Psychological Tactics for Effective Negotiation with Maciej Antczak

Hello, my friends, and welcome to another exciting episode of Negotiate Anything. This show is produced by the American Negotiation Institute and with over 5 million downloads and listeners in over 180 countries, listeners just like you have made this the number one negotiation podcast in the world. Hi, my name is Kwame Christian and I am the founder and CEO of the American Negotiation Institute here at A&I. We believe that the best things in life are on the other side of difficult conversations, and we are passionate about providing you with the best content that will help you to make your difficult conversations easier, both at work and at home. Lastly, I want to remind you that we offer consulting and conduct trainings both virtually and in person all around the world. Our focus is in three main areas. First, negotiation and conflict resolution. Second, leadership. And lastly, diversity, equity and inclusion. Check the link in the description below to learn more about how we could work with you and your team. And now, without further ado, let's jump into the interview.

Maciej, thank you so much for joining us today.

Thank you for having me, Kwame. I must say that it feels very special because I've been listening to your podcast for a long time and it has helped me on multiple occasions. So yeah, this is something very special and I'm really glad to be here.

Hey, it's our pleasure. I'm excited to have you. We've been chatting for a while now. We connected on LinkedIn. So listeners, when I tell you to connect with me on LinkedIn, I am. This is not an empty offer. Okay, so make sure you reach out. But yeah, so let's go ahead and get started by telling the audience a little bit about yourself and what you do.

Okay, so. Well, I'm a psychologist and maybe the best or the most accurate thing that I can call myself is psychologist in business because I'm not really a psycho organizational psychologist. I have graduated in psychology in organizational and clinical psychology, but I am not a practicing psychologist. So this is not my area of expertise. And maybe the path that I chose to take was really going to business and to get to know this kind of environment and to have to enrich those business decision or enrich this kind of environment with a psychological mindset. So bring a bit of psychology into business, but not in the coaching way or in a consultant way, but being on the front line but still with psychological mindset because I believe that there are lots of things in psychology, lots of concepts that businesses can learn from or benefit from. So this is what they do. Simply put, right now I'm working in procurement. I have been working in supply chain in Procter and Gamble and before I had worked for IT company. So I've been both on both sides, on the sales side of things and on procurement side of things. And I have seen that it materialize, so to say, in supply chain. So this is my background.

Fantastic. Yeah, and it's an impressive background because I really like how you've been able to marry psychology with what you're doing in the business world because you're negotiating high level content contracts and before you were selling high level contracts as well. So you've been on both sides and you have the psychological background too. And I'm really excited to have this nerdy moment with you because my undergrad degree is in psychology too. And so I love getting deep into that and figuring out how what we, the way that we see the world and these various cognitive processes impact our decision making and our ability to persuade. So this is going to be a lot of fun. And so let's start off by just talking about the benefit of psychology in business as it relates to negotiation. What have you seen?

So to me, it is like I was talking when I was introducing myself, I was talking about the psychology in business and to me that so underestimated. I think that it is puzzling to me that so many bright people like when, when I see people negotiating and people who are in procurement or in sales, there are hundreds or thousands of bright people. They are, they are very intelligent, they are motivated. But a vast majority just thinks about the techniques, about the, you know, the how they, or they prepare to negotiations. They read a lot of, they try to be better and better, but they still often skip a very important or to my understanding, the most important part of it, which is training your thinking. And that thinking is not only something that you are born like you have a brain that you were born with and you have just a certain level of iq. It is a skill to be learned and to be polished. So I think this is something that is not realized to the extent that it should, especially in negotiations. So when we think about, you know, how to be better at using our gestures, about using our nonverbal communication, how to keep the right level of eye contact and so on. And then you realize that you didn't do that. You didn't, you don't, you might not have the proper foundation for that because you like, if you choose to go with the metaphor of a war or a battle, then you might say that you have invested in banners, in weapon, but you are just giving all of that to raw recruits, to people who don't know what to do with it. So if you have got all the skills, but your brain doesn't function or your brain doesn't realize it does mistakes and doesn't learn, then you are still an army of recruits and your lines are going to crumble and certain point in time, so you are, you are left with nothing but banners and with nothing but, you know, very fancy equipment which cannot do any harm. So that's why I think it's so crucial to bring the psychological mindset into negotiations.

Yeah, definitely. That makes a lot of sense. You're spot on, spot on. And you're right. I think a lot of times we focus so much on the tactics, what we should do, but we don't think about how we think. That whole metacognition that comes into play right, just for ourselves and then understanding other people as well.

