No3 - The Auctioneer - 47 Negotiation Tactics
You’re not bidding to win. You’re being played to lose.
The Weekly Walkaway highlights negotiation in its ‘good’, ‘bad’ and sometimes ‘downright ugly’ forms. Issue No. 114 (20th June 2025)
Happy Friday Walkawayers..
Too many of you still believe the RFX process; that's the request for information to tender and auction process, is sales, not negotiation.
Why? You tell me… all I can tell you is that the process arms ‘them’ with information.. Yup.. ‘information is power’.. Let's just let that hang there for a bit.
This week we continue the 47 Negotiation Tactics.. and, you’ve guessed it, a little story to help guide you in any future possible manipulations, although I can't guarantee you’ll not succumb. This one works on ‘you’ all of the time…
So grab a coffee, take a seat.. brace yourself.. as we carry on our journey through The 47 Negotiation tactics and meet The Auctioneer.
The master of the “final three”.. The BAFO.. The architect of the race to the bottom. The MC of the going.. going.. GONE. the smiling game show host who convinces you that if you don’t win this, you’ve lost everything.
It’s a true story and I’m gonna stay as close to the facts as I can remember; it involves five mobile 3G licences, thirteen bidders, two economists and a cool £22.5 billion.. yup say it again.. 22 and a half b-i-l-l-i-o-n pounds sterling.
And it starts, as all good negotiation disasters do, with the need to win..
How to Lose Billions and Call it Winning
The year is 2000, it’s spring and coming to the end of the first quarter.. Of the new millennium. Exciting times.
Tony Blair is the Prime Minister. Gordon Brown is the Chancellor. The dot-com bubble hasn’t yet burst.
Mobile phones are basic and clunky but seen as shiny status symbols.
The idea of watching a rugby match, cute cats and dogs and teenage dance crazes on it is as futuristic as a Star Trek tricorder.
But.. that future is coming fast..
Now at this time, you young-uns, you’ll have to understand there is no 5G, no 4G let alone 3G.
Not many know exactly what 3G is or even what it will enable but those who are in the business have an idea that it will revolutionise the whole world.
And it does..
But before then.. The UK government has five 3G licences to offer and a dream to sell.. the future of mobile communications is at stake.. Who dares offer the most cash, wins.
It is decided, to raise as much cash as possible, that the licences will be auctioned off and two clever game theory fellows, Binmore and Klemperer, are asked to design the auction and they choose a simultaneous ascending format. The rules are simple:
All five licenses are available for bidding at the same time;
To participate you will need to buy in;
You will be able to increase your bids in each round;
To be in it, to win it, you will have to stay in it - so hold or increase;
At the end of each round, all bids and the highest bidder will be revealed;
The auction will end when no further bids are placed.
No side deals. No off the record chats. No communication at all, unless it is to bid.
Oh.. and no second chances.
And so it begins.. And ends
Here’s the thing about auctions: They reward the rule maker.
Each executive started with a spreadsheet and a plan. But then came the noise. The headlines. The rumours. The fear.
What if we lose?
What if they win?
What if our shareholders think we weren’t bold enough?
Game theory calls it The Winner’s Curse, the idea that the person who wins an auction is the one who overpaid the most. But in real time, it doesn’t feel like a curse. It feels like winning.
You see the auction triggers what's known as ‘competitive arousal’ in the bidders.. a dopamine-fuelled cocktail that drives your ego, your emotional self.. we call it our Chimp, or our Lucy, after Prof Steve Peters’ The Chimp Paradox. It’s the same feeling you get when you bid at a charity event or even worse when you shout over your partner in an argument you’ve forgotten the point of. Once you're in ‘arousal’, your brain shifts to winning at all costs.
And that’s the con. That’s the trick. When the only thing you’re measuring is victory, logic gets replaced by emotion, your Chimp. Judgment gives way to ego. Strategy melts under the pressure of competition.
Anyway, back to the story.. The auction goes on for seven weeks. One hundred and fifty rounds.
Thirteen competitive bidders including the CEO’s of the big players; BT, Vodafone, Orange, One2One. No ceiling, no plan, no idea of the game or the rules and seven weeks of pure madness.
Every round, the bids climb. Every round they stay in the game.. not because the maths made sense, but because of FOMO, the fear of losing out felt worse than the cost of winning.
By the end of it, The UK Government had raised that bonkers number £22.5 billion.
Gordon Brown and his treasury smile and the UK press clap.
Five exhausted bidders walk away holding very expensive pieces of paper and absolutely no idea what’s just happened.
Do you know the worst of it?
3G didn't roll out on time.
We, the users, didn't jump on to the band wagon as quickly as ‘they’ thought and to make it worse still the telcos had paid so much to win, they couldn’t afford to build what they’d bloody well bought.
Those shiny licences, now even more expensive pieces of paper than before and they sat heavily on the balance sheets of these once mighty telco giants.
And then.. The tech bubble bursts.
BT had to spin off its mobile division, global pensions fell. Vodafone bled cash for years. Others like Orange, vanished completely.
All because nobody wanted to be the first to walkaway.
If it doesn’t feel right it probably isn’t right..
As my father used to say to me: if in doubt, both feet out! Stop.