Want to win your next negotiation? Role-playing, that much-maligned management technique, could actually do the trick.
From the July, 2002 issue of Business 2.0, page 94

Try this experiment: Mention the term “role-playing” to your colleagues and note whether they a) roll their eyes, b) groan bitterly, c) guffaw, or d) all of the above. (Probably d.) For most businesspeople, role-playing conjures up memories of either some excruciatingly dumb team-building exercise or, worse, group therapy. And that’s a shame, says J. Scott Armstrong, a marketing professor at the University of Pennsylvania’s Wharton Business School. “It’s kind of baffling to me,” he says. “It’s a technique that really seems to work, yet it’s so difficult to get anyone to use it.”

Outside the business world, role-playing doesn’t have the same image problem. Presidential candidates use it to prepare for debates. Legal hotshots like F. Lee Bailey, Alan Dershowitz, and Barry Scheck practice in front of faux juries. Military commanders, too, frequently act out roles to help them anticipate opponents’ moves.

After three decades of research into business decision-making, Armstrong believes that role-playing could work just as well for executives. In recent studies, for example, he and Kesten Green, a researcher at Victoria University of Wellington, New Zealand, asked college students to act out six historical business conflicts and then predict how the problems were actually resolved (see “Role-Playing vs. Game Theory“). The students answered correctly 64 percent of the time on average. Other students, presented with a written description of the disagreement and asked to guess the outcome, were right just 28 percent of the time. Game theorists — who employ a rival model for predicting the outcome of conflict — were right 37 percent of the time.

Conducting a role-playing exercise is about as complicated as setting up a kids’ game of make-believe. If you’re facing a labor negotiation, for instance, divide participants into two groups, one representing management, the other representing the union. Give each group a one-page summary of the situation and its role, and give them time to prepare. Then bring the groups together and have them interact as if they were the real participants.

You don’t need Laurence Olivier, Armstrong says, but for the exercise to be successful, participants must play their parts earnestly. That means stifling the initial urge to guffaw. The payoff is that you could get the last laugh at the end of your next big negotiation.

Role-Playing vs. Game Theory Using historical business scenarios, business professors Armstrong and Green showed role-playing to be much more accurate than game theory at predicting the outcome of real-life business conflicts.
In 1961, Philco Corp. tried to persuade regional supermarket chains to sell its home appliances, promising to offer discounts to consumers. The chains feared losing floor space. The discount strategy persuaded stores to let Philco in.
In 1982, having seen the NFL‘s TV revenues leap during the previous decade, players demanded a 55% cut. After owners rejected their demand, they debated whether to strike. The players went on strike for eight weeks and won concessions from the owners.
In 1969 the Food and Drug Administration ordered Upjohn to stop selling Panalba, an antibiotic that accounted for 12% of its U.S. revenues. Upjohn’s board debated two major choices: give in to the FDA or resist the ban. Upjohn’s board removed the drug from the U.S. market but resisted a complete ban by continuing to sell it overseas.

Link: Rehearsing for Success

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