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Filed under: negotiation

Anchors Away? via @HarvardNegoti8

Anchors Away?

 

Adapted from “The Enduring Power of Anchors,” first published in the Negotiation newsletter, October 2006.

In the Negotiation newsletter, we have reviewed the anchoring effect—the tendency for negotiators to be overly influenced by the other side’s opening bid, however arbitrary. When your opponent makes an inappropriate bid on your house, you’re nonetheless likely to begin searching for data that confirms the anchor’s viability. This testing is likely to affect your judgment—to the other party’s advantage.

Psychologists Amos Tversky and Daniel Kahneman identified the anchoring effect in 1974. Participants watched a roulette wheel that, unknown to them, was rigged to stop at either 10 or 65, then estimated the number of African countries belonging to the United Nations. For half the participants, the roulette wheel stopped on 10. They gave a median estimate of 25 countries. For the other half, the wheel stopped on 65. Their median estimate was 45 countries. The random anchors dramatically affected judgment.

Since then, dozens of studies have examined anchoring. In a new analysis, Chris Guthrie of Vanderbilt University Law School and attorney Dan Orr integrate what we’ve learned. On average, for every dollar increase in an initial anchor, the final settlement rises by 49.7 cents. Among seasoned negotiators, with every dollar increase in an anchor, the final agreement rises by 37 cents. Finally, even highly unreasonable anchors greatly affect outcomes.

The lessons: Reject the relevance and appropriateness of your counterpart’s anchor—and consider how a different anchor might affect you.

Full article:  http://www.pon.harvard.edu/?p=19228 

The Practical Art of Persuasion via @hbr

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Harvard Business Review

The Practical Art of Persuasionby William Ellet

 Persuasion is a catalyst for getting work done, for achieving an outcome you can't realize on your own. MBA courses, leadership books, and executive education classes recognize the importance of persuasion, but they rarely teach it as a practical art and, if they do, the focus is usually on formal presentations and PowerPoint.

Managers need more fundamental advice on how to persuade. I teach a class on it at Harvard Business School and have developed a series of questions that can serve as a starting point for any leader trying to persuade.

First, recognize your purpose: there is a difference between you and the audience that you'd like to resolve in a specific way. Then ask yourself:


  • Do I want to change the way my audience thinks or feels about something?

  • Or motivate them to do something?

  • Or change their thinking (and feelings) and motivate them do something?
  • The next questions have to do with who you're trying to persuade. We've all heard how important it is to understand your audience; after all, those are the people who have the power to realize your purpose — or not. But how do you do it? You should know four things:


  • Who are they? Are there differences among them relevant to persuasion?

  • What's my relationship to them? (e.g. Do I have any power over them I can use?)

  • What do they think and feel about my purpose?

  • What do they think and feel about me?

  • Next, focus on content. Creating effective persuasion involves logic, emotions and ethos, or character. Logic is the realm of rational appeals to an audience, a capability business schools develop in their graduates. Argument is the primary vehicle for this type of persuasion. In practical terms, that means a conclusion backed by supporting statements and evidence. To get started developing arguments, ask these questions:

  • What are the best arguments I can make to achieve my purpose?

  • Do I need to include arguments that will appeal to different segments of the audience?

  • What evidence do I need to support my arguments? How much do I need?

  • It would be comforting to think that business decisions are made strictly according to reason. But research in psychology, the cognitive sciences and behavioral economics has shown that emotion infuses everything we do, including thinking and decision-making. Questions to focus you on the emotional aspect of persuasion are:

  • What audience emotions will help me achieve my purpose? Which ones should I avoid?

  • How can I stimulate the appropriate feelings in the audience?

  • Ethos is the audience's perception of a speaker's or writer's character as conveyed through the persuasion. When you are considering what ethos you want to convey, ask these questions:

  • How does my audience perceive me now? (Often a hard question to answer!)

  • How do I want them to perceive me?

  • How can I move my audience to the desired perception?

  • You can create an inauthentic ethos, but unless you're a great actor, it's hard to disguise yourself. Once an audience senses you're faking it, you usually have little chance of convincing them of anything—except that you're untrustworthy.

     

    You have many means of persuading an audience, from memos and PowerPoints to videos and tweets. The more creative you are with media, the more likely it is that you'll cut through the clutter and distractions enveloping any business audience. But if you aren't sure of what you're trying to do, who you're trying to persuade, and how you can use the persuasive resources available in the situation, the media won't matter.

    William Ellet is a lecturer at Harvard Business School.