It is fascinating to me. And I think that we can learn a lot, in fact, from psychotherapists. Like, if you think about negotiations, then this is something that, that excites you. That's something that you are emotional, emotionally very engaged. So you should be even more cautious in this situation because you are so emotionally tight and so emotional, so excited about it. So you know that this, this is something meaningful to you. So in case of psychotherapy, you have this kind of supervision or something like that, or you try to have this kind of meta level that you are looking at yourself, say, from outside and analyzing your own behavior. And I think that we are sometimes in negotiations losing this kind of point of view, that you are not using this meta level to analyze your own negotiations, which I think brings huge benefits.

Absolutely. And so for our listeners, I know the big question that they want to ask is how do we make our deals better? And so when it comes to the different cognitive biases that might negatively impact our outcomes in these negotiations, what do you think comes into play when we are regularly entering into bad deals?

Well, I think in general, it is good to understand that our errors are not errors in every context. They are not errors just in general. They are sort of a byproduct. So when you think about our own thinking and about our own mind, you might you as an under, as you have graduated in psychology, then you might recall Kahneman and the System one and System two idea. So our minds in general uses two different ways of processing information. And the first one, the System one is something that we might call the. I really like the phrase in America or in English, because I think it transfers the meaning, so that the gut feeling. And I think that really, really well illustrates what the System one is. It is very emotional, it is fast, it's very responsive. So you can quickly make a decision. You can quickly. If you were running away from a lion, then System one would be the one that would make it possible, right? So this is the tool that you would use. On the other hand, we have the System two. And System two is something that is much more logical. It enables us to explore things, to solve complex problems. The problem is that we are often using the System one when we should really be using System two. And because of the fact that our environment changed so much from the evolutionary days, evolutionary era, or our evolutionary environment where we were being chased by lions, it's changed so much. You are right now surrounded by, you know, skyscrapers and so on, and you are in this complex civilization with this complex behaviors. So this environment demands from you more and more using the system 2 instead of system 1. But because of the fact that system 1 is so fast, it's so energy efficient, it feels good to use it. Simply put. So then you are just reverting back to the System one. And maybe just as a background, it is important to understand that the heuristics that we are using, so the mental shortcuts that we are using to process the world in an easier way, they are not bad per se, they are not bad in general because they made you survive. But they are bad in a certain context. And negotiations is the context where we should be using System two, because this is like solving a complex problem. Exactly that. So in case of entering. That was a long way. That was a long introduction to answering your question. But I think that what makes us enter the deals, the unprofitable deals, is the confirmation is the sunk cost fallacy. And let me explain. Why.

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So when you think of negotiations, the negotiations is often the last step of a very long process. So it is not that you are just going into negotiations and this is the moment where you learn about everything and so on and that no, this is not the case. Negotiations may often be few hours of a few months process. So when you think about that before those negotiations, what happened is that procurement has been preparing for a very long time. They have been drafting the RFX strategy, they have been, they have been drafting contracts, they have been consulting lawyers, they have been consulting their stakeholders. They have invested a lot of time, energy and money into making this process right. And the same happened on the second side of the deal. So when you think about salespeople or sales reps or key account managers, whoever is negotiating the deals from the sales point of view, then those guys have been preparing to nail this deal for a very long time. They were preparing the beats, they were preparing offers, they have, some marketing agencies might have been preparing mock ups and so on. So again, those people have invested a lot to make this happen. And then when you come to the negotiations, you are at the end of this very long process and you are under huge pressure to strike the deal. You are under huge pressure from your stakeholders, under huge pressure from your, you might be under a huge pressure from your company to, to make this work out to, you know, to have the return on investment. You have invested a lot and now everybody wants that to pay off. To pay off. So nobody wants just to say like, okay, we have just spent few hundred thousand dollars on nothing to learn that we could have done something different. Nobody wants to say that. So in this case we just follow along and we sometimes sign our own death sentence because we are under so much pressure or we just don't see any. We, we fail to see different options because we are so tied to the costs that we have already paid. Right.

Makes a lot of sense. And I think this is something that we all fall victim to in not just in negotiations, but in general, in all aspects of our life.

I think it is, that's what I think that's, that's great that you asked about it and I can answer that. We are talking about the confirmation bias about this sunk cost fallacy about in the beginning because I think that it is, it is one of the things that even the big corporate businesses are prone to. You might think about the, you know, different biases that you have that, you know, if you are a consumer, you are more, it is more probable that you fall prey to them because you are not prepared in this way. But in this case, I think that both consumers and the corporate, like even corporate businesses, they are all equally, all equally likely to enter this kind of bad deals for this reason.

