Value creation in negotiation helps both parties get what they want.
People often view negotiation as win-lose, but maintaining a win-win mindset and adding issues to the discussion are the keys to value creation and working out a great deal.
Value creation allows parties to integrate various sources of value through tradeoffs and other creative dealmaking strategies. Even in a negotiation over a used car, for example, you might be able to look beyond price to identify other issues to add to the discussion.
Value-creating opportunities can be uncovered by searching for a common interest, rather than letting the differences that exist between you dominate the discussion. Other promising value-creation strategies include asking lots of questions to learn about what matters to your counterpart and sharing information about your own interests and priorities.
The goal of this cooperative problem-solving in a negotiation is to uncover joint gains for both parties. Value creation is an aspect of win-win negotiations in which both parties benefit from the agreement.
Remember, though, taking a collaborative approach to negotiation doesn’t negate the importance of claiming a fair share of the value you’ve jointly created. Effective value claiming should be based on a thorough analysis of what you want out of the negotiation as well as what the other party wants.
In sum, remember that situations that appear to be zero-sum rarely are.
The key to value creation?
Bringing a degree of optimism about the chances of expanding the pie to every negotiation.
What can business negotiators learn from current negotiations in the news? Quite a bit, according to the dozens of negotiation experts who contributed to the January 2019 special issue of the Negotiation Journal, entitled “Negotiation and Conflict Resolution in the Age of Trump.”
Strictly limited to 60 participants who have completed a prior course in negotiation, this first-of-its-kind program offers unprecedented access to experts from Harvard Law School, Harvard Business School, and the Harvard Kennedy School—all of whom are committed to delivering a transformational learning experience.
A common topic in our business negotiations articles are negotiation topics in business about enhancing your deal after signing the negotiated agreement. After all, not all contracts are created equal.
This virtual and highly interactive semester-length seminar explores the ways that people negotiate to create value and resolve disputes. Designed to improve understanding of negotiation theory and build negotiation skills, the curriculum integrates negotiation research from several academic fields with experiential learning exercises. In light of the COVID-19 pandemic, all sessions will be delivered live.
The problem: Your negotiation seems to be over before it has begun. Your targeted counterpart is refusing to sit down with you or simply ignoring your requests. How can you get her to see that she would benefit from negotiating with you?
It’s often the case that when two people or organizations try to resolve a dispute by determining who is right, they get stuck. That’s why so many disputes end up in court. There is a better way to resolve your dispute: by hiring an expert mediator who focuses not on rights but on interests—the needs, … Read
In negotiation, we bring our unique personalities and styles to the table. A reserved, cautious person is likely to bargain differently than someone who is outgoing and proactive, for example. There is much we can do to improve our negotiation performance—such as preparing thoroughly and using proven persuasion strategies. But can we also improve our … Read
In a hot real estate market, sellers may find themselves determining the best way to engage in an early offer negotiation. We asked Leslie John, the Marvin Bower Professor of Business Administration at the Harvard Business School, to answer a question regarding this topic.
Q: I’m selling my house in a seller’s market. As is the … Read
Successful negotiators work hard to ensure that when they and their counterpart leave a negotiation, both sides feel satisfied with the agreement. Why should you care whether the other side is pleased with negotiations or not?
Negotiation is not only something we do at work; often the toughest negotiations we encounter are in our personal lives. Some of the most successful negotiation examples of the power of negotiation skills in dispute resolution is when they repair relationships between friends.
In most negotiations, we face two goals: claiming value and creating value. Value can be defined as anything you would like to get out a negotiation, whether it be more dollars, a consulting contract, a new rug, an end to conflict, and so on.
Most negotiations call for very different, even opposing, skills: collaboration and competition. To get a great deal, we typically must work with others to find new sources of value while also competing with them to claim as much of that value for ourselves. Before mastering the intricacies of value creation in negotiation, it helps to … Read
According to a recent report from NPR Morning Edition’s Sonari Glinton, women not only negotiate harder bargains than men when it comes to vehicle purchases, but also they do more extensive preparatory work. Conventional wisdom has always placed the automobile in the realm of the masculine, but the emergence of the prepared and educated female … Read
Introductory negotiation courses are taught in law and business schools around the world, but are also increasingly taught to undergraduates and in all types of corporate settings. No matter the context, though, the basic elements of negotiation are roughly similar. Teaching interest-based negotiation, the Zone of Possible Agreement (ZOPA), the Best Alternative to a Negotiated … Read
How would you characterize your negotiation style: Are you collaborative, competitive, or compromising? During any professional negotiation skills training, you’re likely to find out your negotiating style when setting goals and revealing your negotiating personality.
