Is Unpredictability an Effective Strategy?

Is Unpredictability an Effective Strategy?

Notes on Negotiation Written by Marty Latz, Latz Negotiation Institute

“Does it help or hurt to be unpredictable in a negotiation,” I am often asked these days.

Let me give you a great legal answer – it depends!

What does it depend upon?

1. A future relationship with your counterpart

Do you have, expect and/or want a future relationship with your counterpart? If yes, predictability in your negotiations with them will positively impact that relationship. Unpredictability will mostly be counterproductive.

Of course, this operates on a spectrum. Surprises can be a plus, and no one wants your counterparts to know your exact next moves. Generally, though, you should negotiate within a reasonable and expected range of strategies and tactics if you want to engage in the future.

Let’s say you want to hire a new VP of Sales. You interview two capable candidates, each of whom expresses a lot of interest. In fact, one tells you he loves the opportunity and is ready to sign up right away. The other seems equally excited but tells you she would need several days to consider it.

You decide to go with the first and e-mail him an agreement. Unexpectedly, you don’t hear back for a week. He then says he needs more time to decide. Red flag. You need reliability or the relationship won’t work.

2. A reputation for trust and credibility

Predictability and credibility go hand in hand. If I agree to a provision, it creates a reasonable expectation that I will follow through. My performance is predictable, assuming I have a reputation for trust and credibility.

By contrast, a reputation as a wild card undermines your credibility. After all, who knows if you will do it or if it’s even a 50/50 chance. And studies have consistently shown that credible, trustworthy negotiators achieve better deals.

3. The strategy relating to your unpredictability

“Hold on,” you respond. “This isn’t about credibility. It’s about whether your counterpart can figure out your next move and bottom line. If they can, you won’t get your best deal. You want to be unpredictable here, right?”

Yes and no. First, this comment relates to unpredictability in the offer-concession stage of the negotiation. In that stage, yes, you want to be somewhat unpredictable, meaning that your counterpart can’t predict your exact next move or bottom line.

But even in this stage you don’t want to be so unpredictable that your counterpart will just walk away and figure it’s not even worth dealing with you.

Let’s say I’m selling my house, and it’s been listed for two weeks with no offers. In most markets, one offer-concession pattern is that: 1) I list it, making the first offer, 2) a potential buyer counters below my listing price, and 3) we go back and forth several times, with me reducing my asking price and the buyer increasing its offers. If there’s a sweet spot, we meet in between our initial moves.

This pattern is generally predictable, even though our exact moves and bottom lines are not.

What if, instead, a buyer makes an offer below my list price, but I then raise my price. Unpredictable? Yes. Contrary to the pattern? Yes. A helpful strategy? No.

Most buyers would then likely stick to their initial move, walk away, or try to get me to bet against myself. None will help me achieve my goal.

My totally unpredictable move injected so much uncertainty into the process that a rational buyer might just look elsewhere. Not effective.

4. Compliance and implementation

The final factor to consider relates to the implementation and compliance part of negotiations. Will the parties stick with the deal or not? No negotiation will be successful unless the parties uphold their commitments and implement their deals.

A reputation for doing the opposite, meaning your compliance is unpredictable, will be counterproductive and ineffective. This is true even if you incorporate legal incentives that reduce the likelihood of your deals falling apart.

Latz’s Lesson: Here’s a safe prediction – a negotiation reputation as a complete wild card will be highly counterproductive, especially if you care about credibility, compliance and future relationships with your counterparts. So be generally but not totally predictable.

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Marty Latz is the founder of Latz Negotiation Institute, a national negotiation training and consulting company, and ExpertNegotiator, a Web-based software company that helps managers and negotiators more effectively negotiate and implement best practices based on the experts' proven research.  He is also the author of Gain the Edge! Negotiating to Get What You Want (St. Martin’s Press 2004). He can be reached at 480-951-3222 or Latz@ExpertNegotiator.com