Business Deals with Successful People
“Don’t trust a man wearing a better suit than your own.” – Ferengi Rule of Acquisition #47
Yesterday, I posted an article about the potential value of being the dumber party during a debate. (Link for those that don’t want to hit the back button.) Today, I’m going to follow that up by saying this is absolutely NOT the position you want to be if the debate is a negotiation.
The Basic Breakdown
Let’s assume a business negotiation is a zero-sum game, where one party getting more means the other party is getting less. Since each person is trying to secure the best possible deal for themselves at the expense of the other, success will be determined by their difference in skill or knowledge. Unlike a debate (where having less knowledge can still be used discredit an opponent in front of an audience), less intelligence/skill has no advantage in a negotiation. The smarter party will simply take everything they can and leave.
The 47th Rule
The rule “Don’t trust a man wearing a better suit than your own” follows the same logic by applying basic signal theory. Here are the assumed signals correlating clothes, success, and skill:
- The nicer the clothes, the more successful the person.
- The more successful the person, the greater their skill.
From this straight-forward analysis, the Rule of Acquisition seems like a colloquial way of saying “don’t try to beat someone obviously better than you.” That’s pretty good advice, albeit a bit generic.
However, the rule is actually more than a heuristic to measure opposition. Consider how the assumptions might be broken:
- The person might buy nicer clothes without being successful
- The person might be successful without having skill
Let’s pretend the free market works. The second option is impossible over any meaningful amount of time; you cannot be successful without being skilled.
The first option is possible, though. If a person allocates their money with a priority on clothes, they could easily buy a better suit than others at a similar level of success. But if a better suit invites tougher opponents, why would someone waste the money only to make their negotiations harder?
For anyone that’s been duped by as salesman, the answer is obvious: the person is lying about their success to build credibility about themselves or the deal they offer. Every salesman (or con man) you will ever meet will be dressed better than you because they want to look more credible and successful than you are. They want you to feel like you need them, like you were lucky to get a moment of their time, like their product makes people successful.
(I don’t blame salesmen for dressing this way. If they dressed in rags people would assume that no one wants their product because it sucks. It’s their dominant strategy.)
Like most things, negotiating is a skill. That means experience and practice matter. Be careful whenever you are making a deal with someone that understands the situation better than you do; you probably won’t even be able to detect how they are taking advantage of you.
The 47th Rule is a shrewd rule of thumb. “A better suit” cannot be trusted because you are either out of your league or your opposition wants more credibility than they deserve. In business, both situations can lead to loss.