The Harvard Negotiation Method - 7 Steps to Negotiation and Deal Making

[Applause] so in 2015 I was really lucky to have the opportunity to attend Harvard Law School for a week-long intensive executive education program on strategic negotiations now personally I believe that negotiation is one of life's most important skills it just unlocked so many opportunities so much valued and it's something that I think a lot of people don't practice and it definitely can be learned now what I'm going to do in this video is I'm gonna share with you some of the main principles every our negotiation around deal making that I learnt during that yes five day intensive course at the Harvard Law School and yeah hopefully will help you in your life to be able to unlock some value if you've got a negotiation and firstly before we start on that just remember negotiation exists everywhere it exists at home it exists in your family life it exists in your work life in your business life if you're playing sport negotiation is everywhere it's just it's so fundamental so important so before we kick off just remember how important these skills are and here are some of the main principles so if you are in a negotiation this step number one is you need to know who the key players are so make that make a list jot down who the either whether it's a one-on-one negotiation if it's a three four five way negotiation note down the key players and do your research on them step number two after you know the key players and you've got a basic understanding of who they are this is a critical step you need to make sure that you can find out what their motivations are and what their goals are from that from this deal from this collaboration from this partnership so find out as much as you can about their interests and what's of the highest value to them make a list of that note down different points and angles because when you actually get into the game knowing this will help you to unlock all of that value that's probably sitting there that will make the strongest chips and negotiations step 3 know that when you go into a negotiation the main priority is not to win the main priority is to grow the pie and to create as much value as possible step 4 know when it's time to walk away this is referred to as a Batna which is the best alternative to a negotiated agreement and what that is is that's your baseline so in every negotiation you need to be very clear when is the time for you to walk away if you can't unlock that value anything that's above that walkaway line should tell you that the deal is worth pursuing in some way or form if it goes below that but note your baseline it's not worth getting involved in the deal and you're better off walking away focusing on something else because it's going to be a waste of time and you're going to end up losing resenting the other party and it's just not worth it so as you once you figured out what their interests are once you figured out what value that you need to provide once you figured out what a couple of your goals of the negotiations are know where you walk away mark is when you end that negotiation this is really key as well step number five is know the zone of possible agreement so in every negotiation there is usually a zone of possible agreement the bigger that this zone is the better the negotiation is going to be now let me explain this a little bit more so say for example you're buying a car right the car that you're looking at is sixty thousand dollars but you only have twenty five thousand dollars to spend now the reality is even with great negotiation you won't get that car for twenty five or thirty thousand dollars so your zone of possible agreement is quite small in that circumstance now say for example if you have forty thousand dollars available in your bank account or in your finances that's available the car sitting around fifty thousand dollars you have a zone of possible agreement that's going to be much larger and what this will mean is that you and the dealer that you're working with will have a much strong any gauge because they'll be able to meet you at a place that's beneficial for their business and you'll also be able to be in a comfortable place to afford that vehicle or that product that you're looking at by so the bigger the zone of possible agreement the better it is if it's not going to match up there's no point engaging with that negotiation you see this happen a lot I guess in a family law and family negotiations where I guess emotions take really that they play a huge role in that negotiation and if the two parties hate each other and they've got such a big divide that so enough possible agreement becomes so much smaller whereas in amicable separations you will see that the agreement is usually a lot mutual and both parties will find out yep this is high value to me low value to you this is high value to you this is low tone to me let's keep making concessions that increase the value for the other person that will grow the biggest pie possible so that's the zone of possible agreement make it as big as possible following up on design of possible agreement there's things that you can do to keep improving the zone of possible agreement that's why bringing in things like a third party adding additional value bringing in more features finding out ways you can work together to add more value to the other party that's all the design of possible agreement is is how much value do we have in our pie how big can we make the pie so it come to all of the partnership agreement or a collaboration that's going to be a win-win for both of us that's Zopa so another follow up and the zone of possible agreement make the pie as big as possible now that just means value the more value can add to any collaboration and negotiation the better the negotiation is going to be the worst negotiations are win-loss and negotiations where one party wins one loses because it just means that there's the opportunity to unlock more value over the longer term is gone and all the effort you've got a building that relationship is just so it's short-term and just not with this short-term win unless it's a binary negotiation where you're negotiating the price of a cup of coffee where it's a one-on-one transactional negotiation I would not be going for a win-loss type of situation a win win is always ideal as it unlocks future value and the final step is is knowing how to make concessions now concessions are key in every single negotiation because ultimately both parties want to feel like they win so always have three four or five concessions that are low value to you but high value to the other person that you can add in to make them feel like that really want out of the deal never go out with what your best price what your baseline is because there won't be enough room for you to move from that starting position a lot of people do this they'll start off with something like look I'm just going to cut the chase this is my best-case scenario can you do the deal sometimes it works but very rarely will the other party feel like they win because they're gonna think that you've got scope to move when the reality is you've actually thrown out your best possible price and they can make concessions because they've got a lot more in their arsenal where you've got very little scope to move around so whatever it is whether it's a transactional negotiation or a bigger deal make sure that you do put in some padding so that you can make the other party feel like they are getting a good deal and both parties are winning from that negotiation so that's a quick overview some of the real core fundamentals that I learned from that course inhabitant that I've learned from negotiating deals along the way yeah this process works I've probably been able to negotiate deals to the value of two to three hundred million dollars using this system and at the end of the day it's built some amazing long-term relationships to say negotiate with the view of creating value negotiate with the viewer creating win-win situations and negotiate with the view of building long-term relationships you cannot lose transactional negotiations to me are merely pointless this is the style negotiation everyone should be implementing it try it in your life show people your value and build upon that there's negotiation go make some deals practice this would love to hear how you went and what the outcomes where and remember trial and error is key even if you mess up one of these negotiations it's not the end of the world start small practice it whether it's at your local store your food outlet get comfortable we're trying to create value and yeah developing collaborations that build a pie [Music] [Applause]

Channel: Ali Terai

Views: 52,349

Keywords: negotiation, deal making, harvard law school, negotiation executive education, negotiation tactics, negotiation strategies, negotiation tips, Harvard negotiation, negotiate salary, negotiate promotion, get what you want, negotiation skills, partnerships, growing the pie, BATNA, Strategic negotiation, Zone of possible agreement, win-win negotiation, how to negotiate

Id: 5bAbKnzEipM

Length: 9min 32sec (572 seconds)

Published: Wed Dec 27 2017