MESO negotiation, a negotiation strategy for creating value with a counterpart who may be reluctant to negotiate, allows negotiators to propose multiple offers without signaling commitment or preference for any one option. Business negotiators that practice integrative negotiation strategies often complain that although they try to focus on creating value, they run into far too many difficult … Read
Some of our most heated negotiations and disputes involve value conflict over our core values, such as our personal moral standards, our religious and political beliefs, and our family’s welfare.
Consider these value conflict examples:
Business partners clash over the ethical standards they expect each other to uphold.
A negotiator refuses to do business with a potential counterpart … Read
In complex, multiparty negotiations, the task of value creation can quickly become overwhelming because of the large number of parties and interests at stake. An emerging process called “stakeholder alignment” can help construct order from chaos in complex negotiations, according to Joel Cutcher-Gershenfeld, a professor at the Heller School for Social Policy and Management at … Read
Conflict resolution is the process of resolving a dispute or a conflict by meeting at least some of each side’s needs and addressing their interests. Conflict resolution sometimes requires both a power-based and an interest-based approach, such as the simultaneous pursuit of litigation (the use of legal power) and negotiation (attempts to reconcile each party’s … Read
When a dispute flares up and conflict resolution is required, the outcome can be sadly predictable: the conflict escalates, with each side blaming the other in increasingly strident terms. The dispute may end up in litigation, and the relationship may be forever damaged.
The Program on Negotiation has identified three basic sets of circumstances in business negotiations where you’ll be better off tapping an agent (see also principal-agent theory) to take your place at the bargaining table (at least for part of the negotiating process):
What is negotiation in business? Negotiation research has identified it as a process of building trust and negotiation tactics for building trust at the bargaining table have proven effective in helping negotiators create, and claim, more value out of dealmaking scenarios.
Between 2017 and 2019, the United Kingdom (U.K.) and the European Union (E.U.) negotiated the terms of Brexit, the U.K.’s official departure from the E.U. The talks were contentious and stalled often, ultimately being extended by six months.
The trouble started even before the negotiations began, as the parties disagreed about how the process should unfold. … Read
Imagine that you’re buying a used car from its original owner. Of course, you want to get the best deal you can for your money, while your counterpart wants to maximize the value of his asset. After haggling with one another, each side finally arrives at a price point acceptable to both parties. But how … Read
Some negotiations are simple enough to handle on our own, but those deals are increasingly rare in the business world. These days, to thrive in negotiation, you often need to be able to work effectively as part of a negotiation team.
How can you uncover additional value, make useful trades, and put together a package that exceeds your party’s expectations? Here are four integrative negotiation strategies for value creation that all negotiators should add to their toolkit.
Many people consider negotiations to be stressful and threatening. Others view them as challenges to be overcome. Do these different attitudes influence the outcomes that people reach? New research by professors Kathleen M. O’Connor of Cornell University and Josh A. Arnold of California State University sheds light on this important question.
When Amazon and Apple each began scouting locations for a new campus in 2017, we might have expected them to follow similar negotiating strategies aimed at win-win bargaining. In fact, their searches were very different:
Amazon set off a frenzy in September 2017 when it announced it was soliciting bids from cities interested in hosting its second headquarters, … Read
Individual negotiators are sometimes overwhelmed by the idea of leading organization-wide changes to negotiation practices. In fact, it doesn’t take much time or effort to set the wheels of reform in motion, write Hallam Movius and Lawrence Susskind in Built to Win. Here are four simple steps to implement in your workplace.
