Poker and Negotiation

We negotiate in everything we do. From trying to get the dog to go pee outside to negotiating with your kids at bedtime to hiring/firing and making deals at work. If you’re in sales and procurement you negotiate a lot and you can implement negotiation skills and practice practically on an ongoing basis. But if you’re not in one of those professions, but still want to improve your negotiation skills, getting practice time in and simulating real negotiation environments can sometimes be tough. Getting a regular poker game together presents us with the opportunity to practice many of our negotiation skills fairly regularly. And the skills required to do well at poker overlap into the negotiation world. This post will show you how you can use poker to improve your negotiation skills.

We could spend forever going into the comparable skills like body language, understanding statistics, etc. but let’s focus in on the handful of things we can learn from poker that will fundamentally improve some foundational negotiation skills.

1. Understanding Your Hand – Sometimes you’re dealt crappy cards, and sometimes you’re dealt great cards. And in poker (much like in negotiation), even if you have crappy cards (little to no leverage), you can still do well on a hand. It all comes down to understanding your hand. In order to understand your hand in poker, you need to be able to calculate the statistical likelihood of success given your position, your cards, the cards known and the cards unknown (it’s less complicated than it sounds). Likewise, in negotiation, you need to understand your statistical likelihood of success as well. This begins with knowing what you want to achieve, knowing what leverage you possess, trying to understand what leverage the other party has and trying to understand what they want to achieve out of the negotiation. There may be something that you consider to be a weak concession that you can give up in a negotiation that the other party really really wants. But you’ll never know that unless you consciously force yourself to think of the other party’s needs and wants and their current position in the market and what’s available. You need to fully understand what you have to offer and what tools you have available to execute on a successful negotiation.

2. Know When to Fold – It sounds so cliche, but as Kenny Rogers said, “You got to know when to hold ’em. know when to fold ’em”. In poker, it’s unwise to chase the hand that you don’t have and sink too much money into a hand that you ‘hope’ you’re going to get. When the statistical likelihood of success is too low and when you know you’ll lose money on a bet, you need to fold. Negotiations are no different. Most people go into negotiations having no idea what their “walk-away” point (reservation point) is. When you walk away is mostly determined by what you have, what the other party is demanding, what your BATNA (Best Alternative to a Negotiated Agreement) is, and whether you can get to a deal that is better than your BATNA. If you can’t get to a deal that is better than your BATNA, it’s time to walk away.

3. Be Careful with Bluffing – In poker, bluffing is a skill that most never truly master. It’s tough to pull it off effectively because when you caught bluffing you lose all credibility at the table. Negotiation is the same. Here’s some sage wisdom for you – Do not bluff in a negotiation. Leave that for the poker tables. If you get caught bluffing in a negotiation, you lose all credibility and your reputation is damaged in that negotiation and potentially elsewhere. Negotiate in good faith. Leave bluffing for the card games.

These are the fundamental 3 areas in poker that relate directly to negotiations. Of course there are many more areas we could talk about like body language, statistics, emotion, etc, but I’ll save those for another time. For now, do yourself a favor and start up a regular basement poker game with your friends. You’ll be surprised at how well your negotiation skills will improve after a year of regular poker.