Negotiation

One of the biggest business tricks I've learned is negotiation. But more specifically, the Harvard negotiation method. It's a convenient tool that is more practical than academic.

It's pretty different from bargaining when one party is trying to get the best deal for itself, and the other party is trying to do the same for them. The Harvard method looks to create value for both parties. It has four main elements:

1. Separate People from Problems: You shouldn't attack or blame the other party during the negotiation. Instead, you should focus on the problem and try understanding the other person's perspective.
2. Focus on Interests, not Positions: Instead of just looking at the other party's stated position, you should try to understand their underlying interests and concerns. This can help you find a solution that satisfies both parties.
3. Generate Multiple Options with Mutual Benefits: Instead of just trying to win, you should work together to come up with various possible solutions that benefit both parties: the more, the merrier, which helps to look at the problem from different angles.
4. Use Objective Criteria: This means that you should use objective standards to evaluate the fairness of a proposed solution rather than relying on subjective judgments or power dynamics.

Let's take a look at how this might work in two different situations:

Example 1: Negotiating the price of a house on sale

When you're negotiating the price of a house, you might be tempted to get the lowest price possible. With the Harvard method, you would start by trying to understand the seller's perspective and underlying interests. They may need to sell quickly because they're moving or have a specific price in mind because they need to pay off a mortgage. Once you understand their interests, you can work together to devise a deal that benefits both parties. You could offer a higher price, but with more favorable terms, or you could find a way to reduce the seller's costs. By focusing on creating value rather than just trying to get the lowest price, you can often find a better solution for everyone.

Example 2: Negotiating the sale of a company and its value

When negotiating the sale of a company, there's a lot at stake. You could start by understanding the other party's concerns. The buyer may want to acquire the company for a specific reason, or they may have a specific valuation in mind. Once you understand, you can work together to generate multiple options that have mutual benefits. You could offer a lower price but with a more extended earn-out period, or you could structure the deal in a way that reduces the risk for the buyer. By using objective criteria to evaluate the fairness of the proposed solution, you can ensure that the deal is fair and equitable for everyone involved.