results”) as well as the IT mindset (“Design for long term. Control risk.”) Although our experience is with sales and marketing, we suspect this leader profile is critical in other domains as well. Not surprisingly, 62% of the respondents in PWC’s 2017 Digital IQ Survey identified “a lack of collaboration between IT and business” as the leading obstacle to the success of digital initiatives.

So, what do boundary spanners do and how do they do it? Why are they so critical to the success of these initiatives? How do we mint more boundary spanners in organizations?

How Boundary Spanners Enable Success

Sales/marketing has certain priorities: innovating new ideas, chasing opportunities, and getting quick results. IT has priorities too, that are equally important but potentially conflicting: controlling costs and risks, developing enterprise capabilities, and ensuring longer-term sustainability. Boundary spanners can rally both sales/marketing and IT around a common purpose. Boundary spanners can dream with the business stakeholders in the vision phase while aligning the same stakeholders with realistic priorities and the IT mindset in the implementation phase. Boundary spanners have the judgment borne of experience to know when to support IT instincts and when to support sales/marketing instincts.

For example, a boundary spanner will:

  • Support IT by helping business stakeholders see the timeline, quality, and budget risks of adding new features too late in the process.
  • Support sales/marketing by helping IT see the benefits of using an innovative technology that delivers better on business needs, compared to a tried-and-true solution.
  • Push back against both IT and sales/marketing to keep things simple when design-by-committee is making the system unwieldy and hard to use.
  • Bring new insights that may not come naturally to either sales/marketing or IT. A boundary spanner might launch a minimum viable solution with an early-experience team to enable quick adaptation and tailoring. A boundary spanner can also align both parties around an agile, iterative, and fail fast mentality when the underlying technology is new.

A Boundary Spanner in Action

When a software company developed an AI-powered system for its inside sales team, a boundary spanner led the project. The project created a system of interconnected models that scored and calibrated account opportunities and shared insights with salespeople. These insights included which accounts were likely to churn and why, what the salesperson could do to mitigate the risk, and suggestions for the next best product offering based on an account’s propensity to buy. The system delivered recommendations to inside salespeople in seven different time zones. The initiative came out of a grassroots effort within the sales force. The project champion and team leader came from sales but had previously worked in IT. With a boundary-spanning perspective, the leader cultivated a common belief and purpose for AI-enabled selling, bringing together dozens of people from IT, sales, marketing, and product groups looking for sales team support. Ultimately, the initiative led to millions of dollars in new revenue and increased customer satisfaction.

The Making of Boundary Spanners and Why Their Ranks Are Growing

Boundary spanners are shaped through varied experience that allows them to develop broad empathy. Generally, their career paths span technology and business roles. For example, one boundary spanner started her career in IT where she focused on application development. Next, she moved to an analyst role, supporting the marketing organization with reporting and diagnostics. From there she joined a team that implemented a migration of reporting to mobile devices, interacting with designers and users throughout the implementation. Next, she was the business leader for the development of a global, cloud-based commercial data lake. The most successful boundary spanners have lived through multiple technology implementations in varying roles and have experienced both successes and failures.

Unfortunately, for all the value boundary spanners bring, we don’t see enough of them leading technology initiatives. In the past companies have been unaware of the importance of boundary-spanning capabilities. Also, siloed corporate structures have impeded the development of boundary-spanning skills. Leaders have advanced either in IT or in sales/marketing, with little opportunity to move between functions. But this situation is changing rapidly.

Recent trends point towards a spike in the supply of boundary-spanning talent coming out of IT. As companies use more pay-as-you-go services (e.g. SaaS, cloud computing, outsourced analytics), IT has become increasingly focused on bringing value by linking business needs with technology capabilities. This fundamentally changes the profile of corporate IT talent. Increasingly, companies seek IT professionals who can use leading edge technologies to design business solutions. We are already seeing more IT professionals taking initiative to seek out boundary spanning roles. Companies can benefit from having a more formal program to develop such talent.

As companies develop more boundary-spanning talent, we expect to see more organizations embedding digital sales and marketing systems into core processes with greater success.

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