| In part one, we began to explore the President’s predilection for unpredictability as a negotiating tactic. Using his example, we have so far uncovered little practical use, but some ominous concerns, for our own negotiations - at least as a bump-and-run tool to generate quick wins. Happily, for most of us our dealings are longer term. Might the President's concept of what I've called Randomly Unpredictable Behavior give you an edge in deals that are worked out over time? |
Part 2: The President Tweaks the Australians.
This time, we start by making you the King. And I hereby christen you NOT one of them fully tethered, tamed and enlightened constitutional monarchs, but a good old school, covetous, self-centered divine-right-of-kings type King. Next, let’s say you, as King, want something, and you want it bad. But you've got no good argument for having it. So, instead of mounting an argument, you go all unpredictable. You make odd demands, you backtrack on prior concessions. You might become aloof, or imperious, or incoherent, or even threatening. If you're in a power position, the other side may just decide - quite reasonably, by the way - that it's wiser to take what they've got in hand rather than face a worsening situation. I've called this Studied Pre-Emptive Bait-Cutting. They cut bait, you win...
This time, we start by making you the King. And I hereby christen you NOT one of them fully tethered, tamed and enlightened constitutional monarchs, but a good old school, covetous, self-centered divine-right-of-kings type King. Next, let’s say you, as King, want something, and you want it bad. But you've got no good argument for having it. So, instead of mounting an argument, you go all unpredictable. You make odd demands, you backtrack on prior concessions. You might become aloof, or imperious, or incoherent, or even threatening. If you're in a power position, the other side may just decide - quite reasonably, by the way - that it's wiser to take what they've got in hand rather than face a worsening situation. I've called this Studied Pre-Emptive Bait-Cutting. They cut bait, you win...
As the newly minted Leader of the Free World, President Trump seems to have attempted something along these lines with the Australian prime minister, Malcolm Turnbull. The previous US administration had committed to taking a group of refugees from Australian care. Simply accepting this deal would have run counter to much of Trump’s campaign rhetoric. So out of left field (actually, on the phone) he started ranting wildly. “This is the worst deal ever!” he screamed at the sovereign leader of an allied nation, as though arguing over a parking spot on the streets of New York. Then he hung up. There was a uproar similar to when he tweaked the Chinese, but different: the Australians? Why? They’re just so...affable. Eventually, things calmed down. A month later the President assigned Vice President Pence the task of accepting the deal as it had been originally promised.
So, in this instance, unpredictability certainly didn’t render a quick, frightened Hair-On-Fire type win versus the Australians. But what about over the longer term? Could there be introduced into Australian negotiating behavior a hesitancy, an unwillingness to push back? Might they be quicker to accept the deal that’s in front of them, rather than angling for more, out of fear of triggering the President’s tetchy caprice?
Well, we can be pretty sure they won't be asking us to take refugees off their hands any time soon. And they may be more sheepish in asking for concessions in future negotiations over…what?...wool? Perhaps they’ll be more amenable and responsive when it comes to American preferences on defense cooperation. Perhaps.
However, there’s reason to believe that, in this case at least, the opposite may prove true. The negative effects of wrong-footing Turnbull have been (1) putting stress on the US relationship with the Australian public as well as its leadership (both of which groups have been vocally resentful), while (2) arming internal factions that would have Australia turn toward China as a prudent counter-balance to American unpredictability. This in turn could make it harder for an Australian leader who believes that working with the US is his best bet, to choose to do so.
So, even for the King - or in this case, the Leader of the Free World - self-interested irrational unpredictability has limited applicability and significant downsides. However, we should never say never. I can actually imagine this very same dynamic working out reasonably well in, say, a potential renegotiation of the NAFTA agreement. We are after all the centerpiece economy in that grouping. Presumably both Mexico and Canada feel they currently get so much out of the deal that they'd be willing to make concessions to appease an angry US electorate. Trump could even be right that the way things have played out have left the Americans with the short end of the stick. However, encouraging the other two players to return to the table when there are only downside outcomes in the offing for them could beggar both reason and charm. Threatening to pull out of a deal that is by all measures currently a good one for the US could effectively force the other two to the table - if they buy that US leadership is disgruntled and unpredictable enough to follow through on the threat. Should it pan out, this outcome is better than reasonableness and rationality might ever be able to deliver. As always with these sorts of tactics, the gain requires cashing in some goodwill. Depending on what you’re able to get in return, the result could be worth it.