As a format for complex deals, email negotiation has a bad reputation. Negotiators are more likely to deceive one another when using email, and they have trouble building trust and rapport in email messages. Furthermore, some research has found that negotiators achieve less joint gain and are less satisfied with their outcomes when negotiating over … Read
When dealing with a difficult counterpart, it helps to take a conciliatory approach to the bargaining table. While apologies necessarily involve moments of vulnerability, they can also open doors to value creation and strengthen the relationship you have with your bargaining counterpart. Let’s look back at Apple’s apology in China for its maligned warranty policies … Read
For value creation in negotiation, you may need to look beyond your greatest source of power. You may have learned— perhaps in this newsletter or in Roger Fisher, William Ury, and Bruce Patton’s landmark negotiation book Getting to Yes: Negotiating Agreement Without Giving In (Penguin, 1991)—that your most powerful asset is often a strong BATNA, or … Read
As the 20th anniversary of the horrific terror attacks of September 11th approaches, we look back at all that has changed in the world and at home in the two decades since. In the wake of the destruction of the World Trade Center in New York City, there were difficult questions and challenges facing those … Read
Among many useful negotiation skills and strategies, a right of first refusal can often benefit negotiators. In a right of first refusal, the right holder is typically given the power to buy an asset on the same terms that the grantor would receive from any other legitimate, prospective bidder, according to Harvard Business School and … Read
During the 2016 presidential campaign, Donald Trump blamed the trilateral North American Free Trade Agreement (NAFTA) among Canada, Mexico, and the United States for the U.S. trade deficit with Mexico and for lost American manufacturing jobs. Upon taking office, Trump said he was determined to either engage in renegotiation of NAFTA or walk away from the … Read
Do your students really understand the difference between value distribution and integrative negotiation, and have you given them a chance to practice their distributive bargaining skills? Do they understand that every negotiation includes elements of both value creation and value distribution? To help teach these key negotiation skills the Teaching Negotiation Resource Center (TNRC) has developed a … Read
Samantha was livid. While making a presentation during a meeting that both attended, Brad, a newcomer in her department, had shared some slides during a presentation that were clearly based on ideas for a project she’d shared with him privately—without giving her credit. Samantha angrily confronted Brad in his office after the meeting; he became … Read
At the Program on Negotiation, we urge you to aim higher by combining such competitive value-claiming with collaborative value creation. Not because it’s the “nice” thing to do, but because it’s been proven to be the best path to a truly mutually beneficial agreement.
When life becomes routine we are more likely to overlook details or, conversely, we cannot see the forest for the trees. In both instances, what we may lack is a creative outlook on the situation at hand. In negotiations, creativity can lead to value-creation for both parties.
Negotiation training often focuses on bridging gaps between negotiators with different styles, backgrounds, or objectives, but what about overcoming generational barriers in negotiation? Generational differences need not stymie efforts at the bargaining table. In this segment from “Dear Negotiation Coach,” we explore how to overcome cultural differences in communication with members of the Millennial generation.
Businesspeople who are looking for effective negotiation strategies often confront a dizzying array of advice. It can be useful to take a step back and categorize these strategies into various types of negotiation tactics. Highlighting the benefits of negotiation in business, the following five types of negotiation tactics can help you think more broadly about … Read
People tend to irrationally fixate on the first number put forth in a negotiation—the anchor—no matter how arbitrary it may be. Even when we know the anchor has limited relevance, we fail to sufficiently adjust our judgments away from it. This is the anchoring effect.
The following question was featured in the “Ask the Negotiation Coach” section of the Negotiation Briefings newsletter, April 2010 issue. Question: What should I do when a negotiation seems to be all about price, I have no BATNA, and the other side knows it?
Even those who effectively engage in an integrative negotiations or mutual-gains approach to negotiation, a bargaining scenario in which parties work together to meet interests and maximize value creation during the negotiation process, can be stymied by the task of dividing up a seemingly fixed pie of resources, such as budgets, revenue, and time.
Emotional flooding – when strong, specific, and often negative feelings overwhelm us – poses obvious hazards to negotiators, who need to be able to think clearly when faced with the complex, strategically demanding task of creating and claiming value.
For this reason, emotional regulation can be an essential component of negotiation.
