Negotiation is a two-way street. It’s a process that involves not just claiming value, but creating it.
Value creation can help resolve conflicts that are otherwise deadlocked, and transform good deals into great ones.
Value Creation in Negotiation
A successful negotiation requires a fine balance between claiming and creating value. This balance is critical, yet often misunderstood.
“Value creation occurs when solutions are found that benefit both parties, or at least benefit one of them without making the other worse off,” says Harvard Business School Professor Mike Wheeler in the online course Negotiation Mastery.
This is commonly called win-win negotiation because both parties leave the bargaining table in the same or better position than they arrived.
On the other hand, value claiming refers to how value is distributed in a negotiation.
“Once value creation has been maximized, securing a larger share for one party necessarily leaves the other with less,” Wheeler says.
This scenario results in a win-lose negotiation, as one party naturally fares better than the other.
Distributive vs. Integrative Negotiation
Another common way to describe the relationship between claiming and creating value is through the idea of distributive and integrative negotiation. To understand the difference between the two types of negotiations, it’s helpful to imagine the value that’s to be exchanged as a pie.
In distributive negotiation, each bargaining party must vie for their fair share of the pie. If one party takes a larger slice of the pie, then the other is inevitably left with a smaller piece. This form of value claiming negotiation results in a win-lose scenario.
In integrative negotiation, the focus is on expanding the pie by finding creative ways to add value for everyone involved. By focusing on creating value rather than claiming it, both parties not only leave the negotiation satisfied, but foster goodwill and pave the way for future discussions.
If you want to become a more skilled negotiator, here are three ways you can add value the next time you’re at the bargaining table.
How to Add Value in a Negotiation
1. Build Trust
Trust is a foundational component of any effective negotiation strategy. Deal-making comes with an inherent level of risk, making it vitally important for you to build a rapport with the other party.
“If you haven’t established a level of trust—if people think you’re chesting your cards, you’re bluffing, or whatever the case may be—they have no incentive to be any more open than you are,” Wheeler says.
Throughout bargaining talks, foster a relationship with the other side by sharing information. Avoid divulging details that could compromise your position, but show you’re willing to provide some insight into your strategy and intentions in order to reach an agreement. In turn, the person on the other side of the table may be willing to do the same.
Express genuine interest in understanding the other party’s priorities, too. Ask open-ended questions that invite them to explain their stance—rather than just state it—so you can get a better sense of their motivations.
By forging a connection based on trust, a more engaging and productive dialogue can be had that encourages both sides of the table to explore opportunities for mutual gain.
Related: Negotiation Tips for People Who Hate Negotiating
2. Find Uncommon Ground
Value creation requires focusing on areas where you and the other party have different interests and perceptions, rather than commonalities.
“It’s not a matter necessarily of finding things you agree on, but things that you disagree about,” Wheeler says. “You might treasure something that you own, but somebody else is just nuts about it. You ought to be able to make a swap there.”
To hear more of Wheeler’s thoughts on how to create value at the negotiation table, watch the video below:
The key is to consider your differences across multiple issues. If you focus on one item at a time, you risk being locked into a series of win-lose scenarios in which one party comes out on top. While your highest priority might be Issue A, the other person’s might be Issue B, creating an opportunity for trade that can benefit both sides without any major sacrifices.
Through finding and capitalizing on uncommon ground, you can not only secure maximum value for your organization and yourself, but bolster cooperation by satisfying the other side’s needs.
3. Be Agile
Being a successful negotiator involves knowing how to think on your feet. Extensive preparation is an essential part of bargaining, but even the best-laid plans can go awry. You need to be ready to adjust to changing conditions.
According to Wheeler, skilled deal-makers understand the importance of agility and improvisation.
“However you happen to see yourself as a negotiator, most people you deal with likely have a different style, at least to some degree,” Wheeler says in a previous blog post. “To succeed, therefore, you must be agile. That means flexing yourself so that you deploy different skills depending on the situation and whom you’re dealing with.”
Over the course of talks, keep your overarching goals in mind, but refine your tactics as you listen to the other side and learn more about their point of view. Have an idea of the best- and worst-case scenarios that could play out so that you can be prepared to propose solutions to challenges as they arise.
By taking a nimble, creative approach to negotiation, you can uncover new and exciting avenues for trade and achieve greater outcomes than you initially thought possible.
Related: 6 Negotiation Skills All Professionals Can Benefit From
Employing a Win-Win Mindset
Negotiation doesn’t have to be about one person winning and the other losing. Through finding ways to add value in deal-making talks, you can establish a lasting relationship that produces long-term benefits for both sides.
Do you want to deepen your understanding of negotiation dynamics? Explore our eight-week online course Negotiation Mastery and learn how you can develop the skills and techniques needed to effectively close deals and reach agreements.
(This post was updated on April 24, 2020. It was originally published on March 5, 2019.)
