How the weak win deals: A theory of asymmetric negotiation

| February 24, 2011

Negotiations tend to favour the powerful.

This is never clearer than in war and battle. We expect the strong army to defeat the weak army. Yet, as is beautifully articulated in a terrific article by Ivan Arreguin-Toft titled How the Weak Win Wars: A Theory of Asymmetric Conflict, some 30 per cent of the time the weaker army will win a war.

Of course, it is not really the case that weaker armies win wars; for if they were truly the weaker army they would have lost.  Instead, we are surprised when our judgement of which army was stronger is proved incorrect. When the weak win wars it is normally said that they “had a better strategy”. The army with the better strategy is simply the one who’s General has done a better job of accounting for all the variables at play when formulating his strategy.  

The current situation in Iraq is a telling example. Bigger, richer and more powerful, the US armed forces and her allies expected to roll their tanks into Baghdad and win.  Insufficient consideration was given the advantages of the supposedly weaker opponent, such as the commitment level of an insurgent army or the home-turf advantage.  Nearly a decade later they are in a mess.

It may be tempting to simply dismiss me as glibly benefiting from hindsight, as indeed I am, but the point I wish to make is that many of the benefits of hindsight could be available to us in foresight: if only we made the effort to make sure we were accounting for all of the important factors when formulating our own strategies.

The strategic interaction between the protagonists in any conflict, be it in war or business negotiations, is crucial to the outcome.

In commerce we talk about intangible assets as distinct from tangible assets, with the dangerous implication that only tangible assets (by which we generally mean money and property) are real. But the other, so-called intangible, assets aren’t really intangible. It’s not that we can’t put a value to them, rather that we don’t…and we should. When important factors in the decision making process are not immediately tangible, it is worth working a little harder to ensure their value is recognised.

When Toft refers to “asymmetric conflict”, he refers to the phenomenon whereby in any conflict the balance of power always falls to one side or the other. We tend to assume that the asymmetry of power will always be weighted toward the party with more tangible assets. 

Fighting the war of business negotiation on price alone is a mugs’ game.  Smart retailers know this; they strategically value-add instead of discount.

When we dismiss intangible assets we are excluding critical factors such as trust, credibility, access to the right stakeholder networks, security, prestige, specialist experience, reliability, creative control and – probably the most tangible of the intangibles and the one we most often neglect to our detriment – time. The people you are negotiating with invariably care about these things and value them greatly, but when negotiating a transaction they need reminding.

The first step in turning intangibles to your advantage is to articulate them. If you’re not sure how to put a value on a factor you know it is worthy of consideration begin by naming it.  This provides a starting-point from which you can begin to discuss the specifics of what these considerations might be worth to the other party. Express that value in concrete terms for them, such as getting the project finished 12 days quicker or reducing the insurance premiums by 22%. Now you have created your own metrics, it’s no longer such a huge leap to extrapolate a monetary value.

Highlighting the hidden elements on the balance sheet can shift the asymmetry of power to the party traditionally considered weaker.

Sometimes the very intangibility of the hidden factors in a negotiation is what makes them your most powerful weapon. Once you have gained consensus that they exist, and that they have a value (although that exact value is unclear), there is room in the imagination for them to be worth more; you can then direct the negotiation toward the realm of exciting possibilities. If you repeat the last step for every factor that is relevant to making your case you will be able to reduce the number of intangibles and the asymmetry of the negotiation will wobble towards your side of the scales.

I have blogged before about the need for our society to modify our accounting practices to assign value to the so called intangibles. We need to devise a better model to improve decision-making and I maintain that industry and government should make such reforms. 

But I suspect the mills of change will grind slowly on this one.

Till then the underdogs of this world stand to gain an enormous advantage if they add to their arsenal of negotiation skills the practice of valuing intangibles. It has proven an ever-effective secret weapon for me. To SMEs with aspirations to grow I urge you to practice putting your intangible value squarely on the balance sheet in your negotiations. Try to think about this next time you are negotiating a corporate deal, government procurement contract or new terms and conditions with your suppliers.

One final trick to mastering this is to always stop and ask yourself what else is of interest or value to the person you are negotiating with.  If you’re feeling really radical you might even ask them.


Peter Fritz recorded his ideas in this blog with the editorial assistance of Sally Rose. If you would like some help getting your business insights published to share with the First 5000 community please contact