When the Urge to Win Overwhelms Rational Decision Making

There are times when the urge to win overwhelms logic. Authors Malhotra, Ku, and

Murnighan offer the example of a takeover battle between Johnson & Johnson (J&J) and Boston

Scientific to buy Guidant, a medical device maker. Even though Guidant was in the middle of

recalling 23,000 pacemakers and telling another 27,000 patients who had pacemakers already

implanted to “consult their doctors”, the bidding war between the two buyers lead to a final price

of $27.2 billion, S1.8 billion more than J&J’s initial bid. After the recall, Guidant shares went

from $23 to $17 a share. Fortune magazine later called the acquisition “arguably the second

worst ever,” only surpassed by AOL’s infamous purchase of Time Warner.

1. What factors do you think had led to this fierce completion between J & J and Boston

Scientific?

2. If you were tasked with making an offer to Guidant, how could you have handled thIS

situation differently?

3. What fuels these competitive dynamics that lead to bad decisions?

4. What important principles in a negotiating situation like the one you’re being faced with
will need to use when you’re negotiating with Guidant’s leadership?