The same dynamic exists with respect to America’s relationship with NATO, and on the Paris climate accords. We're the gorilla. It is probably not coincidence that our Unpredictable President has lumped all three into the pile of relationships to be re-negotiated. Beneath the bluster, a pattern is showing.
In the business world, if you're a dominant player - a GM of old, an IBM of old, a Microsoft of old - there might be efficiencies for you in the deployment of unpredictability. Should you find yourself in negotiation with someone who, for whatever reason, absolutely has to do business with you, you’ve got big leverage. Choosing to be unpredictable rather than rational could render returns. The problem is, in a market economy what goes around tends to come around. Even if you're big. There's a reason why I refer to those companies above as “old.” GM experienced bankruptcy at least in part because its suppliers were weakened by years of GM’s weighty one-sided dealmaking. And these days Microsoft is being lauded for their newly cooperative attitude, which is entirely a response to the newfound scale of competitors like Google and Facebook.
As for using unpredictability in your own negotiations, again, there are really only two viable applications. The first is if you’re facing someone inexperienced and easily shaken. Unpredictability can trigger a Hair-on-Fire bail-out that renders a quick victory. The second occurs when you have overwhelming advantage and the other side needs the deal. Fearing your future unpredictability could trigger a well-considered decision to cut bait and accept a lesser deal now. In each case, however, if the other side stays calm, your credibility is at risk. And you had better hope the power dynamic is never reversed, or they'll likely dedicate themselves to getting their own back. It’s worth bearing in mind that Richard Nixon called his version of unpredictability The Madman Theory. This is one of those times when we might want to consider the source. No one deals with a madman unless they have to.
One Last (Rather Major) Concern
There’s one last concern to be factored in to your potential use of unpredictability - or indeed of any hardball negotiating tactic that encourages hasty or worried decision-making on behalf of the person you’re negotiating with. When you succeed at inducing a Studied Pre-Emptive Bait-Cutting, you certainly get to keep whatever concessions you had up your sleeve. However, you also lose access to whatever they might still have had up theirs. Further, let’s say that the person across the table happens to be affable, amenable, flexible, capable, and creative. Now imagine that there’s a better idea out there - a new, better, innovative way of structuring your relationship, one that generates value and puts you ahead of your competitors. As we mentioned above, most of the easy good ideas have been thought up. Manufacturing innovation in the modern economy takes time, trust, and an intimate knowledge of what the person across the table is capable of. In figuring out how to do what’s never been done, it’s pretty easy to see that two brains are better than none.
To gauge the costs, do this. Imagine yourself returning home, self-satisfied at all that you have saved by bumping me into cutting bait. Now imagine your competitor, at that very moment, cutting that better, more innovative deal.
So, What’s the Attraction, then?
If the applications are limited and the downsides significant, what then is attraction of unpredictability? I have a feeling that in many cases it’s got to do with control, or better said, feeling a lack thereof. Negotiation is almost by definition an uncomfortable affair. You never know exactly what the other side might be willing to do, exactly how to find out, whether you already have. Negotiation happens up in the air; most of us prefer solid ground. Deploying elementary negotiating tactics like unpredictability can feel like you’ve planted your feet, that now you're calling the shots. And you are, even if just temporarily, and even if everyone's looking at you funny. The problem is what comes after.
While it's good to be the King, throwing your weight around always has repercussions. In this country, bitterness led our forefathers to contrive rather forceful workarounds to Kingly Willfulness. For most of us, most of the time, it's probably best not to have those we negotiate with contemplating similar means.
So, in this instance, unpredictability certainly didn’t render a quick, frightened Hair-On-Fire type win versus the Australians. But what about over the longer term? Could there be introduced into Australian negotiating behavior a hesitancy, an unwillingness to push back? Might they be quicker to accept the deal that’s in front of them, rather than angling for more, out of fear of triggering the President’s tetchy caprice?
Well, we can be pretty sure they won't be asking us to take refugees off their hands any time soon. And they may be more sheepish in asking for concessions in future negotiations over…what?...wool? Perhaps they’ll be more amenable and responsive when it comes to American preferences on defense cooperation. Perhaps.
However, there’s reason to believe that, in this case at least, the opposite may prove true. The negative effects of wrong-footing Turnbull have been (1) putting stress on the US relationship with the Australian public as well as its leadership (both of which groups have been vocally resentful), while (2) arming internal factions that would have Australia turn toward China as a prudent counter-balance to American unpredictability. This in turn could make it harder for an Australian leader who believes that working with the US is his best bet, to choose to do so.
