Neuroscience for Entrepreneurs
In this article we will cover
The neuroscience for entrepreneurs series introduction
Stress and the brain
Pre-negotiation relaxation techniques
Anger vs compassion
Communication in negotiations
Cooperation vs competition
The psychology behind your appearance
Today we will explore how neuroscience and psychology can improve your negotiating skills. While there are many interesting and helpful articles from leading business experts regarding negotiation tactics, substantially fewer take a more scientifically data-driven approach. Coming from a neuroscience research background, I thought I would present some of the scientific concepts and data that may prove helpful to anyone willing to think outside the box to gain an advantage. My aim isn’t to rewrite the rule book already written by business experts over the years, but instead, to review some of the scientific literature providing interesting insights into how our brains work in stressful situations like a negotiation.
Negotiation, defined as a strategic discussion aimed at achieving a beneficial outcome for two or more parties, is, like most things, much more complex than it first appears. How you present yourself, your needs, expectations, and willingness to compromise are fraught with obstacles that can impact the outcome of a negotiation. If we want to understand how they might have an impact, we can look to break down the essential components of a negotiation search through the scientific literature for a deeper understanding.
Whether you want to improve your negotiation skills for your work, new business, or even simply preparing for a big purchase and you want to brush up on your skills, this article will help. Hopefully by the end of the article you will have a few more approaches for anything from salary negotiation, contract negotiations, or job promotion, and we can look to see if understanding the neuroscience and psychology in business can improve your negotiation skills.
Scientifically, we can think of negotiation as a finely tuned human interaction. The good news is that we have spent our lives interacting with others and already know how to do it. So rather than learning new rules, it might just be a case of improving our awareness of communication cues, especially how we communicate our intentions and perspectives to others.
Perfected over millennia, we are remarkably adept at unconsciously recognising the subtle cues of verbal language tone, meaning, subtext, and non-verbal cues like body language, all of which play a significant role in communication. But with so much of our communication relying on components other than verbal content, we can get bogged down in overthinking and succumb to common pitfalls and traps. Letting our emotions dictate our behaviours, under-appreciating how we may come across to others, or feeling defensive when faced with an opposing point of view are traps we have all fallen victim to at some point in our lives.
Don’t worry! We are not doomed to repeat our history. There is hope!
Stress
Negotiation relies on a constant process of decision-making and risk management, so before any negotiation, there will probably be numerous meetings and strategy discussions into the tactics, outcomes, and expectations of the talks. In this way, real-time decision-making processes will present with few surprises allowing the high cognitive demand from the negotiation to get your full attention.
Regardless of the level of planning and experience a person has gone through beforehand, negotiations are undoubtedly stressful, and new developments and unexpected curveballs can flip those preparations very quickly. Being confronted with your counterpart, who may or may not want the same result as you, is tantamount to inviting conflict into your world. With conflict comes our inbuilt fight or flight response and stress.
Somewhat unsurprisingly, stress and anxiety can lead to poor outcomes in negotiations. One study claims that anxiety could lead us to make lower offers, settle for less favourable results, and yield more quickly than we would want [1]. Full transparency here, the methodology in that study was……shaky, at best, but it is relatively easy to appreciate how negative emotions, such as fear, anxiety, and general trepidation, can limit our potential in a negotiation. Even experienced people will feel some level of pressure, even if it more subtle than others. Humans are primarily emotional and social beings, which is why negotiations can be a daunting experience that goes against our natural hardwiring. We want to connect with others, to be liked, and to be understood. Our brain wants us to fit in. Negotiations can lead to situations where we risk that, especially when we want different outcomes from the negotiation, which may not be closely aligned with the other party.
There is a huge vault of literature discussing how stress and anxiety impact performance in various ways, including how some people use it to their advantage (more of that below) [2, 3], and negotiation isn’t much different.
Physiologically, stress activates our sympathetic nervous system, which, in turn, stimulates the release of cortisol, adrenaline, and other hormones. The outcome is a wave of disorientating changes, from an increased heart rate and breathing, blood flow to muscles, trembling, and even pupil dilation. Essentially, the body goes into a state of low-level panic to prepare you for taking on a potentially dangerous moment in your life. The problem is, long after needing this fight or flight response to fend off lions or honey badgers (if you haven’t already, look them up), we are left with an internal panic mode that turns up when what we really need is to be zoned in to the moment. The good news is that we can learn to become so familiar with this response that it no longer influences us, and even better, we can learn to embrace stress to give us a performance boost when it matters.
