Wargaming as practical preparation approach to complex business negotiations
A business negotiation can be a major event in the life of an organization leading to contracts, profits, long term partners and far reaching decisions about allocation of resources. Will the organization’s potential be realized? Will only the minimum goals be achieved? Will there be a failure to agree? As new information and ideas surface, will the organization be able to react.
This last question is vital to the ability of an organization to successfully manage complex business negotiations. Alternative paths to agreement will unfold as negotiations develop and the unfolding cannot be cannot be foreseen. In order to select sequences of actions that will lead to suitable outcomes, negotiators must be able to keep in mind multiple possible pathways. Therefore, negotiators need a sort of Zen mindfulness that enables them to keep conflicting realities in mind simultaneously. On the other hand, they need to keep sight of their needs and goals, on the other hand they must react with confidence and speed as possibilities develop.
Cognitive psychology shows us that complex skills evolve from those that are carefully analyzed and deployed to those that are instantly deployed based on holistic intuition. Kahnemann (2011) refers to this as fast and slow thinking, a widely experienced feature of human thinking. A widely used example of fast and slow thinking involves driving skills. A beginning driver knows how to turn a car and which traffic signs require which actions. But only after some years will the driver be able to correctly handle an emergency situation avoiding an accident with a drunk driver on icy roads in busy traffic. At that time, the experienced driver will almost instantly summarize the situation and react. The driver’s assessment is intuitive, holistic, and goal focused. How can business negotiators gain the same ability?
One answer is that we gain these skills through years of experience. Another answer is that we pass it to associates slowly over time. Knowledge that is difficult to quantify and express is passed slowly and incrementally into less experienced staff. This kind of knowledge, tacit knowledge, does not develop quickly nor independently of the group (Polyani, 1966; Nonaka and Takeuchi, 1995; Nonaka, Toyama, and Konno, 2000). However, time is a luxury which we do not always have. Indeed we may not be able to gather experience in the time frame of years unless we face numerous challenging negotiations annually. And lastly, each major negotiation is likely to be unique, so how can we develop so much deeply intuitive knowledge so quickly?
One possible approach is through the practice of wargaming.
In a negotiation wargame, the negotiation team divides into two more groups, one for each side in the upcoming negotiation. Each group takes on the roles of the members of a side. One group takes the roles of the “home” team (usually called the Blue team). As other groups represent the other sides (Red teams), you can:
– Learn how the other sides think;
– Gain understanding of their interests;
– Identify matching interests;
– Identify conflicting interests.
Simulating and modeling the negotiation will help you later to communicate with the counterparties and help you discover how to create and claim value with them.
Repeated simulations will allow the Blue team to develop some of the deep and intuitive thinking they need in order to quickly grasp the landscape of the real negotiation and pursue the sequence of events that will lead them to maximize the gains of all or most parties at the table. The ability to size up the situation and react quickly means avoiding mistakes which could decrease value for one or all parties.
After completing a wargaming negotiation with your Blue and Red teams, bring all the individuals together to review what happened and why. Share the knowledge and experiences gained from the simulated negotiation through in depth communication among the assembled team members. Maximize in this process the communication and reflection that leads to tacit knowledge in the individuals and in the team as a whole. Wargaming events are not overly expensive or time consuming, so it is possible to repeat and develop the deep, unspoken and intuitive knowledge that will lead you and your staff to quick and sure action at the real event.
Kahneman, D. (2011). Thinking, Fast and Slow. Farrar, Straus and Giroux: New York, NY
Nonaka, I., Toyama, R. and Konno, N. (2000). SECI, ba and leadership: a unified model of dynamic knowledge creation. Long range planning. 33, 5-34
Nonaka, I., Takeuchi, H. (1995). The knowledge-creating company: How Japanese companies create the dynamics of innovation. Oxford University Press: Oxford
Polyani, M. (1966). The tacit dimension. Routledge and Kegan: London