Past performance does not guarantee future results. SEC Rule 156 requires investment companies to tell investors that true.
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| Dunning-Krueger effect leads individuals to inaccurately assess their expertise or abilities. Image: collected from Scotwork. |
Brian Buck, CEO of Scotwork North America, explored techniques negotiators can use to beat their own cognitive bias and make deals more effectively. He disclosed this in the write up 'The Past Is Not Your Future'.
However, we humans have a cognitive bias that almost guarantees we look at the future based on our past active role.
According to Brian Buck, We all have blind spots in our skills and competencies. Those blind spots can be exacerbated by our inability to accurately examine our own capabilities. This is known as the Dunning-Krueger effect, which leads individuals to inaccurately assess their expertise or strengths, further causing them to overestimate their abilities or wisdom. When investors are overly confident in their skills to negotiate, they may plan inadequately, make wildly incorrect notions, or completely underestimate the other parts.
Do you know what is imposter syndrome? It is the polar opposite of the Dunning-Kruger effect. This is usually defined by insecurity or regular self-doubt. For some, it can be paralyzing, which, in a negotiation, could lead them to be conflict-adverse and pass over the negotiation completely.
For others, it can lead to thinking their success was “dumb luck” and had nothing to do with their skill set, which could lead them to set out inadequately and rely on fate instead of their abilities to succeed at the negotiating lounge.
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Our experience with a person, in general, will inform and influence our belief regarding how the next offer with them will go. However, our expectations don’t always align with reality.
For example, which of the following picture do you think will go well?
Scenario #1: You have a longtime client whom you’ve always had pleasurable contracts with. However, you need to negotiate new terms on a deal that every other opposite of yours has taken issue with.
Scenario #2: You have a longtime client who’s been unexpectedly difficult to deal with, and you need to negotiate new terms on a deal that all your other receivers have happily allow.
Will the positive relationship be more significant than the tough issue, or will the easy issue outweigh the difficult tie? The only way to find answers is to consider these queries freely of the client and the issue:
- What’s been your experience? Is the person friendly and collaborative or adversarial and competitive? When you’ve talked about the issues with others, has it been tough or fun to discuss?
- What’s been effective? Does your person like small talk before business, or do they prefer you to be straight forward? Have you found success talking about the issue when you have supporting data or image and motion graphics?
- What adjustments can you set? Based on your experience and what’s been effective, identify adjustments you can make to your approach with the client or how the issue will be addressed to advance your chances of success.
Get beyond your own perspective by help reduce imposter syndrome. Discuss your findings, particularly with those experienced with the person or issue. Talk to your trusted advisors or colleagues and share your thinking with them. Ask for their advice and constructive suggestions or complaints.
You can mitigate some of your cognitive bias if you separate your experiences with the person and the issue. Going the extra step to reflect and find ways to be easy with your approach to the person and the issue will help you leverage your past to set you up for your future smiles.
Scotwork trains business negotiations in North America and other parts of the world.