Truth 45. Satisficing versus optimizing
Reaching true win–win agreements is not easy. More often than not, from an objective perspective, you can spot a deal that both parties would like more—often dramatically more—than the one they agreed to. This means that both parties settled for less than they should have.
Consider once again the fateful story of the sisters negotiating a single orange. One of the sisters wanted to drink all the juice from the orange, while the other wanted the whole peel to make scones. Instead of being clear about what they wanted, they both made the same demand: “I want the orange.” They finally split the orange in half. One sister drank the juice from her half and threw out the peel; the other sister used the peel from her half and discarded the juice. Managers and executives often reach outcomes tantamount to cutting oranges in half. They are oblivious to the existence of another feasible agreement that would have been far more beneficial, just as the sisters would have been much better off by splitting the orange into juice and peel!
This brings us to a key question: Why do people settle so willingly for lose–lose agreements? There are three main reasons:
▪ Satisficing
▪ Lack of feedback
▪ The fixed-pie perception
Satisficing
Nobel Laureate Herb Simon coined the term satisficing for the human tendency to suboptimize—to work just enough to achieve a mediocre goal. Simon contrasted satisificing with a much more productive behavior: optimizing.
First and foremost, negotiators just plain set their sights too low.
One early satisficing experiment asked people to multiply 1 × 2 × 3 × 4 × 5 × 6 × 7 × 8.39 Most people tackled this by multiplying the first few numbers and then making an educated guess at the answer. However, on average, their answers were way too low.
A different group was given the same numbers to multiply, but in reverse order: 8 × 7 × 6 × 5 × 4 × 3 × 2 × 1. This group made better guesses, but their answers were still totally wrong. The results indicate that people rely excessively on mental shortcuts and take “cognitive naps” that can result in costly mistakes. In other words, people are lazy.
People rely excessively on mental shortcuts and take “cognitive naps” that can result in costly mistakes.
Another study compared the negotiations between spouses and dating couples to those between strangers.40 It seems reasonable to guess that married and dating couples, presumably interested in nurturing a long-term relationship, would reach the most win–win outcomes. They didn’t. Complete strangers had a greater incidence of win–win outcomes than couples! Why? Satisficing. On average, the couples quickly settled for the first set of tolerable terms. In contrast, the strangers were more inclined to think about their ultimate aspirations and explore more routes to achieving these. This optimizing led to more win–win agreements.
Lack of feedback
A second reason people fail to reach win–win deals is that they simply don’t get feedback about their agreements. Thus, most people have no objective idea about the outcome of their negotiation. As a result, their behavior becomes self-reinforcing. This is akin to someone eating highly fatty foods, never exercising, never checking her blood pressure, and proudly concluding, “I’m not dead, so I must be healthy.” This person is operating without knowledge of her actual health and, more importantly, what she could do to maximize it.
I strongly encourage everyone to seek opportunities to put their negotiation skills to the test—by seeking feedback.
The fixed-pie perception
A third reason for lose–lose agreements is related to the “fixed-pie perception,” or the nearly universal belief that one’s own interests are diametrically opposed to those of the other party.41 It epitomizes the win–lose type of thinking that marks most negotiations. If I believe that you are wholly opposed to whatever I want, we don’t have much opportunity to create a win–win deal.
You will encounter an alarmingly high incidence of fixed-pie perceptions since many people falsely believe that the other party has preferences that are directly opposed to their own on all dimensions, when in fact this isn’t true.42 In the instance of the Orange Sisters, it would be akin to the first sister swearing that her sibling also wanted the juice when what the second sister truly wanted was the peel.
Many people falsely believe that the other party has preferences that are directly opposed to their own on all dimensions, when in fact this isn’t true.
It’s often possible to reach a mediocre negotiation agreement. However, with careful planning and effort, negotiators can optimize their negotiation experience, which will improve their own outcomes as well as the outcomes of their customers, clients, and colleagues.