Value Creation in Negotiation: Be Better, Not Perfect

Value creation in negotiation helps parties reach better outcomes than they could get through value claiming alone. We can also do more to create value for society at little cost, writes Harvard Business School professor Max H. Bazerman in his new book.

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value creation in negotiation

To reach better outcomes, negotiators learn to create value. Instead of only haggling over the cost of a service contract, they make tradeoffs with their counterpart on issues such as delivery, timing, duration, ancillary products, and so on.

We can apply these negotiation skills to achieve better deals not only for those at the bargaining table, but for outsiders and society at large, writes Harvard Business School professor Max H. Bazerman in his new book, Better, Not Perfect: A Realist’s Guide to Maximum Sustainable Goodness (HarperBusiness, 2020).

The philosophy of utilitarianism offers a useful guide. “Similar to value creation in negotiation, utilitarianism focuses on how to create the most good across all sentient beings,” Bazerman says. “This means being efficient in your use of resources. It means making choices that are independent of our own preferences, which may be biased by who we are in society—by our gender, wealth, nationality, ethnicity, etc. And it means valuing all rather than falling for nationalism and ingroup bias.”

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Value Creation in Negotiation

How can we engage value creation in negotiation, or integrative bargaining, to create more value for others? First, we can replace intuition with deliberation, says Bazerman. When we deliberate more, we reach better, more ethical decisions, research shows. One way to prompt more deliberative thinking—both in ourselves and others—is to compare options rather than considering them one at a time. “When you give people comparative problems, they’re likely to make more ethical decisions and behave in more utilitarian ways,” says Bazerman. So, for example, managers are likely to make less racially biased hiring decisions when they compare a couple of candidates simultaneously than when they consider them one by one.

 In addition, we can think about areas where we contribute good to the world and areas where we might create some harm. “Andrew Carnegie gets a lot of credit for his philanthropy, but he also deserves a lot of blame for the way he managed his steel mill in Homestead,” Bazerman notes. We all can audit our behavior to identify areas where we can do more good—and cause less pain.

Toward Maximum Sustainable Goodness

In Better, Not Perfect, Bazerman advises us to identify and strive toward our “maximum sustainable level of goodness” when considering how to create value. That means trying to make greater contributions to society, year by year. “I have identified a wide variety of ways in which I can change my behavior, lead a wonderful life, and do more good in the world,” says Bazerman. Here are some ways we can all do better through value creation in negotiation and beyond:

  1. Notice and speak out about the harm others cause. As the daily news suggests, there will always be people who do bad things. More interestingly, wrongdoers (think of Bernard Madoff or Theranos founder Elizabeth Holmes) are typically surrounded by dozens, or perhaps even hundreds or thousands of people, who have the ability to notice their wrongdoing and act to prevent it, but don’t. We all have a responsibility to notice and say something when we see others behaving badly.
  2. Use your time wisely. The not-for-profit 80,000 Hours encourages people to direct their careers toward addressing pressing problems in the world, such as the pandemic or climate change. “The idea of using your time wisely applies to lots of things we do,” says Bazerman. For example, on his 50th birthday, he decided to quit the editorial boards of four research journals. He wasn’t enjoying the work and thought that younger researchers would benefit more from it and do a better job. He was then able to spend the time he’d saved to make a positive difference in areas he enjoyed more.
  3. Make more efficient donations. Bazerman advises us to strive to donate our finite resources in a way that does the most good in the world. A philanthropy movement called effective altruism, popular among young people, advocates for donating more money than we have in the past and donating it where we can make the biggest difference. That typically means giving to those with the greatest need, such as funding low-cost health interventions in developing nations.

By creating more value, we can all work to make the world better.

Through value creation in negotiation, how might you make the world a better place?

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