Right? It makes sense. It makes a lot of sense. Yeah. And it's unfortunate too, because people really, really, really want to feel as though there's going to be a payoff for the work that they did. Yes, that's the thing. It's an emotional thing. It's like you said, we have that gut feeling. And that gut feeling says, don't lose what you did. And it's fear of loss that keeps us in those deals.

It's so funny that you mentioned that it's not only negotiations because I think that like even overeating may be a good example of that. So when we commit to a given behavior, then we are just, we are failing to see any other options. We are not leaving this food on the table. We are just, no, we are going to finish it. So it is, it is in a sort of, sort of way funny, but it has very bad consequences in all ways. So, yeah, I think that we should also learn from the project management, from the guys in project management, you know, and think of that, of that process, negotiation processes also in the project management way, because there, the alternative cost and all the other functions that are, with the weighing the options, they are much more. They are pretty structured. So we can also learn from project management because they are talking much more about the sunk cost fallacy. They are more willing to consider that as a factor in their daily life. I think that in negotiations we sometimes think of it as an art and we might fail to put some structure on it.

Makes sense. And what do you think about the impact of confirmation bias on these deals as well?

I think that if we say that sunk cost fallacy makes you enter a bad deal, then confirmation bias makes you stay in this deal instead of exiting it. Obviously, apart from very bad exclusivity paragraphs or something like that, or very bad termination clauses. Apart from that, a very big reason is confirmation bias. Because if you believe in something like, for example, let's say that I am a buyer and I think that this kind of structured rfx, like structured auction, let's say auction or reverse auction, is the best way to get the right product or deliver the right value to the company, then I might be unconsciously gathering and interpreting and looking for the information that will confirm my choice. So if I have chosen a supplier because I was using my certain beliefs about the procurement process and this choice is the result of this process. Then I might be looking for measures of, say, supplier performance or how I value the deal. I'm looking for the measures that will be, that will confirm it. And the same goes for sales. If your core belief as a sales rep is that I must have big clients, I must have big customers, I'm aiming for big names like I want to have this corporation in my portfolio, then you might be unconsciously picking the measures or the ways to confirm your belief. Like if. And that's why you have the. You first have the sourcing when in the sunk cost policy, you go with the wrong deal. Then in contract management or in the account management, you might say you are picking the measures that will confirm that you have made the right choice in sourcing, or you have picked or you have won the right customer in the first phase. So it is like a vicious cycle. You might be repeating this model forever and you might be entering a bad deal, then assessing the bad deal with measures that will confirm that this is a good deal and then you enter it again. As long as your company has money, you can do that. But it's not very profitable. I think that they create a perfect couple, so to say the sunkos. For us. You have confirmation bias.

Yeah. A very dysfunctional couple.

That's definitely a relationship that you don't want to be a part of.

Exactly. Well, I think, I think relationships are a great example of both of them. Right? Of both of those biases.

Yes.

Because a lot of times we end up in relationships that we should have exited a long time ago. That's true. We say we invested two years into this person, then I'm not going to let it go.

That's, that's, that's, that's so true. And I think that it also, it also illustrates that, you know, the first thing that is that you don't want to take this cost, but you are also not. You also know that you are going to take this cost. You are, you will have to accommodate this cost if you are going to, you know, meet and another person and you are going to be in another relationship. So it's like double losing. Losing twice, so to say, because you first have to. No, you think about all this cost that you have already incurred and then you think that, oh my God, I'm going to do it again. So it's a double trouble.

Yeah, it's a tough situation. And I really like the point that you made when it came to confirmation bias, because with confirmation bias, it impacts not Only what we see, but also what we look for. And so, for instance, if you're doing due diligence on a company that you want to do business with, you would look for positive articles about this business. You're not going to say ABC Corp. Bad, you're going to Google ABC Corp. Good. And it skews the information that you see. So it's not even just the fact that you're not processing it the right way, but you're even cherry picking the information that you allow your brain to process.

Yes. And I think it's important just to highlight the fact that it's not something that somebody is doing something that somebody is performing those actions, doing something wrong. They are not. This is, this might be totally unconscious. This is not about people doing wrong things. This is a separate thing that people maybe, maybe there might be fraudulent behaviors in a company or people just want to, you know, get a promotion and just make sure that their superiors think of their deals as the best ones. But this is totally separate. This is about tricking your own brain. So you are tricking your own brain into thinking that you have done the right thing, when in fact you have done something that's not to your advantage.

Exactly. This is great. Well, perfect. Well, let's move on to the next one where we talk about negotiation and information. And so something I always say on the podcast is negotiation is an information game. We want to learn as much as we can. And so you have a very interesting take on that concept. So I wanted to give you an opportunity to talk about that too.

