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Negotiators Like to Take Risks
by Ed Brodow

I coined the term, "negotiation consciousness," to describe the willingness of successful negotiators to be assertive and challenge everything. Implied in this concept is the practice of taking reasonable risks based upon reliable information. Negotiators understand that we all need to take risks. Face it, you wouldn't be alive and reading this if your parents hadn't taken a risk.

The opportunity for taking risks occurs in every step of the negotiation process. Taking risks can involve asking for more than you think you can get. It can involve giving the other side an ultimatum -- take this or else.

Or it can manifest itself in the form of theatricality. Have you ever taken the risk of getting emotional in a negotiation? Next time you buy a car, for example, try a little old-fashioned anger and threaten to walk out. How do you feel when someone else gets emotional? Suppose you have to fire an employee and they start to cry. (It happened to me.) Histrionics can be effective.

When it comes to taking risks, the real question is, "How much risk is justifiable?" My grandfather risked everything he had in the stock market. It must have appeared to him as a reasonable risk. Unfortunately, the year was 1929 and he was wiped out. My grandmother didn't think it was reasonable. She never spoke to him again.

I read a remarkable story in the newspaper about risk-taking. It seems that a man in Arles, France, made a deal with a woman for what we would call a reverse mortgage. The deal was this: he agreed to pay her $500 a month for the rest of her life. In return, the ownership of her apartment in Arles would revert to him upon her demise.

What was the risk factor in this deal -- the woman's longevity, right? Well, you'll be relieved to know that our risk taker was pretty smart -- he was 47 and the woman was 90 years old! A great risk, wouldn't you say? Well, guess again. The man just died at the age of 77 and the woman is the world's oldest person at 120! (What makes it even worse -- or better, if you're the old woman -- is that the man's widow is required to continue the payments.)

There is an important lesson in this. Don't move to France! (Just kidding.) The lesson is that we need to assess the viability of the risk AND our options if the risk turns sour. Select an upcoming negotiation and ask yourself these two questions (from my book, Negotiate With Confidence):
  1. "How much risk am I comfortable taking in this negotiation?" If you are selling your house, how long are you willing to hold on before you drop your price? If it's a seller's market, it may be a viable risk to wait until you get your price. If you're in a buyer's market, however, you may want to grab the first warm buyer who comes along.
  2. "If I take the risk and it doesn't work out the way I hope, what options/alternatives do I have? Do I have a Plan B?" If you lose a buyer for your house because you won't budge on the price, are you likely to have other buyers knocking at your door? Brodow's Law says: Always be willing to walk away -- never negotiate without options! If you want the deal too badly, you lose your ability to say no. Don't place yourself in a position where you have no options.
What might Plan B have been for the poor fellow in Arles -- a hitman? (Don't get me wrong, it just sounds like the screenplay for one of those zany French comedies.) In this case, the risk might have been more viable to a bank with better options -- a bank would have other deals to offset this one. The viability of the risk is relative to the nature of the risk-taker.

The key thing to remember is that successful negotiators take reasonable risks based upon reliable information. Have you taken any risks lately?

Ed Brodow is a motivational speaker, negotiation guru on PBS, and author of Negotiate with Confidence and Beating the Success Trap.

Copyright © 2005 Ed Brodow Seminars, Inc. All rights reserved.

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