Five Ways to Find Value In Our Differences During Negotiations

Originally published by Forbes.

Old school negotiators, whose habits were developed in the dog-eat-dog world of single-issue negotiations, tend to see value only one way: How far can I push my counterpart to give me more of whatever is up for grabs? Those familiar with game theory go a bit further and explore how they can influence their counterpart's view of how much is up for grabs — the so-called zone of possible agreement, or ZOPA. They know that if the outcome depends solely on jockeying between my bottom line and yours, then to "win," I have to convince you I'm willing to let this deal go — and that your walk-away is worse than you think.

The problem with these negotiations? The parties spend a lot of time talking about walking away and bashing the other side's alternatives. That also means they spend less time developing a mutually valuable deal. Think about your last price negotiation — with a car dealer, a potential new hire's salary demands or your least favorite procurement functionary. Those negotiations are often about whether you should take their deal or miss out because they claim they can just walk away and do the deal with someone else.

There is, of course, a different style of negotiation that focuses on solving problems and creating value. Interest-based negotiators, who have internalized the lessons of Getting to Yes by Roger Fisher and William Ury, and the many "win-win" negotiation books that followed, know that instead of trading threats and haggling over demands or positions, we should be exploring the parties' interests — what they are trying to accomplish or avoid through this negotiation, their aspirations and their fears.

But there is more to value creation than just getting at the interests of the parties. People often think that to get to yes, we need to align our interests. But as we explore the interests underlying each side's positions — the "why we want it" behind the "what we want"—we also need to seek out the subtle (or not so subtle) differences between our preferences, what we prioritize, what things cost us to do and more.

Those differences are the keys to creating value. Instead of trying to compromise and accommodate, because “to get a deal we have to want the same things,” we can look to our differences to provide the most interesting clues about ways to create value. Here’s why:

Negotiators sometimes simply want different things, even though they don't articulate those differences.

They might both say they want money and that “money is both their position and their interest.” But they forget that money comes in different flavors: Money can signify purchasing power today, but it can also signify longer-term equity value; money may mean the ability to leverage a deal using debt or external capital; it might also represent respect or recognition of someone's contribution. To create value, dig into "why they want it" and look for ways to meet their interests in ways that are easier or less costly to you. When you structure a deal in ways that come with a lower cost of capital, a different tax treatment or payment in a different form, you create value.

Negotiators may have different priorities.

Trading across issues makes a lot of sense in this situation. If we let the party who prioritizes a certain issue "win" in exchange for us “winning” on a different issue more important to us, we are both better off than compromising independently on each issue. This often shows up quite tangibly in labor negotiations, where the union may place more value on certain issues like benefits and job security, while management may value near-term cost projections or work rules for future acquisitions.

Parties in a negotiation might have different beliefs about the future.

When one side is highly optimistic about some upcoming event or outcome, and the other less so, create value by exploring contingent agreements. Employers, for example, might not want to commit to paying a new hire as if they were a top performer, but they might be happy to agree to some kind of performance-based bonus. Buyers and sellers of commodities might have different expectations about whether market prices are going to increase or decline, but both can project value from a deal based on a benchmark or index.

Negotiating parties can have different preferences about timing.

If you can determine whether a deal is better or worse for each of you depending on when it takes effect, you may be able to do a deal that is neutral to you, but less costly (or more valuable) to your counterpart because it lands in a different fiscal year, enables them to make an important announcement or avoids a precedent they’d prefer not to set for a future larger deal.

Parties may have shared interests but different capabilities.

The way to create value is to figure out how you can collaborate to make more of what you both want. For example, I worked on a negotiation between a large hospitality and entertainment company and a global beverage supplier, and while they both cared about the size of the discount the beverage company would provide on each case, they could both gain a lot more by increasing sales volume. There were many ways they could cooperate on that, including leveraging the beverage company’s contracts with high-profile entertainers who could help drive traffic to the hospitality company's venues.

Depending on the context of your negotiation, you may find other useful and interesting differences that allow you to create value. In most negotiations, if you can figure out the things that are high value to you and relatively low cost to them, and vice versa, you have the keys to value creation in the palm of your hand.

Want more valuable deals? Put those differences to use.