One study by a team of researchers in US and Israel modelled salary negotiations in around 100 people and comparing cortisol levels with their negotiation performances [4]. Cortisol is a hormone produced by the adrenal gland on top of the kidneys and is crucial in regulating blood pressure, circadian rhythm, metabolism, and parts of the stress response. This occurs in the brain along what is known as the HPA axis (Hypothalamic-Pituitary-Adrenal). Perhaps the most interesting viewpoint on the stress response is that if we can learn to alter how we think of stress, we can reduce its negative impact and increase its positive effect. That same study demonstrated that if the study participants adjusted their mindset about feeling stressed and instead welcomed the stress response by acknowledging improvements that coincided with the stress response, they performed better in the mock salary negotiations. This meant they left the negotiation with a higher salary than those told not to view stress as advantageous. They turned their negative into a positive
What many of us don’t realise is that as the body prepares for potential danger, the stress response gives us a temporary boost in our brain processing for things like our attention, memory, and even performance in cognitive tasks. Cognitive tasks often studied within research settings describe how our brain handles problem-solving and decision-making.
Therefore, learning to alter our mindset about stressful situations may come with benefits. Of course, this is easier said than done because anxiety before an important negotiation or life event is difficult to view as anything but overwhelming and a nuisance. If we can’t seem to view the stress response as helpful, other techniques can be employed.
You’re amazing!
Positive affirmations (the practice of encouraging self-talk) can lead to a feedback loop of positive and more favourable throughs, and just as significantly, they can interrupt negative thoughts [5]. Cognitive psychology explains how affirmations also reduce our instinct to feel and act overly defensive because the way we see ourselves, our integrity, and pride feel less exposed and vulnerable to outside influences [6]. Therefore, we can view the information objectively and not feel like it attacks our beliefs and personality.
Meditation
We are constantly bombarded with articles and content about meditation and mindfulness. It is very much in vogue, but there is a good reason for that. Time and time again, neuroscience research demonstrates the genuine impact it can have on the brain and, ultimately, our daily lives (I could cite a lot of work here, but an excellent review to get you started can be found with Prakash, 2021 [7]. Also, this article is free to read, which is even better).
Regular meditation reduces activity within the brain's default mode network (DMN). The DMN is involved in attention and mind wandering and is the brain’s way of keeping busy when it is not given a task to do [8]. In recent years, the DMN has been an area of intense focus for its hyperactivity and increased network connectivity [9] in depression and mood disorders.
While there have been entire books dedicated to the role of the DMN in the brain, it is a general overview of emotional processing that we should focus on here. In particular, how, in times of stress, we can regulate the activity of the DMN. Neuroscience tells us that the regulation of emotional responses is linked to cognitive control in areas of the brain such as the prefrontal cortex and posterior parietal cortex. Mindfulness training and other relaxation techniques may actively engage these areas of the brain to help us override intense emotional responses [10]. This is not to say that we can ‘think’ away our fears and anxieties, but what it does tell us is that consistent investment into relaxation techniques can provide measurable brain changes which may benefit us in moments when we are forced to deal with stressful situations. Meditation also has the ability to reduce amygdala activation, which is a central component of all our emotions, especially fear and anxiety [11].
If we can learn to alter our response to stressful salutations, we will be more likely to show optimal decision-making, emotional regulation, and overall negotiation performance.
Showing your emotions
With all the research directed towards becoming a stress-free guru in the mountains, you could be forgiven for thinking that complete control over your emotions is the best approach. Well, not really, no.
Regulating our emotional responses during critical moments prevents our feelings from driving our behaviours. It can be easy to become frustrated, angry, disappointed, or irritated and to let those emotions drive your immediate responses. But with practice, we can become more like the driver and less like a passenger.
