How the Life Code Shapes the Course of Your B2B Negotiations

With this post, I aim to recommend the book "Life Code" by Dr. Hans-Georg Häusel, published in August 2020, to anyone engaged in (or overseeing) professional B2B negotiations. The book highlights the profound influence of the dominance system on managers' life codes, a factor that also impacts professional negotiations. To stay in control during negotiations, it's crucial to employ a process strategy that empowers dominant decision-makers to champion their goals vigorously. At the same time, this strategy provides a graceful exit possibility, saving face in the event of a compromise. This balanced approach is precisely what the process-oriented ABC strategy ensures.

Firstly: Decisions are Made Emotionally, Not Rationally

Häusel initially points out a scientific finding established since the mid-1990s: "All our decisions are driven by emotions" (p. 11). In other words, "Emotions, not intellect, govern the world" (p. 191).

This concept isn't new (see, for instance, Pfister/Jungermann/Fischer, The Psychology of Decision-Making, 4th Edition, 2017) but is often overlooked in negotiations and even by the scientific community. Experienced negotiators are familiar with phrases like "Stay rational, emotions won't help here" or "The following point is unusually emotional." In 2008, the highly esteemed psychologist Prof. Wolfgang Salewski (among others, former advisor to the Munich Police, the Federal Criminal Police Office, the Federal Foreign Office, and the GSG 9) summarized the then-current scientific consensus in his seminal book "The Art of Negotiating": "Any attempt to resolve a conflict objectively is a desperate attempt to shift emotions to the factual level" (p. 108). He further noted: "Unfortunately, these insights are still completely unknown in many social or political areas, or they have not yet been able to prevail" (p. 109). "Many parties to a conflict still believe in rational ways to solve disputes" (p. 109). However, "Life does not operate on strictly rational principles; it is driven by desires and fears" (p. 264). Conflicts cannot be resolved through factual arguments but only through discussions about the differing emotions or motivations (p. 108f).

Häusel builds on Salewski's 2008 publication on emotional decision-making by (deliberately simplifying) explaining the three emotional (and simultaneously motivational) systems in humans: the Stimulus system (seeking novelty), the Dominance system (power), and the Balance system (security).

The strength or weakness of each emotional system varies from person to person, so everyone has their unique mix of the Stimulus, Dominance, and Balance systems. This unique mix forms "the foundation of our personality" and also the individual's Life Code. Based on their Life Code, people have strong or weak inclinations. Häusel vividly illustrates this with the analogy of an escalator: following one's inclinations feels like moving effortlessly in the direction of the escalator, whereas acting against them feels like moving against the escalator's direction. Hence, inclinations facilitate certain behaviors (e.g., in negotiations) but do not predetermine an individual. In summary, "The insightful person accepts that they are not as free in their decisions as they believe. They acknowledge that behind everything they do lies an emotional program, the Life Code" (p. 192).

Your Life Code also shapes how you perceive the world and the same goes for your negotiation partner. Everyone views the world through their "emotional lens," never objectively.

Secondly: Dominance Prevails in the Business Realm

It is a well-observed fact that individuals in key business roles (such as managers) often display a pronounced dominance system, which is closely related to aggression: "The realm of pure dominance is concerned with performance, goal attainment, and competition. The business world is emblematic of these values" (p. 93). The mindset driven by a dominant dominance system advocates for: "Prioritizing self-interest, seeking personal advantage, asserting oneself, expanding power and status, surpassing others, ... and eclipsing competitors" (p. 33).

A significant dominance system is characteristic of "people who make decisive choices, shoulder responsibilities, and inspire peak performances. Many individuals with a strong inclination towards this dimension can be found in executive suites, governmental offices, and military ranks" (p. 115). Although the associated mindset might appear unattractive, the dominance system is "the driving force behind progress" (p. 33); hence, individuals encoded with such a Life Code are essential for the betterment of society. At the extreme, they are "antisocial personalities of victory." Their Life Code can be summarized as: "A pronounced tendency towards dominance, coupled with moderate to high levels of adventure-seeking (stimulus) and control. In contrast, their scores in other areas are substantially below average" (p. 117). ... They are distinguished by "virtually nonexistent values of harmony" (p. 117). "They are tough on themselves and even tougher on others" (p. 117).

Salewski concurs: "Individuals, organizations, and nations pursue power to validate their individual, structural, or national self-esteem and identity" (p. 251). Such is the stark reality.

Thirdly: The Intricacies of B2B Negotiations

In the realm of B2B negotiations, it is my observation that decision-makers from both sides invariably exhibit a pronounced dominance orientation. Consequently, each party enters the negotiation with a victor's mindset: "Assert your dominance, expand your power and status." This dynamic naturally sets the stage for a confrontational outset, rendering such negotiations decidedly complex. The value of confrontation lies in its utility, provided that, akin to seasoned negotiators, the conflict remains strictly content-based (firm on issues) while personal interactions are marked by utmost respect.

From personal experience, I have learned that staying in the driver's seat during challenging B2B negotiations hinges on a deep understanding and adept application of best practices.

Fourthly: Securing Your Position in the Driver's Seat

Effective negotiation is built upon three pivotal strategies: the task-focused Team Strategy, the behavior-centered BMI Strategy, and the process-driven ABC Strategy (Three Questions to Identify a Professional Negotiator).

