Regrouping from the cancellation of the 2004–2005 season due to failed labor negotiations, National Hockey League (NHL) teams and players faced the challenge of radically restructuring their collective bargaining agreement (CBA) in July 2005. The new CBA instituted a uniform cap (as well as a floor) on team payrolls. It also set maximums and minimums for individual contracts and declared many more players free agents, allowing them to sign with whatever team made the richest offer.
Imagine that you’re an NHL general manager. You have a month, at most, to fill your team’s roster before training camp begins. What’s your strategy? If you expect that your rivals will go on a spree and overspend for big-name players, it would be smart to sit back, protect your budget, and then scoop up the excess talent. But if the other owners move cautiously in this new terrain, it would be in your interest to aggressively sign stars before the market heats up.
The NHL general managers had to work on at least three different levels as they raced to sign players. They had to assess a particular player’s value to their own team and what other clubs would be likely to pay him. They also had to weigh what sort of precedent, good or bad, that deal would set for the other players they were trying to sign. Finally, they had to anticipate how their moves would affect the decisions of competing teams.
Military strategist Carl von Clausewitz coined the term friction, “the force that makes the apparently easy so difficult.” Friction doesn’t just refer to adverse weather or enemy fire. It can also be mental and self-induced, resulting from the “lack of a clearly defined goal, lack of coordination, unclear or complicated plans,” and other signs of ill preparation, according to Marine doctrine.
Friction was high in the hockey negotiations. Confidential information about contract talks was sometimes leaked to the press. Key players who seemed ready to sign with one team suddenly bolted to another. Some general managers gave fat contracts to players long past their prime. Each transaction altered the overall negotiation landscape.
In rapidly changing marketplaces, you can’t provide for every contingency. But you can take a page from Marine Corps practice and develop bump plans.
Two Negotiation Tips for Preparing for Success at the Bargaining Table
Rather than mapping out every possibility, commanders practice a form of analytic triage by focusing on two negative possibilities, discarding almost everything else. The first element is anticipating the enemy’s most likely course of action. The second is preparing for the biggest, most damaging risks by identifying the greatest threats to success.
Translated to the negotiation arena, creating a bump plan means ultimately making an informed bet on how you expect things to unfold, while also contemplating what you’ll do if events go the other way. A hockey general manager who values premier goaltending should identify a handful of potential players. But in case he gets stymied with all of them, he should be open to assembling a team that’s more offensively oriented.
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Adapted from “When the Only Constant is Change,” by Michael Wheeler (professor, Harvard Business School), first published in the Negotiation newsletter.
Originally published November 2010.