Poker Tips that Improve Your Negotiation Skills
“If you can’t spot the sucker in the first half hour at the table, then you are the sucker” – Matt Damon’s character in the movie Rounders
Poker players often quote the above saying as a great tip for newbies. But it isn’t just good advice for poker players, but also to anyone sitting at a negotiating table. Indeed, poker can teach quite a few important lessons in mastering the art of negotiating.
We’ve gathered some of the poker tips that improve your negotiation skills and guarantee you leave the table as a winner.
DON’T ASSUME THERE’S A SCRIPT
It’s a great battle, and it really is a battle, and there are people from all walks of life, you know, never judge anybody at the table: A man can be the greatest poker player and he might know all the numbers, but he might get beaten by a really savvy kid who works in a grocery store; and that’s what’s so great about this game” – James Woods
Poker is a game with plenty of game theories. You can find predictions and probability calculations for the ‘perfect poker win’ from blogs and books. The essence of these theories is to tell you that by following these conditions and steps, you’ll end up winning more and bigger.
Likewise, you can find plenty of ‘scripts’ for negotiations. You can read about the right things to say at the right time and discover the tricks that ensure you end up with the winning hand when negotiating. The assumption is that if you follow a certain path in business, you’ll come out at the top.
While these game theories and guidelines are surely going to teach you plenty of things, the first rule of poker is that there’s no script – uncertainty is always part of the game.
What you need to understand, in terms of negotiations, is that having a set of cards in your hand doesn’t mean you should always make the same decisions. Holding on to two queens in your hand doesn’t mean you should always stay in; indeed, sometimes you might need to fold.
Therefore, instead of walking into the negotiation with a script in your mind or a set of “if A then I’ll do B”, you need to have an open mind. Take the things in as they come and understand things can change in an instant.
If you are faced with an unexpected situation during the negotiation, take a moment to catch your breath and follow these steps:
- Breathe and ensure you understand what was offered or said.
- Consider your options based on the objectives you want to achieve.
- Ask a few questions to verify your new position.
- If you are unsure what the best approach to the issue is, propose you get back to it later.
Take advice from an ex-poker professional and entrepreneur David Daneshgar who told the Inc., “Poker and business are both situational – you need to tailor everything you do and say to each individual person or client. You listen to what they say, hear them out, make quick decisions, and adjust.”
Learn more about the basics of negotiation in a business context.
UNDERSTAND YOUR HAND
“Life is not always a matter of holding good cards, but sometimes, playing a poor hand well.” – Jack London
Nonetheless, remember that not following a script doesn’t mean you shouldn’t be aware of your hand. In poker, you need to know what hands are the strong ones and the hands that are weak. The ability to understand the value of different combinations means you are able to make the right decisions at the right time.
The best poker players know the different combinations – they know the odds and they can analyse their own strengths in an instant.
Similarly, you need to learn about everything that’s essential for the specific negotiation and the deal. Approach your negotiations by focusing on the following points:
- What is the advantage you can gain from the negotiation? If there is none, consider carefully whether to negotiate at all.
- What are your negotiation objectives? What do you want to achieve?
- What are the strengths you have on your side? What about the weak points?
- What will the other party try to achieve? What are their strengths and possible weaknesses in terms of negotiating?
- What outcome is worth fighting for, i.e. when to pull out from the negotiation table?
If you are negotiating for a team or an organisation, make sure to go over the details with your bosses or the team. Getting a second opinion can help you prepare and you also want to go through different scenarios to know how you should respond to different things the opposing party might throw in your way.
Furthermore, poker players always approach the table with a clear idea of what they are going to bet and when. You should have the same approach to negotiations. You need to know the lines you aren’t going to cross, but instead will just fold.
CONTROL THE EMOTIONS
“I think one of the interesting things about poker is that once you let your ego in, you’re done for.” – Al Alvarez
‘Poker face’ refers to the ability to mask your emotions and hide your true feelings from other people. As the name suggests, it’s crucial for poker, but you will also benefit from ‘poker face’ in negotiations.
You can lose your poker game if you start showing too much emotion, as your competitors will know if you have a bad hand or a good one. You can’t reveal this information, as it jeopardizes your ability to push others further.
The same applies to negotiating. If you reveal your true position too early by being overly excited, confident, or nervous, you’ll leave the negotiating table empty handed.
Controlling the emotions is not easy, as you might have a $1 million deal on the line. But you should try the following tricks:
- Prepare for the deal – If you’ve done your homework and you know your hand inside out, you won’t be thrown off the rails with new information as you can easily relate it to your goals and objectives.
- Learn what makes you emotional and get it out of the system before the negotiation – Understand what is the emotion you are likely to feel. Perhaps you are afraid of failure, you are nervous about talking or you feel you get overexcited if things go well. Get the emotion out of the way beforehand by doing a rigorous exercise or calming the nerves with meditation.
- Learn to give and take – Often the emotions get heated when you are the one making concessions. Therefore, you might stay calmer if you always reply to a need with a want. If you give, you should take and vice versa. Asserting control is another great way of gaining confidence and moving the conversation into an area that doesn’t leave you sweating.
- Adjourn if the nerves kick in – If you notice you are starting to involve too much emotion, consider adjourning. You can either just ask for a small break for refilling the coffee mug or a longer break for “going over the details with the boss”, for example.
Furthermore, you want to start looking at the deal and its outcomes objectively and from an outsider’s viewpoint. Don’t place emotional value to the deal, but understand it as a task. This also requires you to detach emotionally from the result of the negotiation.
