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Why Paying Off Your Debt Sooner May Cost You MoreShould You Take Trump’s Advice?
In Trump: The Art of the Deal, Donald Trump offers 11 negotiating tips. George Wu weighs in on their practical value.
- By
- August 02, 2016
- CBR - Behavioral Science
Trump’s Tip:
Think big
“I like thinking big. I always have. To me it’s very simple: if you’re going to be thinking anyway, you might as well think big.”
Wu's Response:
“Thinking big is good advice. Many negotiators are not ambitious enough. They focus on what they need to get in order to make a deal, not what they could get. And my research has shown that negotiators often believe they have gotten a larger share of the pie than they actually have. But if people are unrealistic about what they can get, they may turn down good opportunities.”
Trump’s Tip:
Protect the downside and the upside will take care of itself
“I always go into the deal anticipating the worst. If you plan for the worst—if you can live with the worst—the good will always take care of itself.”
Wu's Response:
“It’s certainly a good idea to be prudent and to make sure you can live with the downside. Research has shown that decision makers are often surprised when bad outcomes occur. I’m not sure at all, though, that the upside simply takes care of itself.”
Trump’s Tip:
Maximize the options
“I never get too attached to one deal or one approach. . . . I keep a lot of balls in the air, because most deals fall out, no matter how promising they seem at first.”
Wu's Response:
“Yes, but this is pretty basic advice. Negotiation 101. Your biggest source of leverage in a negotiation is your other options.”
Trump’s Tip:
Know your market
“I like to think I have that instinct. That’s why I don’t hire a lot of number-crunchers, and I don’t trust fancy marketing surveys. I do my own surveys and draw my own conclusions.”
Wu's Response:
“Knowing your market is hard. That’s why I teach my students not to trust their instincts. Whether it’s number crunchers or any other kind of expert, it’s useful to have people with different perspectives on the marketplace.”
Trump’s Tip:
Use your leverage
“The worst thing you can possibly do in a deal is seem desperate to make it. That makes the other guy smell blood, and then you’re dead.”
Wu's Response:
“This is correct, but basic and vague. Of course you should use your leverage. He gives no guidance on how to identify the sources of leverage and how to use them.”
Trump’s Tip:
Enhance your location
“Perhaps the most misunderstood concept in all of real estate is that the key to success is location, location, location. . . . First of all, you don’t necessarily need the best location. What you need is the best deal.”
Wu's Response:
“In some sense this is also about outside options. You’re trying to maximize your surplus, regardless of whether you have a big top-line number and high costs, or a lower number at the top and lower costs.”
Trump’s Tip:
Get the word out
“One thing I’ve learned about the press is that they’re always hungry for a good story, and the more sensational the better. . . . If you are a little different, a little outrageous, or if you do things that are bold or controversial, the press is going to write about you.”
Wu's Response:
“Negotiators have to recognize when they should involve other parties—the media, internal stakeholders, people who put pressure on your counterparty, etc. You need to understand which other parties could be involved in the negotiation, how and when to get them, and whether to keep them out. But it can’t always be good to have the media involved.”
Trump’s Tip:
Fight back
“In most cases I’m very easy to get along with. I’m very good to people who are good to me. But when people treat me badly or unfairly or try to take advantage of me, my general attitude, all my life, has been to fight back very hard.”
Wu's Response:
“In negotiations, you need a credible threat that you might fight back. But fighting back is not the only option. Sometimes trying to work things out is better, either directly with your partner or through some dispute resolution process. In other situations, it simply may not make economic sense to fight back.”
Trump’s Tip:
Deliver the goods
“You can’t con people, at least not for long. You can create excitement, you can do wonderful promotion and get all kinds of press, and you can throw in a little hyperbole. But if you don’t deliver the goods, people will eventually catch on.”
Wu's Response:
“It seems hard to dispute that, though it’s not really a negotiating tip.”
Trump’s Tip:
Contain the costs
“I believe in spending what you have to. But I also believe in not spending more than you should.”
Wu's Response:
“That’s not about negotiating either. It’s more of a general management point.”
Trump’s Tip:
Have fun
“Money was never a big motivation for me, except as a way to keep score. The real excitement is playing the game.”
Wu's Response:
“You don’t necessarily have to have fun, but there is an important point here: people perform much better when they don’t fear negotiation. Walking into a negotiation shouldn’t be like going to the dentist.”
George Wu is the John P. and Lillian A. Gould Professor of Behavioral Science at Chicago Booth.
Donald J. Trump, Trump: The Art of the Deal, New York: Random House, 1987.
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