"Strategic thinking at its core - the ability to recognize emerging challenges and opportunities, prioritize to focus on the right things, and mobilize your organization to do what's necessary to adapt and execute." - Michael Watkins
Underpinning the way I think about strategic thinking, which I believe is also valuable in the context of complex negotiation, is what strategic thinking is at its core - the ability to recognize emerging challenges and opportunities, prioritize to focus on the right things, and mobilize your organization to do what's necessary to adapt and execute.
Anna Cajot, Negotiation Conference Director, is in conversation with Michael D. Watkins, PhD, a globally recognized expert in the field of management thinking and negotiations.
Michael is Professor of Leadership and Organizational Change at the International School of Management Development in Switzerland (IMD). He is a Thinkers 50-ranked management influencer (2019 to present) and was inducted into the Thinkers50 Hall of Fame in 2023, in recognition of his remarkable contributions to the field of management thinking.
While on the faculty of Harvard’s Kennedy School of Government, he taught negotiation to senior leaders in the national security community. This stimulated his research on international diplomacy, which focused on how leading diplomats negotiate in high-stakes situations. The result was a widely-praised series of case studies on James Baker’s efforts to build the first Gulf-war coalition, Robert Gallucci’s negotiations on behalf of the U.S. with North Korea, US and UN humanitarian operations in Somalia, Richard Holbrooke and the Dayton negotiations in Bosnia, and Shimon Peres’ efforts to initiate the Oslo Peace process. These experiences led him to co-author (with Susan Rosegrant) the award-winning Breakthrough International Negotiation, which combines his diplomacy case studies and analysis.
Anna: Michael, thank you for joining me today. I understand you recently published a new book, "The Six Disciplines of Strategic Thinking: Leading Your Organization into the Future." In this book, you introduce a set of mental disciplines used by leaders to recognize emerging challenges and opportunities, prioritize to focus on the right things, and mobilize their organizations.
Additionally, you underlined the practicality of strategic thinking, asserting it as the most crucial skill for leaders today. Could you elaborate on your definition of strategic thinking and its role in complex negotiations?
Michael: Understanding what makes strategic thinking important is a good place to start. The way I think about it is through the lens of a variation on the VUCA framework. But I always begin not with volatility but with complexity. To me, what makes negotiations, in general, and strategy making, in particular, challenging is the core of many complexities that we're dealing with during a process. In the context of negotiation, that would mean i.e., processes where many parties negotiate the need for alliances. You need strategic thinking in part to deal with this complexity, that's really a core piece of it.
The other key component is uncertainty. We're almost always dealing in situations as negotiators where we're not operating with complete information. We've got substantial uncertainties about the other side, their intentions, motivations, and red lines. So, learning to deal with uncertainty, and I would also add ambiguity, is central to being an effective negotiator.
As soon as you get into complex negotiations, strategic thinking is at the core of what you're doing. You previously mentioned your negotiation team model, which includes the Negotiator, Commander, and Decision Maker. Strategic thinking has to happen at all of those levels, and it needs to be integrated across all levels, which I believe is partly what makes it so interesting.
Anna: What about the six disciplines you've covered in your book? How can senior leaders use them to strategically lead complex negotiations?
Michael: Certainly. So, the number one strategic thinking discipline is pattern recognition. The key aspect here is your capacity to leverage knowledge and intuition to grasp the actuality of the situation. During a negotiation, there's a lot of information coming at us, and the question is how can we read the important signals and tune out all other "noise". I believe that expertise is what lets us do that. For example, our deep expertise, as negotiators, helps us understand that this particular signal the other side is giving us is really a signal and we should be paying attention to it, as opposed to they're just having a bad day. Your ability to discern important patterns in the context of rapidly changing environments is critical.
The second discipline I discuss in the book is systems thinking or systems analysis. And we use this all the time in the context of negotiation when we're modeling multi-party negotiations, where you've got two organizations or multiple organizations negotiating with each other. There's undoubtedly a negotiation between them, but there are also negotiations within them. We call this the multi-level games or the two-level games. It's important to recognize that your actions in the main negotiation affect what's happening in the negotiations within each organization, and these internal negotiations also influence the main negotiation.
Mental agility, the third discipline, clearly is very central to effective negotiation. And I look at two things when I think of mental agility. One is the ability, and I believe William Ury talks about this, to "go to the balcony," figuratively, to get out of the detail of what you're doing and get up at a higher level to see a bigger picture. The other part is just the classic chess master skill - looking ahead a couple of moves and thinking about your next move. Obviously, a lot of that comes out of game-theoretic thinking. How do you anticipate action and reaction? What are the best moves you can make, given the likely response that the other side will have?
