Negotiation training teaches us the dangers of assumptions – a costly risk you simply can’t afford in your negotiations.
Co-authored with the valuable insights of Tim Green, a Principal at The Gap Partnership, a prominent provider of negotiation training, this article aims to elaborate on this crucial point.
Life is often unpredictable, catching us off guard when we least expect it. We anticipate one outcome and suddenly find an entirely different scenario unravelling before our eyes. Reflecting on my teenage years, I recall a family vacation to the States. Our journey covered countless miles of US highways, an adventure led by my father that felt endlessly monotonous to a young and easily bored child. The supposed highlight of the trip was a visit to the Grand Canyon, which necessitated hours of tiresome driving across the Arizona desert. Given the previous tedious experiences of the journey, I prematurely concluded that this would be another protracted, dull chapter of the trip, consuming many precious hours of my youth.
To say that my assumption was wrong was the understatement of the year. All I’ll say here is if you haven’t been to the Grand Canyon, go, now! Dad, feeling suitably vindicated on the drive back to Las Vegas, chose then to put a cherry on top of my experience. It was created by nothing more than water erosion over millennia! Mind well and truly blown!
Thankfully, making assumptions that prove to be unfounded more often than not leaves us feeling rather satisfied, because things end up being better than we had imagined. Like watching a film that the critics have slated, but coming out of the movie theatre loving it. But there are, of course, many other times when making assumptions can be very costly indeed, especially where financial risk is involved.
In sports many a punter, and sometimes the bookies, have lost the shirts off their back making assumptions that proved to be wildly off the mark. Perhaps the greatest example of this in sporting history was the English football team, Leicester City, winning the English Premier League title in the 2015/16 season. In only their second season in the top flight after ten seasons in the lower divisions, and with a new manager that no-one rated, it was assumed they would never challenge for the title and so were 5000/1 outsiders. Bookies were offering the same odds on Elvis turning up alive at one of their matches! By the end of the season, and quite literally against all the odds, UK bookies had collectively lost £25 million, the biggest loss in British history on a single sporting market.
In commercial scenarios, where numbers can be huge by comparison, making assumptions can be catastrophic. In a famous example from 1992, Hoover was carrying huge stocks of surplus washing machines and vacuum cleaners. To shift stock, they ran a free flights promotion to anyone buying £100 of its products. Hoover assumed uptake would be low. The resultant redemptions were so vast that Hoover found itself overwhelmed by demand for both tickets and new vacuum cleaners, and by the costs of the flights. The fiasco that ensued saw multiple lawsuits filed over the next six years and a cost to Hoover of almost £50m. As a result the British division was sold to Italian manufacturer, Candy, and later the company lost its Royal Warrant.
The danger that can come from making assumptions is implicit in the word itself. The Cambridge dictionary defines assumption as ‘something that you accept as true without question or proof’. No negotiator should ever accept anything without first questioning it or seeing the evidence for themselves. Whilst making assumptions about anything in negotiation is highly inappropriate, testing a hypothesis about the other party’s position is entirely appropriate. The Cambridge dictionary defines hypothesis as ‘an idea or explanation for something that is based on known facts, but has not yet been proved’. The very nature of this suggests forethought, planning, research, experience and yes, even a little ‘gut feel’. These are all highly valuable traits in any skilled negotiator.
By its very definition, assumption, by contrast, speaks of a lack of all of these characteristics. In negotiation, assumption is lazy. It is the defence of the negotiator who never stopped to really investigate the balance of power, or who will always have reasons why it wasn’t worth preparing for an unforeseen potentiality, or who was over-confident, or whose ego encouraged them to ‘wing it’, or who was too busy to prepare properly. Perhaps most tellingly, making assumptions is the territory of the negotiator who is inside their own head, and not their counterparty’s, be that because of fear of one’s own position, or arrogance about it.
The stock market warns that past performance is not a guarantee of future performance. Negotiators take heed! Just because someone took one position last year, doesn’t mean they will do so again now. Remember that when you negotiate you are not negotiating with businesses, but with people, the most highly adaptable and fickle species on the earth.
Assuming anything with this in mind is therefore very risky indeed. And of course, whilst you do not negotiate with a business, the person’s position and eventual actions in a negotiation can be directly affected by the position of the business they represent, something negotiators stuck inside their own heads often overlook at their cost.
On our workshops, we hear all the time from our delegates about ‘mistakes’ they feel they have themselves made in their negotiations, or where they feel the counterparty made mistakes themselves. As often as not when we question for more information, the ‘mistakes’ have come back to them after they’ve made blanket assumptions that turned out to be inaccurate. These assumptions can seem insignificant at the time, but can result in a significant impact. Examples include making assumptions about your counterparty based on factors such as age, gender, culture or experience.
So, make time to establish your hypotheses based on the facts you already know from the preparation you have done, and build plans and options that will enable you to respond flexibly and proactively to whatever the reality then turns out to be when you have tested your hypotheses. In short, get inside the other person’s head and understand all the factors that might impact their true position at the time you are negotiating.
And next time you are tempted to make an assumption about a negotiation you are undertaking, remember 2016 and the US presidential elections and the UK’s ‘Brexit’ vote. Only time will tell how costly the assumptions that ‘it’ll never happen’ turn out to be in either of these two examples, but it might well be a price many of us were not prepared to pay. Of course by then it might well be too late!