Is Your Next Negotiation Going To Create A Mutually Beneficial Agreement?

Every negotiation should be about value creation
Every negotiation should be about value creation
Image Credit: European Southern Observatory

Mutually beneficial agreements are something that is often talked about, but does anyone really understand what is meant by them? Different negotiators view them in different ways. Some believe that a mutually beneficial agreement simply means that both sides have used their negotiation styles and negotiating techniques to jump into the negotiation and attempted to get as much of the limited resources being negotiated as they possibly could. It turns out that this thinking is wrong. There is a lot more to mutually beneficial agreements than you might think…

Understanding Mutually Beneficial Agreements

So what is a better way to think about mutually beneficial agreements? The best negotiators know that they need to find ways to combine two important parts of any negotiation. First, they have to find and bring to the table competitive value-claiming. Once they’ve done this, they next have to add collaborative value creation to it. If they are able to accomplish this, then they will have found the path to being able to create negotiation outcomes that are truly mutually beneficial agreements.

Being able to reach a mutually beneficial agreement with the other side of the table is not always an easy thing to do. One of the biggest barriers that negotiators face in attempting to accomplish this is that they screw up by bringing a win / lose mindset to the negotiating table. Although it is correct that in some small number of negotiations, everything revolves around a single issue (e.g. price), more often than not it is your responsibility as a negotiator to take the time to find ways to expand the negotiations and bring other issues to the negotiating table.

What we need to understand when we sit down to conduct a negotiation is that more often than not, there will be many more issues that just the price of what is being negotiated. Additional items could include such things as financing, delivery, service, future business deals, performance bonuses, and so on. As a negotiator it’s important that you don’t look at such negotiations as being overly complex. Instead, see them as the benefit that they are. When you have multiple issues with which to work, you are now provided with the ability to create mutually beneficial tradeoffs with the other side of the table. Using a series of tradeoffs, you will be able to create a better deal for you than you could have if you had simply compromised on each of the issues being discussed. This allows you to boost your chances of being able to create a mutually beneficial agreement.

Creating Mutually Beneficial Agreements

If we can all agree that mutually beneficial agreements are a good thing, then what is the best way to go about creating them? The first step in the process is to share information with the other side of the table. During a negotiation, we are always afraid that we’ll be giving away too much information if we share our true preferences on the issues. However, expressing preferences isn’t really the same as giving away your bottom line.

Another step in the process of creating a mutually beneficial agreement is to take the time to ask questions of the other side. What you don’t want to do is to make the mistake of viewing negotiation as primarily an exercise in trying to persuade the other party to do what you want them to do. If you go into a negotiation with that mindset, you’ll be so focused on what you want to say that you won’t take the time to listen closely enough to what the other side has to say. By contrast, listening actively and asking lots of questions will help you collect the information you need to develop a mutually beneficial agreement.

Finally, a powerful technique that you can use to create a mutually beneficial agreement with the other side is to make multiple equivalent simultaneous offers (MESO) . Most negotiators tend to present one offer at a time. The problem with this technique is that if their offer is rejected, then they learn very little new information that would help them move forward. A better approach is to craft multiple offers that are different across issues but equally appealing to you. The other party may reject all of your offers, but is likely to communicate which one they like the best—and this will put you on a track toward a mutually beneficial agreement.

What All Of This Means For You

When we are negotiating, what do we really want to walk away from the negotiating table with? In an ideal world, we’d like to be able to reach a mutually beneficial agreement with the other side. If we can find a way to create value out of the deal that we’ve been able to reach with the other side and then provide that value to both sides as a part of the agreement, then we will have been able to create a mutually beneficial agreement.

It can be a challenge to create a mutually beneficial agreement especially when one or both side is dealing with a win / lose mindset. In order to move away from this, additional items need to be introduced into the negotiation. This will make things more complex, but at the same time it will allow a better deal to be created. A mutually beneficial agreement can be created if both sides can share information, take the time to ask each other questions, and make multiple equivalent simultaneous offers.

As negotiators our goal always has to be to find a way to reach the best deal possible with the other side of the table in every principled negotiation. One way to go about doing this is to create mutually beneficial agreements. These types of deals are more difficult to create, but in the end both sides will end up benefiting more from the extra effort that goes into creating them.

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

Question For You: What types of questions do you think that you should ask in order to reach a mutually beneficial agreement?

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What We’ll Be Talking About Next Time

At lot of us go into a negotiation like we are getting ready to go to war. We do our research, make sure that we know who we’re going to be going up against, prepare our demands and then use our negotiation styles and negotiating techniques to charge into battle. To us a negotiation is all about competition. The more points that we can score, the better the chance that we’re going to win this negotiation and the other side is going to lose. However, maybe we’ve been looking at this all wrong. Is it possible that the goal of any negotiation should be about creating value?