Keep Emotion Out of Decision Making
We've all had the experience of letting our emotions get the better of our actions. But in a business setting, emotional decisions can be costly -- and a quick way to lose your job.
But how do you keep cool, calm, and collected in the high pressure environment that marks the modern enterprise?
In the highly instructive Harvard Business Review article When Winning is Everything, authors Deepak Malhotra (Harvard Business School), Gillian Ku (London Business School), and Keith Murnighan (Northwestern's Kellogg School of Management) describe the psychology of "competitive arousal," and how managers can mitigate its effects.
Competitive juices are most often fueled by three factors: rivalry, time pressure, and being in the spotlight. And when all three are present, "collectively, they can lead to decision disasters. " Take the 1993 bid for Paramount by longtime lock-horns Sumner Redstone (then the CEO of Viacom) and Barry Diller (then the CEO of QVC). The result: Redstone overpaid to the tune of $2 billion -- $1.5 billion more than he intended -- to acquire Paramount and secure a "Diller killer."
The authors also report that the higher the stakes, the more likely you are to overbid.
Keeping Your Cool
Here's what you can do to maintain your senses when the temperature starts to rise. Read the article for many more specifics and real-world examples:
- Circumvent competition and defuse rivalries "Managers can prevent competitive arousal altogether by anticipating potentially harmful dynamics and then creatively restructuring the deal-making process."
- Reduce time pressure "Effective decision makers create time to reevaluate the bases of their value calculations, to discuss substantive issues, and to negotiate."
- Deflect the spotlight "To counter the effects of an internal spotlight on competitive arousal, organizations should consider spreading the responsibility for critical, competitive decisions across team members. That way, no one manager or executive will stand alone in the spotlight."
Dealing with the Irrational Negotiator
Four Strategies for Making Concessions
Six Steps for Making Your Threat Credible
Six Ways to Build Trust in Negotiations