So, even for the King - or in this case, the Leader of the Free World - self-interested irrational unpredictability has limited applicability and significant downsides. However, we should never say never. I can actually imagine this very same dynamic working out reasonably well in, say, a potential renegotiation of the NAFTA agreement. We are after all the centerpiece economy in that grouping. Presumably both Mexico and Canada feel they currently get so much out of the deal that they'd be willing to make concessions to appease an angry US electorate. Trump could even be right that the way things have played out have left the Americans with the short end of the stick. However, encouraging the other two players to return to the table when there are only downside outcomes in the offing for them could beggar both reason and charm. Threatening to pull out of a deal that is by all measures currently a good one for the US could effectively force the other two to the table - if they buy that US leadership is disgruntled and unpredictable enough to follow through on the threat. Should it pan out, this outcome is better than reasonableness and rationality might ever be able to deliver. As always with these sorts of tactics, the gain requires cashing in some goodwill. Depending on what you’re able to get in return, the result could be worth it.
The same dynamic exists with respect to America’s relationship with NATO, and on the Paris climate accords. We're the gorilla. It is probably not coincidence that our Unpredictable President has lumped all three into the pile of relationships to be re-negotiated. Beneath the bluster, a pattern is showing.
In the business world, if you're a dominant player - a GM of old, an IBM of old, a Microsoft of old - there might be efficiencies for you in the deployment of unpredictability. Should you find yourself in negotiation with someone who, for whatever reason, absolutely has to do business with you, you’ve got big leverage. Choosing to be unpredictable rather than rational could render returns. The problem is, in a market economy what goes around tends to come around. Even if you're big. There's a reason why I refer to those companies above as “old.” GM experienced bankruptcy at least in part because its suppliers were weakened by years of GM’s weighty one-sided dealmaking. And these days Microsoft is being lauded for their newly cooperative attitude, which is entirely a response to the newfound scale of competitors like Google and Facebook.
As for using unpredictability in your own negotiations, again, there are really only two viable applications. The first is if you’re facing someone inexperienced and easily shaken. Unpredictability can trigger a Hair-on-Fire bail-out that renders a quick victory. The second occurs when you have overwhelming advantage and the other side needs the deal. Fearing your future unpredictability could trigger a well-considered decision to cut bait and accept a lesser deal now. In each case, however, if the other side stays calm, your credibility is at risk. And you had better hope the power dynamic is never reversed, or they'll likely dedicate themselves to getting their own back. It’s worth bearing in mind that Richard Nixon called his version of unpredictability The Madman Theory. This is one of those times when we might want to consider the source. No one deals with a madman unless they have to.
One Last (Rather Major) Concern
There’s one last concern to be factored in to your potential use of unpredictability - or indeed of any hardball negotiating tactic that encourages hasty or worried decision-making on behalf of the person you’re negotiating with. When you succeed at inducing a Studied Pre-Emptive Bait-Cutting, you certainly get to keep whatever concessions you had up your sleeve. However, you also lose access to whatever they might still have had up theirs. Further, let’s say that the person across the table happens to be affable, amenable, flexible, capable, and creative. Now imagine that there’s a better idea out there - a new, better, innovative way of structuring your relationship, one that generates value and puts you ahead of your competitors. As we mentioned above, most of the easy good ideas have been thought up. Manufacturing innovation in the modern economy takes time, trust, and an intimate knowledge of what the person across the table is capable of. In figuring out how to do what’s never been done, it’s pretty easy to see that two brains are better than none.
To gauge the costs, do this. Imagine yourself returning home, self-satisfied at all that you have saved by bumping me into cutting bait. Now imagine your competitor, at that very moment, cutting that better, more innovative deal.
So, What’s the Attraction, then?
If the applications are limited and the downsides significant, what then is attraction of unpredictability? I have a feeling that in many cases it’s got to do with control, or better said, feeling a lack thereof. Negotiation is almost by definition an uncomfortable affair. You never know exactly what the other side might be willing to do, exactly how to find out, whether you already have. Negotiation happens up in the air; most of us prefer solid ground. Deploying elementary negotiating tactics like unpredictability can feel like you’ve planted your feet, that now you're calling the shots. And you are, even if just temporarily, and even if everyone's looking at you funny. The problem is what comes after.
While it's good to be the King, throwing your weight around always has repercussions. In this country, bitterness led our forefathers to contrive rather forceful workarounds to Kingly Willfulness. For most of us, most of the time, it's probably best not to have those we negotiate with contemplating similar means.
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