But different types of regulation create … Read
Business negotiators understand the importance of reaching a win-win negotiation: when both sides are satisfied with their agreement, the odds of a long-lasting and successful business partnership are much higher. But concrete strategies for generating a win-win contract often seem elusive. The following five, from experts at the Program on Negotiation at Harvard Law School, … Read
Most negotiations require us both to compete to claim value and to cooperate to create value. The ability to move back and forth between these two goals is a critical—and difficult—skill. How do emotions affect value creation and claiming? Researchers Alice Isen and Peter Carnevale found that a positive mood leads to greater value creation. … Read
A few characteristics of negotiation styles include hard bargaining tactics focused on claiming as much value as possible and integrative negotiation strategies such as value creation or win-win negotiation scenarios. What negotiation styles leads to optimal negotiated agreements and are suitable to win-win negotiations? One skill to cultivate that will have a positive impact on … Read
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, … Read
This spring and summer, professional sports leagues scrambled to negotiate deals with players’ unions to start or resume their seasons with health, financial, and logistical accommodations for the Covid-19 pandemic. Most reached mutually agreeable deals, with some bumps in the road.
Then there was Major League Baseball (MLB).
As they tried to work out when the 2020 … Read
In negotiation and conflict management, we bring our unique personalities and styles to the table. A reserved, cautious person is likely to bargain differently than someone who is outgoing and proactive, for example. There is much we can do to improve our negotiation performance—such as preparing thoroughly and using proven persuasion strategies. But should we … Read
The numbers are staggering: As a result of the coronavirus pandemic, unemployment in the United States rose from 3.5% in February to 14.7% by the end of April, the highest rate since the Great Depression. The number of unemployed Americans leapt to 23.1 million by the end of April, according to the Labor Department. With many … Read
This virtual and highly interactive semester-length seminar explores how people negotiate to create value and resolve disputes.
Designed to improve understanding of negotiation theory and build negotiation skills, the curriculum integrates negotiation research from several academic fields with experiential learning exercises. All sessions will be delivered live via Zoom. Emphasizing both theoretical and practical insights, this … Read
In preparation for negotiation, sellers face a choice between negotiating one on one with buyers, holding an auction, or combining elements of both processes. Consider the different paths that Amazon and Apple followed in 2017 when each began scouting locations for a new campus:
Dangling the prospect of a $5 billion campus and about 50,000 jobs, … Read
How do you teach your students to identify and create value in real estate negotiations?
Real estate negotiation can be difficult for both the buyer and the seller. Teaching real estate negotiation can involve value creation, distributive bargaining, as well as issue linkages. It is important for both buyers, sellers, and agents to identify ways to … Read
A distinguished older soprano, Sally has not had a lead role in two years. However, when another soprano falls ill, the Lyric Opera is eager to hire Sally…but at what price?
Sally Soprano is one of the best-known role-play simulations from the Program on Negotiation’s Teaching Negotiation Resource Center (TNRC). And it’s a classic for good … Read
In corporate negotiation, negotiators often care most about getting the best price possible, assessing the other party’s ability to follow through, and closing the deal. Unfortunately, such business preoccupations can lead dealmakers to overlook potential ethical concerns, as current negotiations in the news often attest. Examining some of Facebook’s recent corporate negotiation mistakes, we describe … Read
Group negotiations are a fact of managerial life, yet the outcomes of teamwork are highly unpredictable. Sometimes groups cohere, reaching novel solutions to nagging problems, and sometimes infighting causes them to collapse. How can you predict when conflict will emerge in groups, and what can you do to stop it?
Dora Lau of the Chinese University … Read
Imagine that you’re up for a new job that you’d like very much. At the end of a long hiring process, the HR manager asks you to name your price. You propose a salary that you believe to be ambitious, expecting some haggling to follow. Instead, the HR manager smiles and holds out her hand … Read
In many other parts of the world, women face the daunting challenge of winning a place at the negotiating table in the first place. In particular, UN Women, an agency of the United Nations, has noted that women are vastly underrepresented in formal peace negotiations worldwide.
One of the most popular negotiation topics in business concerns the role of outsiders to the negotiation. In this article the Program on Negotiation explores how to include outsiders in both your strategy and at-the-table negotiations.