Crucially, it is not about perfecting the poker face during negotiations but rather about using emotions to your advantage. A case report by Adam & Brett (2018) [12] which looked at nearly 400 people over two studies, described how moderate-intensity anger yielded greater concessions in negotiations than calmer strategies. However, the researchers also found a rate of diminishing returns when that anger passed into the high-intensity range.
In general, most of us want to avoid confrontation and limit stressful and negative experiences, so a moderate display of anger may potentially lead to concessions from the other side in an effort to de-escalate the conflict. Situations where the negotiation takes place only over one encounter and where both parties are not likely to meet again could benefit from tactical uses of anger. However, when negotiations occur over multiple meetings or when both parties need a continued partnership, displays of anger may be more harmful than good and could label you as a person who creates uncomfortable and hostile environments - something we naturally want to avoid. Determining which scenario could benefit from showing your emotions will need to be guided by your own instincts, but displays of anger should be saved for rare occasions, if ever.
Displays of emotions serve a social function by eliciting similar sentiments in the viewer and communicating the intention behind our actions, which helps to explain why anger can quickly escalate to adverse outcomes, but what about other emotions?
Compassion, empathy, and kindness are probably not the words you might immoderately associate with a tough negotiation where the stakes are high. After all, your goal is to appease both parties, sure, but still come up with the best terms you can get. Whatever approach you want to use would need to be determined before entering into negotiations (although not always), but the science is pretty convincing; positivity almost always beats hostility.
What we see when we look through the data from studies in behavioural psychology is that as we become more trusting of the other person, the more likely we are to want to reciprocate that trust and align our interests [13]. Areas in the brain, such as the prefrontal cortex, amygdala, and insula, are activated differently depending on whether we trust or distrust the other person, so there are notable differences in how our brain responds. You could use this to your advantage if you head into a negotiation looking for mutual benefits and make it clear from the beginning that you are seeking to find a common middle ground, even if you have to concede on one area in order to gain in another.
If we understand all of these concepts before entering into a negotiation, we can also better prepare ourselves for instances when we encounter them from the other party [14]. For example, how would you respond to compassion, anger, frustration, disappointment, or excitement/satisfaction during a negotiation? By thinking about how emotions can be used for effective negotiations, we can also prepare for instances when we experience them ourselves and become more mindful in stressful situations, thereby giving us an advantage.
Cooperative versus competitive:
Ex-FBI negotiator and author of Never Split The Difference, Chris Voss, describes negotiation on his website and books and draws on studies from the 1960s to explain the importance of body language. Based on research by Albert Mehrabian, the 7: 38: 55 communication rule explains the three core elements of communication and how the majority is non-verbal, meaning that it comes from how we say something and our general body language and demeanour, or how important each aspect of communication is [15, 16]. This rule suggests that the content of what we communicate is perceived as the least important (around 7% of communication comes from content), whereas the tone (38%) - how we say it, and the body language (55%) are much more relevant in our communication.
Of course, there are considerable limitations to this type of subjective conclusion, and the specific weighting of each component shouldn’t be taken as Gospel for every scenario. Instead, it is useful as a reminder that we need to think about all aspects of communication when we negotiate and observe non-verbal cues in everyone in the room. Therefore, being open, connecting with others, and feeling relaxed, will convey a more honest and trustworthy demeanour. (I should note here that there is a lot of weight put into body language and its claims, but in general, it should be used more as an extra factor rather than a secret tell-all, for which it really isn’t).
So, why not just present yourself as more genuine and cooperative? The idea of cooperative versus competitive is a fine line to walk, as neither party wants to yield more than their fair share. Competitiveness may appeal to some people, with research suggesting that under the right circumstances, a certain degree of competitiveness can lead to other parties making lower demands [17]. In general, however, the researchers note that there is a risk that it can trigger unconscious threats to a person's self-worth and reduce self-esteem, even if this is perceived at a subconscious level, creating a defensive negotiating party.
Compelling research in psychology demonstrates that building a sense of trust and cooperation with other parties involved in a negotiation plays into our evolutionary desire to be part of a social community. We tend to empathise more easily with people who we think are similar to us and hold shared values, whereas those outside our group are more difficult to relate to.