And that's true that you talk about it a lot. And I remember, I really recall the episodes that you were mentioning. And I thought that, well, that's insightful. That's something that sometimes seems so obvious, but we still forget about it, that we just love to talk, love to give our knowledge to people who we are trying to win the negotiations with or, and we are still falling prey to that. But I think that it is, as you mentioned, the information. There are situations in which gathering more information may be to your disadvantage. So this is something that's called information bias. So I think it is, the point that I want to make is that if you are gathering lots of information that you are trying to have a very, very good grasp of every, every subject that you are negotiating on, that you are trying, so to say, become an expert in things, that you are trying to comprehend all the knowledge that the other party has. And you are trying to become expert yourself. You are, you might become overwhelmed with this information. So this can, all this can also be. So our cognitive resources are limited and they cannot be expanded forever. So if you think about this, getting all this information or comprehending all this information, you simply may end up in a stalemail because your brain will no longer be able to make use of this information. So information is good as long as your brain can do something with it. When, when you have the amount of information that prevents you from, from actioning, for taking the decision, it is actually a very bad thing. And I think it is especially important in cases, when you are negotiating something that's not of a high value to you, that's something that is not. You know, like when, when you are not buying a house, but you are buying a, a chair and you are trying to become an expert, you know, you know, in buying a chair, you might think that everything, you might say that everything is a chance for negotiations. But I think that for the sake of sanity, you have to very carefully pick what you are negotiating and in which cases exactly, you want to become an expert and gather more information. And I think that a good way of thinking about this, about this information overload or this information bias, that more information is always better, is that how much can you gain by gathering more information? And is this gain more than what you are losing on doing this research? So you have this kind of balance, I'm doing, I'm wasting, or I'm investing my time in research. So this takes time, takes my time. You know, my. If you say time is money, then obviously this has a certain cost to it. And on the other hand, you have certain gains that you can get from gathering more information. And sometimes, like when you are picking a hotel, for example, you might say that investing two days or three days into looking for a hotel that will be marginally better than the one that you would have picked in two minutes is just a pure waste of time.

Right? You're spot on. You're spot on. And the term that comes to mind for me is satisficing. So the blending of satisfaction and sufficing like this is enough. And it's really hard to do. And I think a lot of times our over analytics, our over indulgence in information comes from fear. And a lot of times we procrastinate through information gathering. And one of the things I've started to do is set a shot clock for me. So that's a term from basketball. So you know, you have 24 seconds to shoot a, shoot a basket in basketball. And so I say, okay, in order for me to prepare for this negotiation, I need to put a cap on it. So I'm only going to prepare for 90 minutes, and I'm going to set a timer on my phone, and wherever I am, I'm done. And so for me, especially when I was practicing a lot as a business lawyer, I have to be mindful of the clock too, because I can't just waste the whole retainer on preparing and then tell my client, hey, I just blew through thousands of dollars doing some Google research. But hey, I'm really prepared and if you pay me more, I'll actually be able to perform by that time.

Good for you.

Exactly. I'm getting a new lawyer. So, yeah, I think that's a, that's a really great point. And so when it comes to recognizing that, that potential limit, what are some things that they should keep in mind when it comes to understanding when you know enough?

I think that what I mentioned, that weighing the potential benefit of the deal versus the potential loss of the time that you are dealing with, pretty much this balance between the gains and losses can give you a good grasp of whether you are on track. And the problem with that is that people often don't think of their own time in terms of resources. So this, this might be, you know, that I'm looking for something and, you know, I might be looking for something for two days and if I, if I save on a $2, well, I can be proud of myself because I have saved $2. But, yeah, okay, but you, you could have, you know, earned $200 in this time. So you are not, you have not. This was not a great deal. But, but I think that this is, this is the, the main culprit, so to say. So this is the problem that people don't think of their time as they would have been thinking about money.

Yeah, that makes a lot of sense. I think you're spot on. And then just for the interest of time, I want to move on to the next one, which is, which is really interesting. And it's called the incentive super response bias. So can you tell us about that?

