In our previous piece looking at Daniel Kahneman’s brilliant book, Thinking Fast and Slow, and its implications for procurement thinking and practice, we looked at the concept of Priming.
Granted, Kahneman published the book in late 2011, but is still immensely valuable for procurement practitioners to keep on their bedside tables today — and here’s why.
One of the central premises of Kahneman’s book is how our brains look for the easy route at all times, what he calls “System 1” thinking. If we can draw a conclusion, make a decision, or find a belief without actually going through a time-consuming and exhausting process of really thinking, we will. That is not our conscious decision — our brains are wired that way. “System 2” thinking, which is more logical, analytical and difficult, is something our brains avoid if they can.
So Priming is the phenomenon whereby something we’ve seen or heard recently influences our next thoughts. If I ask you to name an animal, and you’ve just walked past an advert for the zoo illustrated with an elephant, you are more likely to say “elephant.” And remarkably, this is true even if you don’t recall seeing the advert. Our sub-conscious is quite capable of priming our future thoughts.
In this Plus brief, we will consider what is in effect a particular sort of priming, with an obvious implication for procurement and negotiation behaviour specifically. Anchoring is the tendency for us to fix our thoughts around a particular number, point, or fact rather than thinking logically and independently about a decision.
In Kahnemann’s words, “it occurs when people consider a particular value for an unknown quantity before estimating that quantity.” The estimates then stay close to the number considered. And this is one of the most tested and robust results in experimental psychology; it is an absolutely proven phenomenon.
In a somewhat frightening example quoted in his book, German judges were asked to throw a dice before being asked what sentence they would give for a particular crime. The dice came up with either the number 3 or 9. When the dice said 9, the average “sentence” was 8 months. When it said 3, the average was 5 months!
Anchoring and Procurement Negotiation
The implication for procurement is very clear in the negotiation arena. Whatever number gets anchored in your brain is in danger of becoming the starting point and indeed the expectation for the negotiation. You may work up or down from there, but it is difficult not to mentally accept that as an anchor for the discussion.
Let’s get into some tangible examples.