How Chess is Similar to Business Negotiations

I like to win. That can be said of most of us. However, I can accredit a portion of what I have been able to accomplish throughout my career to strategies that I learned through playing chess. Understanding chess and how it relates to business and negotiating can keep us doing what we all like to do, win.

Objective

In chess your objective is clear: You must read the opponent and develop a strategy to capture your opponent’s King. While the objective of the game is quite simple, it's clear definition guides every move you make on the board. Good negotiation is guided by your primary objective. By reading those who you negotiate with you can ensure the deal is mutually beneficial.

A simple and clear objective defines what winning is when entering into business negotiations. This objective allows you to quickly navigate the pros and cons of a deal. If the final terms of the agreement aligns with your primary goal, it can be considered a match won. The good news about a negotiation is that unlike in chess, both sides can win. Understanding your product or service and where to position it helps to determine your overall objective as a company. Once your objective is in place, its definition defines each step on the way to being successful and staying competitive in your market. Seeing what space your opponent occupies on the board effectively illustrates what type of strategies you need to be considering so that both sides can win.

Resources

In chess, each player starts with an equal 16 pieces on their side of the board. Each piece carries a vital role that combined collectively can bring one victory. Just like in negotiation, each team member is assigned an essential part in helping close a deal. The King - Lead Negotiator, The Queen - Assistant Negotiator, Rooks, Knights, and Bishops - Legal Advisors, and The Pawns - Members of the team who offer support. Without them negotiations cannot begin, just as a match couldn’t happen without working with the pawns.

You may have lost more pieces than the other player, but that doesn’t mean you’re out of the game. And vice versa: You may have many more resources available to you with a more talented team, but unfortunately, that doesn’t automatically mean you’ll be more successful. Ultimately, the determining factor is how these resources are employed given the current situation.

We often see this with startups: These small companies initially don’t have access to the resources the larger players in the game have, but they are still able to come out on top because they know how to leverage what is available to them. Like in chess, all your pieces or resources must be utilized to ensure a win.

In most cases you’ll open with a pawn to start the match, one of the most unassuming pieces on the board. It’s a mere glimpse into what all the pieces can accomplish. You never want to offer up all of your resources or services on the first go. As you go back and forth, you need to leave the necessary room to give and take in order to close the deal. It's likely several versions of the offer will be seen before being agreed to. Leave yourself enough room to add additional resources to make your offer more enticing.

Plan

Garry Kasparov is a chess grandmaster, and former world chess champion. He is considered by many to be the best player in history. In an interview conducted by Diane Coutu for Harvard Business Review he said, “After just three opening moves by a chess player, more than 9 million positions are possible. And that’s when only two players are involved in the game. Now imagine all the possibilities faced by companies with a whole host of corporations responding to their new strategies, pricing, and products. The unpredictability is almost unimaginable.”

Chess players continuously study the board. Each decision dictates your next move, all of which must be made thinking multiple steps ahead. As the other player makes a move, you are required to respond, and not only do you respond to their move, but you must also anticipate their future actions. You’re constantly running through a list of moves they may make. Always keep in mind the big picture, which could mean sacrificing pieces along the way if necessary. In doing this you’re able to avoid counter-advances that would compromise your position.

In negotiating, planning is one of the most essential elements in securing a deal that will benefit your company the most. With your objective in mind and proper planning, you can understand when taking a step back can allow you to put yourself in a position where you stand to gain a lot in the future. Recognize that sacrifices are okay if they can help reach your primary objective.

Two corporate lawyers, Ted Maduri and Andrew Lord, talk about how they use chess strategies in negotiations. “Do you want to win the battle or win the war?” They cover examples of making sacrifices and keeping your eyes on the final prize, among other strategies they use in this video.

Competition

Knowing your competition is crucial. Comprehending how they operate and being prepared to play to their style will up your odds of a victory. Being able to read them helps ensure you’re ready to plan ahead effectively.

“Those who learn to deal effectively with differences among people have a tremendous competitive advantage in negotiating. They will reach more agreements." ~ Stuart Diamond, Getting More: How to Negotiate to Achieve Your Goals in the Real World. Many of the businesses we engage with are from different countries with very distinct cultures from our own. It is important to understand these cultures and their differences when negotiating, doing so will give you the best approach to the situation. This understanding can bring negotiations to a win-win scenario.

Make an effort to understand how your culture’s negotiating values align with those of the culture you’re doing business with. Back in January before I went on a trip to Korea, I took an excellent survey, by Erin Meyer. The survey was designed to illustrate how different cultures communicate, lead, decide, and evaluate. I selected Korea as the country and was able to see where our cultural norms aligned. This information made me much more prepared for collaborating with my team by understanding how my potential colleagues think.

Winning

It’s no surprise that many executives are excellent chess players, as the strategies learned apply directly to business and negotiating. The game of chess teaches strategy which focuses on a primary objective. In negotiating, all plans are made with the long-term goal in mind. Short term sacrifice can translate into a future advantage. Knowing your competition will allow you to respond better and anticipate what pieces they value that can be traded. If it doesn’t work out to beneficial, don’t be afraid to walk away. In your next negotiation, keep these strategies in mind and see how much closer it gets to chalking up that deal as a win.

Written by

Hands-on company builder; Founder & Entrepreneur with 3 exits, who enjoys scaling companies 24x7x365; Blockchain Pioneer. Founder and CEO at FanVestor /#Fvestor

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