Creating Win–win Deals

Some negotiators talk about wanting to create win–win deals, but when they hit major roadblocks leave the negotiating table prematurely, thus missing out on an opportunity to make a good deal. Effective negotiators utilize techniques to ensure they can create win–win deals.

Getting the conditions right

Effective negotiations, unlike competitive sports, can produce more than one winner. However, it takes motivation by both parties to find creative alternatives that fulfill their interests to create a win–win outcome. To promote win–win deals, effective negotiators focus on both the substantive issues of the deal (price, terms of payment, quality, and delivery schedule) and on formulating a social contract between the negotiators—the spirit of the deal. This involves setting appropriate expectations of how the deal will be negotiated, implemented, and re-visited, in case future disputes arise. If, by contrast, negotiators believe that negotiations are a zero-sum game that must inevitably be won at the expense of the other party, a win–win deal is not possible.

Bundling the issues

Effective negotiators do not negotiate a single issue at a time because this implies that there is a fixed pie and only leads to a win–lose scenario. Instead, they bundle several issues together. Trade-offs can then be made between negotiators because negotiators do not place equal importance on every issue. The principle of bundling issues involves placing an issue that is of high value to you (for example, price) with another that you consider to be of low value (for example, warranty). When you trade-off on issues, you can then keep your high-value issue (price) and give your low-value issue (warranty) away to the other party. The other party, in return, will allow you to have your high-value issue, because your low-value issue is, in fact, of a high value to them. If your low-value issue is also considered to be a low-value issue by the other party, then they will reject the trade-off. Therefore, it is important for you to know what the other party considers to be their high-value issues.

Capitalizing on risk

You can also capitalize on differences in risk tolerance. Some negotiators are more comfortable with high-risk situations than others. As a win–win and risk-taking negotiator, it is possible for you to design a deal where you assume more risk and receive more benefits while your counterpart, who is also a win–win negotiator but risk-averse (avoider), assumes a lower level of risk but receives fewer benefits from the deal.

Win–win negotiating

Table

Fast track	Off track
Negotiating on multiple issues simultaneously	Negotiating on only one issue at a time
Understanding what is important to the other party	Focusing exclusively on your own interests
Identifying and leveraging differences in the interests of and the risks to the other party	Ignoring differences in your counterpart’s interests and risks