Yes, sure. This is a very sophisticated name for something very simple. But that's, that's something that I really enjoy talking about because I think this is a big, big problem sometimes in procurement or it is a problem for whoever who tries to be excessively objective. So if we are looking for very objective measures of something, of some things, like, for example, we are trying to break everything down into hourly rates, we might end up with suboptimal Results, to say the least. So this originated from my conversation with a marketing manager. Like, my cousin is marketing manager and I've been talking to him about how procurement hates marketing and how marketing hates procurement because they are trying to do the, they are trying to do the reverse. So in procurement, you might be laughing that they are willing to pay, that marketing might be willing to pay everything and just disregard all the kind of, you know, terms and conditions for the sake of a premium feel. And on the other hand, that marketing guys might think, you know, that procurement is just lacking the imagination to understand this idea that they have in mind. And I think that what procurement sometimes tries to do is to be very objective and try to put very objective measures. Like in case of marketing agency, you might ask for hourly rates. So you try to have a grid with hourly rates of marketing. Obviously, this is not normally the only, the only factor. I was looking for a word for too long. Sorry. This obviously is normally not the only factor. But still we are, we are very drawn to look for something that looks like apples to apples. We are looking for something that we can compare between. So if you are doing that, you might, you have to be very careful because by doing that, you might be incentivizing the wrong behavior. So in a nutshell, you might be, you are actually paying for what you are looking for. So you are just getting more of what you have paid for. So if you are paying for the hour, you will get more hours. So this is, this is something that is very easy to understand, but it still happens. And if you think that you are, you, you know, you in this, for example, tier of a marketing director, or let's say marketing manager, you're paying less and you are, well, I'm great. I have chosen the best agency, they can deliver all that and they have the best hourly rates. Then you will see a very, very long hours that they have worked on it for long hours for some reason. So the invoice might still be same. You might not have, you might not gain anything, but you accept from your own feeling, being objective. So what's important to keep in mind is to incentivize the things that you are looking for, not, you know, some kind of byproduct of that.

That's really interesting and it makes a lot of sense and especially for me as a lawyer, we see this when you're, when you're paying your lawyer by hour, sometimes the retainer just magically seems to disappear, you know, and so it's a, it's a tough situation. And to clarify, I am not talking about me. I know in the interest in the industry in general that has occurred. And so. But I think it's really important to keep those things in mind. And I love the example that you gave because it's not just with our external types of negotiations. It's also internal with the people that we work with. We want to incentivize people properly. And a lot of times we don't put enough thought into what the incentives we're utilizing could end up creating. And I think a great resource for people on this is Anything written by Dan Ariely. It's really interesting talking about how sometimes the very things that we are seeking to incentivize are actually diminished by our endeavors. So I think that's first of all, new term for most people, the incentive super response bias. And I think it's very informative too. And I know we're coming up on time here. So before we go, I want to give you an opportunity to leave the audience with a little bit of advice based on everything that we talked about today. What are some key things that they can take home in order to improve their negotiation outcomes?

Sure. I think it's a very valid point to have something a bit more general as an advice because we have been talking about very specific cases. But if you look for the cognitive biases, there are hundreds of them or hundreds of fallacies. So you might be lost what you should be doing. And I think that two things that are applicable to almost all biases is first of all to look at your resources. So you should be looking at what you might be missing. So which resources I might be missing in negotiations. So am I missing time? Do I have enough time? Did, like, am I missing expertise? Am I like. Because I'm just trying to make a decision and I really don't have enough knowledge to do that or you know, am I missing any other kind of resource? So you might, you might think about very specific, about very specific cases. Like if you, if you, do you really want to call instead of mailing or do you really want to pick up the phone because then you might have less time and are you prepared to do that? So you might think how prone you are to certain, certain errors to start certain problems with your thinking in terms of those resources that are scarce and the other, the other part of it. So first, first of all, look at your resources and pay attention to the ones that might be scarce. On the other hand, you should be looking at the part like if you divide the thinking process or your decision process into two very big, very like general stages. You might first of all look at what presents to me as an available option, and then you might look at how am I judging those options? So even something as easy as that, as, you know, separating those two stages can be very beneficial. But if you, if you even ask yourself this question that, am I missing something? Is it, is it possible that I have not been taking into consideration some option which deserves my attention? And then when you go to the later stage, am I giving equal opportunity for these alternatives? You know, am I giving them enough time? Am I. Am I'm giving them enough attention? So I think this is obviously very generic and you might go into more detail when you think about specific biases, but I think those two are applicable almost everywhere.

Absolutely. And yeah, I think that's a great place to end because again, we're encouraging self awareness to recognize that there is actually something to think about, because that's the biggest problem when it comes to these logical fallacies is that we're not aware that they're occurring. We think we're thinking appropriately. And so just becoming more aware of them can help us to take notice of our cognitive processes to make sure that we're doing the right thing. So I appreciate this. This has been a lot of fun. Maaje, thank you so much for coming on the show and we're looking forward to have you back very soon.

I'm really glad that I have joined and I'm really glad that you have invited me. It was really a pleasure to speak to a fellow psychologist about negotiations.

So likewise, my friend.

Thank you very much.

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