How To Create Value In A Negotiation?

Your goal should be to create value in order to expand the pie
Your goal should be to create value in order to expand the pie Image Credit: Mike Cohen

When we enter into a negotiation, our goal is to use our negotiation styles and negotiating techniques to get the best deal for ourselves that we can get. However, the other side enters the negotiation with the same goal in mind. Clearly we are working at cross purposes. The only way that both parties can leave the negotiation feeling as though they got the best deal possible is if there is enough value in the negotiation to go around. What this means for you as a negotiator is that you are going to have to find ways to create value in your next negotiation.

The Value Of Value

Creating value during a negotiation is the name of the game in integrative negotiations and these principles also apply to the highly competitive realm of business negotiations. In the business world, why is it that competition so often seems to be the norm, while cooperation seems like it is an impossible goal? One of the most destructive assumptions negotiators bring to negotiations is the assumption that the pie of resources being negotiated is fixed. The mythical-fixed-pie mindset can lead us to interpret the most competitive situations as purely a win-lose negotiation.

Those negotiators who recognize opportunities to grow the pie of value through mutually beneficial tradeoffs among issues understand that the more complex a negotiation is the more opportunities there are. Tradeoffs allow you and the other side to achieve more than you would if you merely compromised on each issue. Once negotiators have been able to break the assumption of a mythical fixed pie, the search for value can then begin. In order to create value, you need to learn about the other party’s interests and preferences.

How To Build Value In A Negotiation

In your next negotiation, you are going to want to build trust and share information. The most direct way for negotiators to create value is to share information in an open, truthful manner. The value created by sharing information with the other side will often outweigh the risk of having that information misused. “On-time delivery is critical to us,” you might tell the other side in a negotiation over new business. “Our old contractor couldn’t meet deadlines. Now tell me some of your key concerns.”

A key part of any negotiation that we are involved in has to do with asking the right questions. During a negotiation your goal is to understand the other side’s interests as well as possible, yet both parties may be unwilling to fully disclose confidential information. What steps should you take? Simple: ask lots of questions! Many negotiators, especially those trained in sales persuasion tactics, view negotiating primarily as an opportunity to influence the other party. As a result, we end up doing more talking than listening. And while the other side is talking, we tend to concentrate more on what we’re going to be saying next than on the information that is being conveyed. This tendency that only assists the other party in collecting information from you. Listening and asking questions during a negotiation are the keys to collecting important new information.

During your next negotiation, try giving away a bit more information. The question is what do you do when trust between parties is low? The solution is to give away some information that focuses on the trades you are willing to make. Doing this can enable you and the other party to expand the pie of outcomes. Additionally, behaviors in negotiation are often reciprocated. When you share useful information, they may return some of their own. You need to remember that the key is to give away information that will inspire wise tradeoffs, rather than simply slice up the pie.

What All Of This Means For You

When we enter into a principled negotiation, we are looking to get the best deal possible. We may spend a great deal of time thinking about how we are going to get what we want. However, what we often don’t spend any time thinking about is what the other side might want. This is probably a mistake. The only way that we’re going to be able to reach a deal with the other side is by allowing both side to find enough value in the negotiation.

If when we start a negotiation, we believe that the pie of resources is fixed, then we will be unable to cooperate with the other side and may find ourselves locked in competition with them. We need to understand that we can grow value in a negotiation by making tradeoffs with the other side. In order to build value in a negotiation, you will need to find ways to both build trust and share information. You will also have to master the art of asking lots of questions in order to gather information. You can build value by being willing to give away information to the other side.

If you take the time to think about how you want to build value in your next negotiation, you can make it happen. Take the time to understand what the other side is looking for in the negotiation and make sure that you are able to work with them. Take the time to ask questions and provide information so that you can get the deal that you want out of your next negotiation.

– Dr. Jim Anderson Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You: How many questions do you think that you should prepare before a negotiation starts?

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What We’ll Be Talking About Next Time

If you could pick the perfect negotiating situation, what would you pick? If you are like most of us, you’d probably pick a relaxed room with conformable chairs, good lighting, and no time pressures in which to apply your negotiation styles and negotiating techniques. However, as we all know, all too often we find ourselves in the opposite of this situation – uncomfortable chairs and under lots of pressure. Negotiating is all about making the right decisions at the right time. When we are under pressure, this starts to become very hard to do. What do negotiators need to know about pressure and how it impacts their decision making process?