The FT front-page headline last Monday said it all. ‘New Era of Volatiliy Dawning on Markets’. But it was wrong in one respect – this is not a new era. Every follower of economic fashion has long known that political stability, economic predictability and demographic certainty, each a major factor which underpins share prices have been increasingly volatile for some years. The Brexit Referendum, the popularity of the Labour Left Wing, the antics of North Korea, the huge movement of displaced people from Africa and the Middle East into Europe, the election of Donald Trump, the weakening of Angela Merkel, the growing influence of social media and fake news, political interference by one State in another’s domestic affairs; each of these on its own is unsettling. Piling one after another creates such confusion that we are now manifesting a state of Hyperuncertainty, where the future is so difficult to read that as managers and entrepreneurs we begin to fear taking any decisions at all. How should the railways be run? Is outsourcing still a viable option? Whose data is reliable enough to calculate whether a medium-term capital investment can be sensibly made?
The challenge is mirrored at a personal level. We are all psychologically affected; for example, by changes in technology, both good (electric vehicles, online banking) and bad (hacking, rogue cryptocurrencies), or in the rise of aggressive procurement policies which keep costs low (Lidl, Primark) but destroy profitability (Carillion, Capita) and affect our social fabric (empty shops on High Streets, unviable care homes for the elderly). The cumulative effect is that we become unnerved, uncertain, unconfident about the decisions we have to make. Which in turn makes negotiating deals a precarious process.
Scotwork do not believe in obsessing about events which cannot be controlled by the individual. We do believe that there are effective actions deployable by all negotiators which mitigate the effects of uncertainty and which help make the issue of uncertainty more manageable.
Take one macro-economic example – Brexit. Firstly, analysis written today will be wrong by the time you read it tomorrow. The fluidity of negotiating policy is such that no-one, including both Mrs May and M Barnier have any real idea of what their negotiating objectives and priorities are (I do not consider ‘getting the best possible deal’ is an objective). Secondly, how much faith can we put on economic modelling for the effects of Brexit, or any of the other data sources, when they have been so unreliable in the past. The truth is that Brexit is a future event so there are no ‘facts’, there are only opinions. And if and when the UK and the EU do get a ‘deal’ what is the probability that their parliaments will ratify it.
Scotwork has produced a short book ‘Negotiating in Uncertain Times’ for negotiators faced with the effects these and similar problems on their everyday negotiating life. It examines six challenging areas of uncertainty and recommends positive and practical strategies, tactics and skills for each to enhance the capability of negotiators to overcome the uncertainty and improve their deal quality. Here are some taster examples:
Data Uncertainty: If data used to base future deals is becoming increasingly unreliable, recognise that this is a shared problem. Plan strategically to share the problem with your negotiating counterparty, because they have the same issues. Agree how much reliance you will place on suspect data and which data sources can be used to predicate future opinions.
Confidence Uncertainty: If your lack of confidence is weakening your negotiating position, improve your skill at storytelling. Analyse Donald Trump’s technique – he was able to persuade millions of American voters to believe dubious propositions using some simple skills.
Trust Uncertainty: If you can’t rely on the trustworthiness of a negotiating counterparty, even given a previous good relationship, use the negotiating tactic called GTWTWOYT. When they say No to what look reasonable, or they set a red line in an unacceptable place, test the validity by Giving Them What They Want, On Your Terms. So, say Yes to their demand, but only on terms which will maintain the value of the deal for you.
Hyperuncertainty is unlikely to diminish in the foreseeable future, so negotiators need to be capable of dealing with it. As a first step download a free copy of Negotiating in Uncertain Times here.