The below video offers tips on how to overcome the fear of failure and the tips can be helpful when it comes to approaching negotiations:
Finally, controlling emotions means you shouldn’t actively try to hide them. If you are trying to act super cool, you can actually reveal your true position. For instance, holding your breath is often a sign at the poker table you are trying to bluff, causing the other players to approach the game with caution. Therefore, try the above tips to be as neutral as positive instead of just masking an emotion by faking another one.
LEARN TO READ BODY LANGUAGE
“Poker is a game where you don’t have to have the best hand to win. Poker is really reading other people and reading human emotion, which certainly comes into play in business.” – Charlie Ergen
While you are staying neutral in your emotions, you also want to learn to read other people’s body language. If you’ve watched a poker match, you would have noticed how players eye each other and often engage them in light conversation. This is not to enjoy yourself at the table, but to see if the other person gives away clues of their hand.
Poker players aren’t focusing on the body language for nothing either. A famous study by Albert Mehrabian showed interesting facts about the human communication. According to his studies, communication is just 7% about the actual words used and 38% of the different vocal qualities, such as tone and pitch, with 55% left for physical expression.
Therefore, by carefully examining the body language and the tone people use during the discussion, you can learn whether they are hiding something, feeling nervous or have a few tricks up their sleeves.
Take these common physical cues from the poker table to your negotiations:
- Chatting too much mean the person is nervous.
- Staring down is a sign the person is trying to hide their strength.
- Sighing and shrugging can signify the person’s strong position.
- Rapid breathing is typically a sign of the person being excited.
- Hand in front of mouth could be a sign of a weak hand.
- Looking at the chips quickly and then turning away can highlight the person’s willingness to bet.
- Quick decisions are a sign of honesty, as bluffing generally requires a more composed reaction.
Furthermore, when you are listening to the person talking, you need to focus on the tone and pitch. For example, below is an example of a single sentence you might hear the person say. Say it out loud and change the word you emphasise each time and you’ll notice a slight difference in the meaning of it.
- I don’t think the organisation accepts the terms.
Finally, if you want to spot a liar, then keep these key findings of a 2012 study in mind:
- Liars tend to use more words than people who tell the truth.
- Liars also use third-person pronouns when talking, as a way to distance themselves from the act of lying. They also use complex sentences.
- People who are hiding something, but not lying, tend to talk less.
Check out the short video on reading someone’s body language by Derek Banas. It has great tips on what the different signs might mean, based on findings in scientific studies:
KNOW WHEN IT’S TIME TO QUIT
“I learned playing poker that you never count your winnings because that’s when you start to lose.” – Kenneth Langone
In one of the worst cases of poker losses, an American businessman lost around $204 million in one year. Terrence Watanabe’s case is an infamous example of not knowing when to stop.
When it comes to succeeding in poker, the real sign of a champion isn’t the ability to win big, but to control and minimise losses. Like any sport or game, poker will provide you with opportunities to win and the occasions where a loss is inevitable – you simply need to know when to fold.
The same applies to the world of business and negotiating. You need to be able to pick your battles and know when to give up. Not every deal is worth fighting for and sometimes the ability to walk away will provide better results for you and your business.
When considering your options, the following signs can help decide if it’s better to leave the negotiating table:
- The other party is not giving in on their demands, not even an inch.
- You start doubting the deal’s viability.
- The deal is moving further away from your goals.
- The valuation or terms aren’t moving, even when the facts are.
- What are we buying?
- What is the target’s stand-alone value?
- Where are the synergies- and the skeletons?
- What’s our walk-away price?
While the above focuses on acquisition negotiations, you can easily apply the points to any sort of deal. Before the negotiation, think carefully about:
- What is being negotiated?
- What is the value of the thing on the table?
- What are the advantages and disadvantages of the deal?
- What is the red line we don’t want to cross, whether in terms of price or terms?
Learn more about how to rock your next negotiation from Stanford Business School.
MAKING MONEY IS NOT THE ONLY THING THAT MATTERS
“It’s not whether you won or lost, but how many bad beat stories you were able to tell.” – Grantland Rice
Finally, poker has been to many players just about the winnings and the nice lifestyle of a poker star. But it shouldn’t be just about the money and this is something poker stars have learned.
The same applies to the negotiating table. A business environment can easily hone in the idea it is all about the money. But you shouldn’t think that the deal is more successful, if it brings in more money to you and the business. Instead, be aware of all the other benefits a negotiation can provide you and your business with.
Remember the negotiation that didn’t end in a finalised deal can still sow the seeds for later. For instance, you would have:
- Learned more about negotiating and improve your own skills.
- Gained valuable experience in dealing with different types of people around the negotiating table.
- Forged relationship with the business and the negotiator, which can help you widen your network and lead to new connections that will be valuable.
- Impressed the business or the negotiator, which can mean you are offered new opportunities in the future.
Therefore, if you fail to reach a deal, don’t let the negative emotions take over and convince you to feel like you’ve failed. In fact, focus on what the experience can teach you and your business, as well as the future opportunities it might have brought about. Never leave the negotiating table or the poker table in a bad mood or feeling like a failure – you might have just sown the seeds for future success.
TO FOLD OR TO HOLD – FINAL THOUGHTS
Negotiating skills are closely related to poker skills – you need to be able to read the situation, to understand your strengths and weaknesses, to keep a good poker face and to be able to read your opponents. Furthermore, you must be able to know when the right option is to just minimise the losses and to quit. Like with poker, negotiating isn’t all about the deal – sometimes you can win even if you didn’t end up signing a contract.
When you are facing a negotiating situation, keep your cool and use the above tips as an advantage. In the end, you’ll be better at negotiating the more you practice and experience the real life situation; so don’t hide away from an opportunity to place your bets.