In my view, those three things - the pattern recognition, systems analysis, mental agility, are the core of what helps you recognize and prioritize what you need to do in the context of complex negotiations.
Anna: Michael, I would like to continue exploring the other three disciplines. How can leaders apply them in complex negotiations?
Michael: The first three disciplines we discussed are about recognizing and prioritizing, but the mobilizing part is paramount. Underpinning the way built the six disciplines around the core model of recognizing, prioritizing, and mobilizing, I think about strategic thinking, which I believe is also valuable in the context of negotiation, is what strategic thinking is at its core - the ability to recognize emerging challenges and opportunities, prioritize to focus on the right things, and mobilize your organization to do what's necessary to adapt, execute, etc. Therefore, I built six disciplines around the core model of recognizing, prioritizing, and mobilizing. In the context we're talking about, looking at the negotiating team first is the right way to frame it.
The first discipline of the mobilizing part is structured problem-solving at the team level. What does that have to do with strategic problems and leadership teams? We want the leadership team to go through a disciplined process of thinking about how we are going to frame the problem, generate options, evaluate options, and choose the right solutions. You won't go into detailed analysis every time something changes in your negotiation. Still, you should have a "language" to communicate with your team and a toolkit to handle information and start responding to situations effectively. The team set up you use of Negotiator, Commander, Decision Maker, that's a team of a form. So, what I want to happen, is for the negotiation team to work together to process the information that's coming in rapidly, still note the key insights, and then figure out what those mean. How do you then mobilize and respond? This also gets to the question of what you do at the negotiating table versus away from the negotiating table and how those things interact with each other. That's where the structured problem-solving question of what you do at the negotiating table versus away from the negotiating table and part comes in in a negotiation.
And then there's visioning. As a skilled negotiator, it's good to have a vision of where you think things will go or where you believe you can take things. I worked with a really amazing negotiator years ago at a big biotech company, and he did a lot of deal-making. He was negotiating deals with larger pharmaceutical companies and others. He described it this way: "You always want to hold up the golden chalice in front of people and say: 'Look at that, that's what we can do together; that's that beautiful thing we can accomplish'."
Finally, there's the whole piece about political savvy. In the context of strategic thinking for business leaders, that's the ability to manage stakeholder environments you're operating in. As a senior leader, you're dealing with governments, non-profits, unions, boards of directors, and investors. So, you typically navigate through a complex stakeholder environment. And you need to be thoughtful about how you build the right alliances, understand what key stakeholders want, and identify alignments and agendas. That same is true in any complex negotiation you're engaged in. My own experience was primarily in complex international negotiations, and often, there were many stakeholders whose interests needed to be understood and factored into the process. Otherwise, they could create real issues for you when you're negotiating.
To sum up, I believe there are real connections between the six disciplines of strategic thinking and negotiating. Pattern recognition is crucial. Understanding the system and how interactions happen at multiple levels. The mental agility, to be able to step back and think out a couple of moves, is essential. The ability to work with your team to rapidly process information and develop new strategies almost in real-time is critical. The capacity to envision the outcome and get people excited about team to rapidly process information and develop new strategies almost in real time the possibility of envisioning the result, communicating about it powerfully and simply, and then, of course, managing the entire stakeholder environment you're operating in.
Anna: Political savvy is a crucial capacity highly valued by executive leaders. How can leaders effectively align with and negotiate with key stakeholders before negotiating with the 3rdparty to advance their organizations?
Michael: You're talking about some of my favorite topics now. The way I would formulate the complexity is that there's an internal negotiation and there's an external negotiation, and then they interact with each other. As as long as that person is sitting in the middle, whether it is the lead Negotiator, Commander, or Decision Maker, they need to understand that they're operating at two levels of negotiation and that their job in part is to synchronize those two levels. You have to strategize how to build sufficient consensus around what you're trying to do to get a mandate.
Don't think what's going on internally is any less of a negotiation than what's going on externally and don't think you're ever going to get unanimity around a position internally because you won't. Instead, it would be best if you focused on steering that negotiation in a way that the overall interests of the organization are reasonably represented. And I always find the idea of winning and blocking coalitions quite helpful. You need to know the winning coalition internally and what potential blocking coalitions exist. I talk about that quite a bit in the political savvy chapter because you want to avoid doing things that catalyze unnecessary resistance.