In negotiation, we sometimes face the dreaded task of asking difficult people, intimidating opponents, and otherwise daunting counterparts for a big favor. How can we close the deal when we can barely summon up the courage to talk to the person in the first place?
Regrouping from the cancellation of the 2004–2005 season due to failed labor negotiations, National Hockey League (NHL) teams and players faced the challenge of radically restructuring their collective bargaining agreement (CBA) in July 2005. The new CBA instituted a uniform cap (as well as a floor) on team payrolls. It also set maximums and minimums … Read
When you expect an opponent to be competitive, your confidence in the outcomes you can achieve in negotiation is likely to plummet. In negotiation research with Adam Galinsky of Northwestern’s Kellogg School of Management, negotiators were provided with some background about their counterpart including information on how competitive their counterpart has been in previous negotiations.
A standoff between Democrat President Barack Obama and congressional Republicans in 2012 focused attention on the negotiation styles employed by the two parties as they sought to secure their interests while also working toward the resolution of a budgetary battle.
When countries face contending water claims, one of the biggest obstacles to reaching an agreement is uncertainty. Specifically, there are three types of uncertainty: uncertainty of information, uncertainty of action, and uncertainty of perception. In part 2 of this 5 part series, Program on Negotiation faculty member Lawrence Susskind explains the uncertainties facing negotiators trying … Read
Many negotiation and mediation instructors draw from other disciplines for a range of purposes. Insights from social psychology, for instance, can help students understand, explain, or predict certain interpersonal and inter-group dynamics. Ideas from economics and game theory can shed light on various value-creation principles.
So, you believe you’ve done everything you can do create value in your negotiation. You engaged in logrolling, making trades based on your and the other party’s different preferences on particular issues. You brainstormed new issues to add to the discussion, added a contingent contract, and proposed multiple offers simultaneously to identify which your counterpart … Read
Most negotiations are “mixed motive” in structure, requiring us both to compete to claim value and to cooperate to create value. The ability to move back and forth between these two goals is a critical – and difficult – skill to master.
The practice of using alcohol to grease the wheels has a long and storied role in famous negotiations. In recent decades, shared drinks during adversarial bargaining helped lead to breakthroughs in conflicts in Serbia and Northern Ireland, for example.
What at first seemed like a minor misunderstanding has spiraled out of control. A Chicago-based printing company hired your Chicago-based IT consulting firm to train its staff to use its new computer system.
The mortgage foreclosure settlement reached by the Obama Administration and major US banks bailed out during the 2008 financial crisis illustrates the importance of an integrative negotiations approach to bargaining with your counterpart. Here are the strategies and techniques employed by each side to reach a consensus on the mortgage foreclosure settlement.
Individual negotiators are sometimes overwhelmed by the idea of leading organization-wide changes to negotiation practices. In fact, it doesn’t take much time or effort to set the wheels of reform in motion, write Hallam Movius and Lawrence Susskind in Built to Win.
The issue of bidder collusion raises a larger question for negotiators: What ethical responsibility do we have to those who aren’t seated at the table with us?
Harvard Business School professor Max H. Bazerman uses the term “parasitic value creation” to describe the common tendency of negotiators to focus so narrowly on identifying benefits for those … Read
When parties to a negotiation can’t seem to find common ground, it sometimes seems as if the only solution is “winner take all.”
Consider the decade-long campaign by the backers of the Cape Wind project to build the first offshore wind farm in the United States off the coast of Massachusetts in Nantucket Sound. Led by … Read
The story, related by an anonymous job candidate on a blog called the Philosophy Smoker, went viral. According to the job candidate, referred to only as “W,” the philosophy department of Nazareth College, a small liberal-arts college in Rochester, New York, offered her a tenure-track position following a round of interviews. W said she responded … Read
In negotiation, including a matching right in an agreement can be a classic win-win move.
Suppose you’re a landlord negotiating with a prospective tenant. You want to maintain the ability to sell the apartment to someone else in the future, while your prospective tenant wants a commitment to rent the apartment for as long as … Read
In late 1999, with its stock in free fall, NCS HealthCare, a provider of pharmacy services to long-term care facilities, began “exploring strategic alternatives” – code in the mergers and acquisitions world that NCS’s board wanted to put the company up for sale.
