Out to Lunch

Published: Feb 10 , 2012
Author: Stephen White

Two accounts clerks and their manager are walking to lunch when they find an antique oil lamp. They rub it and a Genie comes out. The Genie offers each of them one wish.'

'Me first! Me first!' says one of the clerks. 'I want to be in the Bahamas , driving a speedboat, without a care in the world.' Puff! He disappears.
'Me next! Me next!' says the second clerk. 'I want to be in Hawaii , relaxing on the beach with my personal masseur, an endless supply of Pina Coladas and the love of my life.' Puff! She's gone.

'OK, your turn,' the Genie says to the manager.

The manager says, 'I want those two back in the office straight after lunch.'
The moral of this story is that going first is sometimes the wrong strategy.
The received wisdom in many of the negotiating academic circles is that allowing the other party to make the first proposal is good strategy, because it might reveal that their proposal is more generous than you would have expected, which will shift the point of agreement (the deal) in your direction.

But Scotworkers have long been exponents of the principle that making the first proposal is good negotiating behaviour. It sets the agenda. It identifies the geography of the subsequent conversation. It incorporates variables you want to have in the deal. And most importantly it puts the benchmark at your end of the negotiating spectrum, leaving the other party the task of pushing you up or pulling you down towards where they would prefer to be.

So when is it the wrong strategy? There are two measures. The first is probability. If their behaviour indicates that they are uninformed about the facts - the market, the competition, market prices, and so on - and as a result there is a significant probability that they might make an overgenerous first proposal, let them do it. The second is the need for progress. Negotiations move forward when proposals hit the table. If the investigative phase of the negotiating process (the Argue step) fails to reveal their priorities and needs, and as a result you can't work out what would be an appropriate proposal, inviting them to go first might just produce that information. Although their proposal might be unpalatable, at least you will have found out their issues.

Remember that most of the time letting the other side go first is poor strategy. We can all tell stories about stunningly good outcomes because the other side made a first proposal which was much more generous than we had expected. But those stories are worth telling because they are the exceptions. Most of the time when the other side go first their proposals do us no favours at all.

Stephen White


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About the author:

Stephen White
My background is sales and marketing. I read Law at University and worked for 2 major packaging companies for 13 years in sales and sales management. I joined John McMillan and Scotwork in 1984. For the next 25 years together with our colleagues we delivered training and consulting, built the global business and developed the Scotwork product portfolio.

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