The Art of Negotiation: How to Make Win-Win Deals

Several years ago, we decided to have our website redone. We went about it like real pros – or so we thought.

But instead, it turned into a real mess. 

Not because of the design company we hired to set it up (they were great). And not because we were a particularly difficult client (ok, maybe a little). But because we screwed up the negotiation part. 

When we were sitting at the negotiating table with the budget in front of us, we bargained hard. The design company wanted a bigger budget, and we fought them tooth and nail over every dollar and every feature. 

We thought we’re doing it right: why pay more when you can get it for less?

That’s how most negotiations look like: they are zero-sum games. 

In the end, we ended up with a website that didn’t live up to our  expectations, didn’t live up to the design company’s standards, and certainly didn’t win any awards in the eyes of our audience.

What went wrong? 

What we had engaged in is known as positional bargaining. Basically, that means that each party names their price (usually at different ends of the low-high spectrum), and then they negotiate until they meet somewhere in the middle. It’s always a compromise for both sides. 

Positional negotiations happen when we believe that there’s just one pie, and we have to get as much of it as possible.

But there’s a better alternative. 

3 people at a table negotiating

Inventing a Better Pie: The Harvard Negotiation Project

In 1979, William Uri and Roger Fisher at Harvard Law School started their work on the Harvard Negotiation Project, probably the most expansive body of research done on the topic of negotiation to date. The solution they found is as simple as it is counterintuitive: 

Instead of fighting over the biggest piece of the pie, find ways to make a bigger pie. 

That way, no one needs to fight and everyone walks off with a lot of pie. The model they developed is called principled negotiation and it has since then revolutionized the world of negotiation: from diplomacy between nations to billion-dollar business deals to relationship advice. 

These integrative negotiations, or non-zero sum games, require you to change just one thing:

In the negotiation, you make strategic use of the simple fact that people have different needs, interests, resources, values, and so on. 

Instead of fighting about who gets the biggest piece of the pie, you negotiate until you find out that you really only care about the crust and topping (after all, we all know that’s what makes a pie great). Meanwhile, the other party is a huge fan of the soft filling. How easy is it for both of us to leave that negotiation table with a big smile on our faces?

Any principled negotiation needs to look at four boundary conditions:

  1. People
  2. Interests
  3. Options
  4. Criteria

#1: People: Separating The People From The Problem

Let’s say you have a broken heater and a stingy landlord you don’t get along with.

Now usually you would use that new heater to make your landlord pay through the nose.

In most negotiations, we blur the lines between the people involved and the problem that needs to be solved.

But what if you separate your dislike for the person and the problem that needs to get solved?

You can then use your landlord’s tendency to save every penny to get him to agree to a new heater that’s going to save him money in the long run.

You can become curious about why your landlord is so scared of spending money. Maybe there’s a big repair coming up next year that he’s saving up for, or maybe he’s worried you’ll move out on short notice and he’ll lose money while the flat is empty.

If your goal is for you both to come out of this negotiation as winners, it helps to know where the other person is coming from. But don’t try to guess what the other person’s intentions are. Because you’ll almost always be wrong. Just ask them. 

Making this effort is especially important when you’re negotiating with a friend, family member, or business partner that you’re going to then work with for a long time


#2: Interests: Start With Interests Instead Of Positions

A negotiation is never about the price tag, it’s always about the interests that each party has in the deal.  

By looking at all the interests – including money – we can add a lot more facets to the discussion, allowing us a lot of areas to negotiate around.

Let’s say you want to buy a second-hand car. Now instead of naming your price and the seller naming his, let’s start with interests. 

You want a car at a good price, but that is also good-to-go. You’re living a busy life and you can’t have a car that keeps breaking down. 

The seller also wants a good price for the car, but he is moving soon, so he doesn’t want the cheque bouncing or the buyer coming back two weeks later because something broke.

Working around interests instead of positional bargaining has put you both in a situation where you can strike up a winning deal: maybe you can both pay for a mechanic to ensure the car is serviced and works well, and you can agree to pay in cash.


#3: Options: Inventing Options That Both Parties Benefit From

Once you know each other’s interests, you can start brainstorming options that both parties can benefit from. 

Let go of the idea that there is a single perfect answer to this – as also discussed in detail in our decision-making article. There are many solutions, and they can all work.

This way, compromises become a lot easier, because now you have a lot more to compromise on. Sometimes, a compromise is a huge gain for the other party and it doesn’t cost you anything, like paying in cheque vs cash in the example above. 


#4: Criteria: Negotiate based on objective criteria, not emotions

Because negotiations can impact you and your relationships for a long time, they shouldn’t be made from a gut feeling – but on objective criteria based on market prices, labor cost, precedence, or community standards.

For example, when you talk with your landlord about that broken heater, there is a precedence in how much your rent should be lowered while you don’t have hot water, and how long it should take to replace the heater.

So there you go. How different is this approach than showing up to the negotiation with an arbitrary price tag in mind, and then haggling around until both parties leave the table discontent?

In short: 

  • See the problem as separate from the person you negotiate with
  • Look for the various interests you and the other party have in making that deal
  • Based on those interests, brainstorm options together that work for all sides
  • Use objective criteria to ensure the final deal is fair


Now go and make some awesome pies!