This post will concentrate on the ABC Strategy, particularly on structuring the negotiation process when both decision-makers are propelled by a singular emotional directive from their respective Life Codes: "Assert yourself."

While the approach is straightforward, it does demand some amount of practice:

Phase A: In Phase A, your sole intermediate goal is to analyze all conflicts (Analysis of Open Points).

As a decision-maker, your aim is to prevail. Hence, during Phase A, the mindset for you and your negotiator is: Play to win. Instruct your negotiator as follows: Delve into every issue (price, delivery time, quality, contract duration, etc.) extensively. Exchange positions (low price vs. high price, long delivery time vs. short delivery time, etc.) and articulate our arguments or perspectives. Listen to our partner and inquire why a particular position is crucial for them. Remain firm on content yet highly respectful personally during Phase A. Avoid arguing to convince the other party, as it often proves futile. Instead, argue to earn respect and reduce our information deficit. Discuss each position until discussions become circular. Embrace the conflict. Since both parties aim to assert themselves, it's natural not to find solutions for many points during Phase A. That's not our objective at this stage. Do not concede any point; instead, list all points as "Open Points." This approach calms tensions and prevents either side from feeling defeated. This process must continue until all conflicts are listed as "Open Points." This impasse is always a desirable outcome in B2B negotiations.

Ask the legendary question posed by George H. Ross, former legal counsel and negotiator for Donald Trump: "If we solve all of these problems, do we have a deal?" (Ross, Trump Style Negotiation). A "Yes" response indicates that all conflicts have been identified, at least for the moment.

Phase B: In Phase B (Break for Change), your interim goal as a decision-maker is to choose your conflict strategy (Professional Renegotiation Tips): whether to persist with the professional confrontation from Phase A, pause the negotiations, concede, settle for a suboptimal compromise, or shift to collaboration. Continuing the professional confrontation from Phase A leads to a win or loss. If your counterpart's Life Code also mandates "Assert Yourself," both parties stand to lose and no deal will materialize. This is acceptable if your fallback position or status quo is satisfactory. Concession or a suboptimal compromise concludes the negotiation. Alternatively, you might opt for collaboration and (only now) jointly seek solutions with your negotiation partner, leading to Phase C.

Phase C: In Phase C (Concessions Package Procedure), your directive to the negotiator remains to strive for victory (play to win). However, you recognize that your counterpart is averse to losing, and a mutually satisfactory negotiation outcome can only be achieved if both parties are emotionally content with the result. Crucially, neither side should lose face. The ethos for this phase is: Play to win while ensuring satisfaction.

This is typically achieved through classic "give and take bargaining," leveraging the psychological principle of reciprocity. Negotiations on packages persist until all key stakeholders are content, adhering to the principle: "Nothing is agreed until everything is agreed." In Phase C, the Open Points List from Phase A is transformed into a package deal palatable to both sides, as conflicts are resolved in a manner that preserves dignity through reciprocal concessions.

The ABC Strategy outlined here is the hallmark of professional negotiators, derived from the Thomas-Kilmann Conflict Mode Instrument (https://kilmanndiagnostics.com/overview-thomas-kilmann-conflict-mode-instrument-tki/), transforming the "Competing" and "Collaboration" strategies into a "Process Strategy" applicable across all B2B negotiations.

The success of the ABC Strategy has also been empirically validated: "Van de Vliert and colleagues found evidence that the strategy of asserting, characterized by efforts to 'win' conflicts by prevailing, can be effective when followed by mutual problem-solving. Assertiveness ensures that opposing viewpoints are addressed, facilitating a mutual understanding and motivation to resolve ongoing issues, while problem-solving aids in achieving these resolutions" (Tjosvold/Wong/Yi-Feng Chen, "Cooperative and Competitive Conflict Management in Organizations" in Ajiko/Ashkanasy/Jehn, Handbook of Conflict Management Research, p. 44f).

Fifthly: Summary

Individuals make decisions emotionally and subsequently seek justifications for their emotional choices, a process known as rationalization. In B2B negotiations, it's typical for both parties to have a highly developed emotional system concerning dominance, each adopting the mindset of asserting themselves. To ensure both parties can save face without feeling defeated, these dominant personalities ideally employ the ABC Strategy: In Phase A, each remains firm on the issues, and conflicts are cataloged on an Open Points List. In Phase B, each considers how to address the analyzed conflicts. If both opt for collaboration, negotiations proceed on packages characterized by reciprocal give-and-take, ensuring no one leaves as the loser.

The efficacy of this approach is rooted in its tacit execution. A participant might propose, "Let's place this item on the Open Points List for later review." When it appears all topics have been covered, a party might inquire, "If we address all these items, do we have an agreement?" signaling the conclusion of Phase A. Choosing to collaborate in Phase C leads to the proposition, "How about we tackle all the open items in a bundled solution?" maintaining the ethos that "An issue isn't resolved until all are addressed." This strategy has been a staple of my negotiation tactics, and in two decades, I've yet to face any resistance to it. Counterparts are either pleasantly taken aback or agree with a nod of "okay, as usual." This method is key to steering through complex B2B negotiations effectively.

In conclusion, make sure to always keep in mind the significance of the Life Code, for "By learning to view conflicts from the perspective of the Life Code, we significantly broaden our cognitive and, consequently, operational frameworks" (Häusel, p. 193).