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Prospective Hindsight Makes for Better Negotiation Outcomes

Have you ever taken part in a pre-mortem? It's more fun than it sounds. You get to put on your black hat and be the 'realist' without being labelled a dissenter.

The pre-mortem technique is used at the planning stage of a project. Once a proposed project has been thoroughly outlined, the group is told the project has failed spectacularly (hypothetically) then participants are asked to proffer plausible reasons for the failure. The reasons extracted are then used to strengthen the project at the planning phase and enhance its chance of success.

The technique was developed by research psychologist, Gary Klein, as a result of an earlier study which found that prospective hindsight – imagining that an event has already occurred – increases the ability to correctly identify reasons for future outcomes by 30%.

A pre-mortem is useful for a number of reasons; it identifies potential problems early on, it reduces groupthink, it makes team members feel valued, and it prepares the group to spot trouble once the project gets underway.

In a recent TED talk, neuroscientist, Dr Daniel Levitin suggested we could utilise the pre-mortem more broadly in our individual lives to help prepare for stressful situations. When we encounter high stress situations our systems produce cortisol. Cortisol is a toxin which clouds our thinking. This is an evolutionary adaptation – part of our fight or flight response which inhibits non-essential functions (like rational thinking) so that it can turn on/up mechanisms essential for survival.

It’s useful to recognise that when you’re under stress you’re not going to be at your best.

A pre-mortem ahead of a potentially high stress situation or meeting can help ensure that rational, logical thinking is available to you, despite the inevitable brain-fog. You’ve already thought through what could go wrong and how you would handle it to achieve your desired outcome, so that, as he puts it, “you don’t have to manufacture the chain of reasoning on the spot.”

Applying this to complex sourcing, such as the kind of big outsourcing deals we at Voco often facilitate, the pre-mortem ought to naturally occur through the tender/proposal/negotiation process. The desired outcome for both parties is a set of arrangements that identify and mitigate long-term risk. This is where rational, logical thought looking forward to a mutually intended horizon, needs to be at its best. The trouble is, this phase is also incredibly high-stress. No wonder negotiations can and often do become frustrating as the parties, in their stressed-out state, see sinister shadows lurking behind every service obligation, every contract clause. Much that should be considered good risk mitigation is instead seen as a trap.

In complex sourcing contexts the stakes are high – as is the cost to result. Pre-mortem thinking can be applied by both parties early as part of active qualification. As the ‘man in the middle’ I can see how powerful this technique could be. My advice? Clients: think ahead and explicitly seek to bring prospective suppliers’ approach to risk management to the surface before you select respondents. And suppliers: be up-front with prospective clients by qualifying the opportunity in a deliberate and highly engaged way.

 

To discuss the topic further, please get in touch with the author, Michael Foley, on 021 777 684.

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