In 2001, Omnicare, a larger provider in the same general industry, offered to … Read
Before launching a workaround, run through this list of skills-based strategies adopted from Getting Past No: Negotiating Your Way from Confrontation to Cooperation by William Ury (Bantam, 1993). Only attempt a workaround if you’ve tried them all without success:
If you’re in the middle of talks that seem to be going well, here’s a warning: consider the impact of the agreement on those who aren’t at the table, or suffer the consequences. That’s a lesson that Apple and some of the largest U.S. book publishers are currently learning the hard way.
On April 12, the … Read
Many things factor into whether you choose “fight or flight” when faced with a difficult situation in life. Whether it is a disagreeable coworker or a border struggle between nations, the decisions made at the onset of conflict often determine the tenor of the entire proceeding.
Along with information and a good-faith desire for collaboration, knowing … Read
Significant business disputes typically involve more than one issue—including disputes that appear to be “just about the money.” Who pays and when? In what form is payment made, with what level of confidentiality, and with what effect on future disputes?
In the heat of the moment, disputants too often focus on one conspicuous issue (such as … Read
Adapted from “Do Attitudes Influence Results?” first published in the Negotiation newsletter, January 2007.
Many people consider negotiations to be stressful and threatening. Others view them as challenges that can be overcome. Do these different attitudes influence the outcomes that people reach? Research by professors Kathleen O’Connor of Cornell University and Josh Arnold of California State … Read
Adapted from “When Lose-Lose Wins,” first published in the Negotiation newsletter, August 2004.
Does negotiation research promote the creation of joint gain at the expense of relationship building? Researchers Jared R. Curhan, Margaret A. Neale, and Lee D. Ross suggest that the field is guilty as charged.
To illustrate, the team apply author O. Henry’s classic tale … Read
In an effort to understand more about how the former PON Clearinghouse does and doesn’t meet its customers’ needs, we interviewed a number of long-time Clearinghouse clients. We asked what teaching materials they found most valuable and for what reasons. We also asked how they found out about the former Clearinghouse and what additional teaching and … Read
Adapted from “Creating Values, Weighing Values,” by Max H. Bazerman (professor, Harvard Business School), first published in the Negotiation newsletter.
In April 2001, the FTC filed a complaint accusing pharmaceutical companies Schering-Plough and Upsher-Smith of restricting trade. Upsher-Smith had been preparing to introduce a generic pharmaceutical product that would threaten a near monopoly held by Schering-Plough. … Read
Adapted from “Break Through the Tough Talk,” by Kristina A. Diekmann (University of Utah) and Ann E. Tenbrunsel (Notre Dame University), first published in the Negotiation newsletter.
You might think that cultivating a reputation as a tough bargainer might be the best way to cope with a competitive opponent. But this isn’t necessarily the best strategy. … Read
Adapted from “Promote the Positive or Minimize the Negative?” First published in the Negotiation newsletter.
Tory Higgins, a social psychologist, and his colleagues Lorraine Chen Idson and Nira Liberman have introduced the concept of regulatory focus. According to Higgins, when making decisions, people focus on either promotion or prevention. Those focused on promotion are primarily concerned … Read
The Clearinghouse at PON offers hundreds of role simulations, from two-party, single-issue negotiations to complex multi-party exercises. United States v. Dunlop is a four-person, three-issue, two-round exercise between U.S. prosecutors, an executive charged with securities fraud, and defense counsel over the terms of a possible plea bargain; attorney-client interviews are followed by … Read
Adapted from “Team Negotiating: Strength in Numbers?”, first published in the Negotiation newsletter.
According to conventional wisdom, when it comes to negotiation, there’s strength in numbers. Indeed, several experimental studies have supported the notion that you should bring at least one other person from your organization to the bargaining table if you can. On average, this … Read
Suppose you work for a specialty bicycle manufacturer and have negotiated a one-year contract to buy 500 headlamps per month from a supplier for $10 each, with payment due 30 days after receipt. The seller makes five deliveries; you promptly pay $5,000 after each shipment. The seller fails to make the sixth delivery, however, and … Read