What is Deal Design?
When negotiators engage in thoughtful deal design, they position themselves to capitalize on the upsides of group negotiations and minimize the potential costs.
Without realizing it, we leave many of our most important decisions in negotiation up to chance. We make tacit assumptions about whether we’ll negotiate in person, what we’ll discuss, how long the negotiation will last, and so on.
This type of automatic decision making may lead to good deals, but it can prevent us from reaching great ones. By taking time to ask ourselves deliberate questions about deal design before and during our negotiation, we can set ourselves up for a more productive and rewarding agreement.
Consider the following real-world dispute where poor deal design created costly barriers. Environmentalists and farmers opposed a power company’s plans to build a dam in the Midwest. On the surface, the parties appeared to have deep, irreconcilable positions. Yet a superior deal could be designed if the parties looked past their bargaining positions to their underlying interests.
As it turned out, the farmers were worried about reduced water flow below the dam, the environmentalists were focused on the downstream habitat of the endangered whooping crane, and the power company needed new capacity and a greener image. After a costly legal stalemate, the three groups designed a better deal that included a smaller dam built on a fast track, water-flow guarantees, downstream habitat protection, and a trust fund to enhance whooping crane habitats elsewhere.
Creative deal design can help you build a foundation of trust and cooperation—and avoid conflict and chaos—in negotiations involving multiple parties and contentious issues.
To learn more about deal design, and discover how to boost your power at the bargaining table, download your FREE copy of Dealmaking: Secrets of Successful Dealmaking in Business Negotiations, from the Program on Negotiation at Harvard Law School, today.
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