How ambitious should your goals be when you negotiate?  Is your answer “ambitious to the point of lunacy”?

Maybe it should be.

Some new research by two Georgia State University researchers (Ed Miles and Beth Clenney) looked at the effect of setting extremely challenging goals in negotiation.  What was ‘extremely challenging’?  In their study, it involved creating every possible dollar of value by making perfectly efficient tradeoffs, leaving not a single dollar of value ‘on the table’… and then, with that in place, claiming 130% of your even share of that value.  Negotiators rarely are able to squeeze every bit of value out of a negotiation.  Previous research shows that getting 104% of the “fully symmetrical integrative solution” (the every-last-drop-of-shared-value deal) is extremely difficult, even for skilled negotiators.  So thinking you’ll get a fully-optimized deal, and then walk away with about a third of your counterpart’s share on top of your own?  Welcome to the border of ambitious and crazy.

But these lunatic goals seem to work.  If you go toe-to-toe with someone who sets themselves a merely difficult-but-attainable goal, the researchers found, you’ll take their shirt (in their experiment, the crazy-goal folks walked away with about 35% more than their counterparts, despite entering the negotiation with the same amount of power).

So, you might ask, should I have any bounds to my avarice when I negotiate?

Well, probably.  Remember the idea of the ‘fully symmetrical integrative solution’?  Where both sides trade things they care about for things they don’t, and make those trades perfectly efficiently?  It turns out that when either side walks into a negotiation armed with crazy-person goals, they don’t come close to reaching this integrative solution.

Here’s are the results from one of their experiments pitting candidates against recruiters in a new-job negotiation:

This graph shows the total joint value.  That’s how much value got created by making helpful-to-both-sides tradeoffs.  See what happens?  If even one party has an extreme goal, the ability of the negotiating pair to make mutually-beneficial tradeoffs plummets.  

Why might this be?  Well, the researchers found that negotiators with extreme goals tended to make gutsier first offers.   I’m going to guess that they probably do a number of other things.  If they’re going to walk away with all of their own pie and some of yours to boot, they’re going to have to appear iron-willed and make you cast doubt on the strength of your own position.  That may lead them to disguise their real positions and alternatives, introduce misinformation, and appear unyielding in their demands.  Contrast those tactics with the ones you need to find shared value:  Asking questions, sharing information, exploring alternatives.  You start to see why even one extreme-goal negotiator could short-circuit the process of finding mutual gains.

So, here are the three questions I would ask before you start setting nutty negotiation goals for yourself:

  1. Will I end up resorting to tough-guy tactics to meet an extreme goal?  Extreme goals are powerful, but they can lead you to miss all the nice potential for joint gains in a negotiation.  If you think setting an extreme goal is going to lure you into browbeating your counterpart instead of asking questions and finding shared solutions, avoid extreme goals.
  2. Where is most of the value in this negotiation?  In this study, it looks like the gains are largely related to claiming value (bartering over how to split up the money), and the losses relate to creating value (finding clever ways of making everyone happier at little cost, or trading priorities).  If your negotiation is a one-shot, zero-sum bargaining situation, extreme goals might be more helpful.  If your negotiation is complex, with lots of different issues and parties who both have different priorities… well, you might want to steer clear.
  3. Can I parry effectively against my counterpart if they have extreme goals?  From these data, you don’t want to bring sensible goals to a crazy-goal fight.  So, you need to ask yourself:  If the other person arrives full of impossibly ambitious goals, can I effectively avoid being drawn in by their tactics?
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