Showing yourself as a potential partner looking for mutual benefits, rather than a newcomer looking to get something for themselves, is an important strategy to start negotiations with the best intentions. When we establish early in the negotiation that we are seeking a win-win, we can gain trust and respect and establish a rapport that may lead to a more prosperous partnership within this round of negotiations and in potential future directions.
First impressions count
If all else fails, there is one last point to pay attention to. Looking sharp! This one seems pretty obvious, but appearances do matter, although probably not in the way you expect. Psychology teaches us that looking your best can positively affect how you perceive yourself. Dressed in attire that makes you feel confident and worthy has been shown to have real benefits. Studies demonstrate that a positive appearance gives the impression of honesty, health, intelligence, and being trustworthy negotiations correlate with higher degrees of persuasion and honesty [18-21]. Additionally, the benefit of improved self-confidence will allow you to feel more relaxed and composed during stressful events like a negotiation.
In summary, while there is a fair argument for the difficulties of translating theory into practice, at the very least, the research can act as a trigger for new ideas and ways of approaching specific situations that may provide you with the extra 1% needed to outperform your competitors and improve performance. Small margins matter, so why not use every tool in your arsenal to create them, and that includes learning lessons from neuroscience?
Be sure to read through my other articles, where I take a deep dive deep into other aspects of entrepreneurship such as goal setting, visualisation and mental preparation, and making first impressions count.
References
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[2] Palazzolo, J. (2020). Anxiety and performance. L’encephalon; 46 (2), 158-161
[3] Nieuwenhuys, A. & Oudejansm, R. R. (2017). Anxiety and performance: perceptual-motor behavior in high-pressure contexts. Current Opinion in Psychology; 16, 28-33
[4] Akinola, M. et al. (2016). Adaptive appraisals of anxiety moderate the association between cortisol reactivity and performance in salary negotiations. PLOS One; 11 (12)
[5] Cohen, G. L., & Sharman, D. K. (2014). The psychology of change: self-affirmation and social psychological intervention. Ann Rev Psych; 65, 333-371
[6] Klein, W. M. et al. (2011). Feelings of vulnerability in response to threatening messages: effects of self-affirmation. J. Exp. Soc. Psychol; 47, 1237–42
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[8] Garrison, K. A. et al. (2015). Meditation leads to reduced default mode network activity beyond an active task. Cog Affect Behav Neuro; 15 (3), 712-720
[9] Posner, J. et al. (2016). Increased default mode network connectivity in individuals at high familial risk for depression. Neuropsychopharmacology; 41 (7), 1759-1767
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[11] Tang, Y., et al. (2015). The neuroscience of mindfulness meditation. Nat Rev Neuroscience; 16 (4), 213-225
[12] Adam, H. & Brett, J. M. (2018). Everything in moderation: the social effects of anger depend on its perceived intensity. J Exp Soc Psych; 76, 12-18
[13] Haas, B. W., et al. (2015). The tendency to trust is reflected in human brain structure. Neuroimage; 107, 175-181
[14] Kelly, E. J (2016). Importance of emotional intelligence in negotiation and mediation. International comparative Jurisprudence, 2, 55-60
[15] Mehrabian, A. & Wiener, M. (1967). Decoding of inconsistent communications. J Pers Soc Psych; 6 (1), 109-114
[16] Mehrabian, A. & Ferris, S. R. (1967). Inference of attitudes from nonverbal communication in two channels. J Consult Psychol; 31 (3), 248-252
[17] Tuncel, E. et al. (2020). Face threat sensitivity in distributive negotiations: effects on negotiation self-esteem and demands. Org Behav Hum Dec Proc; 161, 255-273
[18] Feingold, A. (1992). Good-looking people are not what we think. Psych Bull; 111 (2), 304-341
[19] Langlois, J. H. et al. (2000). Maxims or myths of beauty? A meta-analytic and theoretical review. Psych Bull; 126, 390-423
[20] Reungen, P. H. & Keenan, J. B. (1993). Social perception and interpersonal influence: some consequences of the physical attractiveness stereotype in a personal selling setting. J Cons Psych; 2 (1), 25-38
[21] Sakomoto, M., et al. (2018). Optimal linguistic expression in negotiations depends on visual appearance. PLOS One; 13 (4)