Business deals are the lifeblood of any organization, whether it is a small startup or a multinational corporation. But how can you ensure that you are getting the best possible outcome from your negotiations? How can you balance the need to create value with the desire to claim value for yourself?
According to experts from the Program on Negotiation at Harvard Law School, the key to reaching mutually beneficial agreements in business negotiations is to strike a fine balance between creating and claiming value. Creating value refers to the process of expanding the pie of resources and benefits that are available to both parties, while claiming value refers to the process of dividing the pie and securing your share of the benefits.
To create value, negotiators need to identify the issues and interests of both sides, explore possible tradeoffs and synergies, and generate creative options that can satisfy the needs of both parties. To claim value, negotiators need to prepare well, set realistic goals, make persuasive arguments, and use effective tactics to influence the other side.
However, creating and claiming value are often in tension with each other. If you share too much information about your interests and preferences, you may reveal your weaknesses and give the other side an advantage in claiming value. If you focus too much on claiming value, you may miss opportunities to create value and leave money on the table.
How can you overcome this dilemma and strike the best business deals? Here are some tips from the experts:
- Use objective criteria. Instead of relying on your subjective opinions or emotions, use objective standards and benchmarks to justify your proposals and evaluate the other side’s offers. For example, you can use market prices, industry standards, expert opinions, or legal precedents to support your claims and persuade the other side.
- Separate the people from the problem. Avoid personalizing the conflict or attacking the other side’s character. Instead, focus on the underlying issues and interests that are driving the negotiation. Try to understand the other side’s perspective and empathize with their concerns. Build rapport and trust by communicating respectfully and honestly.
- Be flexible but firm. Be willing to make concessions and tradeoffs that can create value for both parties, but do not compromise on your core interests or goals. Be assertive but not aggressive. Do not accept an unfair or unfavorable deal, but do not walk away from a potential agreement without exploring all the options.
- Seek win-win outcomes. Do not view the negotiation as a zero-sum game, where one party’s gain is another party’s loss. Instead, look for ways to create win-win outcomes, where both parties can benefit from the deal. Aim for mutual satisfaction and long-term relationships, rather than short-term gains and one-time transactions.
By following these tips, you can strike the best business deals that can create and claim value for yourself and your counterparts. You can also improve your reputation and credibility as a skilled and ethical negotiator.
