Creating value 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 competition so often the norm, while cooperation seems like an impossible goal? One of the most destructive assumptions we bring to negotiations is the assumption that the pie of resources is fixed. The mythical-fixed-pie mindset leads us to interpret the most competitive situations as purely win-lose.
For those negotiators who recognize opportunities to grow the pie of value (see also, expanding the pie) through mutually beneficial tradeoffs among issues, the complexity of such integrative negotiations is an asset. Tradeoffs allow you and your negotiating partner to achieve more than you would if you merely compromised on each issue.
Once negotiators have broken the assumption of a mythical fixed pie, the search for value can begin. To create value, you need to learn about the other party’s interests and preferences. Here are three proven strategies that will increase your likelihood of uncovering value in the integrative negotiations process:
1. Build trust and share information.
The most direct way for parties to create value is to share information in an open, truthful manner. The value created by sharing information with your most trusted customers will often outweigh the risk of having that information misused. “On-time delivery is critical to us,” you might tell a representative of a technology consulting firm in a negotiation over new business. “Our old contractor did good work, but couldn’t meet deadlines. Now tell me some of your key concerns.”
2. Ask questions.
Your goal is to understand the other party’s interests as well as possible, yet both parties may be unwilling to fully disclose confidential information. What should you do next? Ask lots of questions! Many executives, especially those trained in sales persuasion tactics, view negotiating primarily as an opportunity to influence the other party. As a result, we do more talking than listening. And when the other side is talking, we tend to concentrate more on what we’ll say next than on the information being conveyed—a tendency that only assists the other party in collecting information from you. Listening and asking questions are the keys to collecting important new information. “What mechanisms does your firm have in place to make sure you meet our deadlines?” you might ask the consulting rep.
3. Give away a bit more information.
What do you do when trust between parties is low? Give away some information that focuses on the trades you are willing to make. Doing so can enable you and the other party to expand the pie of outcomes. Plus, behaviors in negotiation are often reciprocated. When you share useful information, he may return some of his own. The key is to give away information that will inspire wise tradeoffs, rather than simply slice up the pie. In your negotiation over the technology consulting contract, this might mean saying, “Let’s talk about how referral incentives might benefit us both.”
How do YOU create value in integrative negotiations?
Originally published in 2009.
“In the business world, why is competition so often the norm, while cooperation seems like an impossible goal?” Arguably because there are anti-trust laws which forbid outright cooperation in industry as it would otherwise be the norm! Industry as a matter of course tends to try and cut out waste, like creating several (incompatible) types of operating system, however, anti-trust apologists believe (wrongly so) that prices would be lower and “choice” greater if every hamlet had its own software firm with its own product. Quite the opposite: if you have ONE product that satisfies most needs, economies of scale would drive down its price as well as set free more developers to compete on other fields. Like with the “national airline syndrome” where deregulation has driven prices into the ground, yet “code sharing” is a cooperative tactic to avoid servicing too many routes in parallel with underutilized aircraft, cooperation will always ensue in most industries and across industries, if not some bureaucrat would redefine economics as “ruthless” competition – all the while deploring the very artifact!