PON – Program on Negotiation at Harvard Law School – https://www.pon.harvard.edu

What is a Win-Win Negotiation?

How trading across differences leads to mutual gains and win-win negotiation

By Katie Shonk — on May 18th, 2017 / Win-Win Negotiations

In an episode of the American television show The Office, bumbling manager Michael Scott consults with a manual on conflict resolution while attempting to mediate a dispute between two of his subordinates, Angela and Oscar. After Scott explains that there are five approaches to resolving conflict, beginning with “win-lose,” an annoyed Angela interrupts: “Can we just skip to whatever Number 5 is—win-win, or whatever?”

“Win-win is Number 4, and Number 5 is win-win- win,” says Scott, consulting his manual. “The important difference here is with win-win- win, we all win. Me too. I win for having successfully mediated a conflict at work.”

The scene’s intention is comic, but as we will see, it reflects a genuine confusion in the workplace: What is a win-win negotiation, anyway?

From win-lose to win-win In the 1980s, the way in which people thought about negotiation changed dramatically, writes Massachusetts Institute of Technology professor Lawrence Susskind in his book Good for You, Great for Me: Finding the Trading Zone and Winning at Win-Win Negotiation (PublicAffairs, 2014). Thanks in large part to the collaborative spirit of Roger Fisher, William Ury, and Bruce Patton’s bestseller Getting to Yes: Negotiating Agreement Without Giving In (Penguin, 1981), millions of people came to believe that win-win negotiation is an improvement on the dominant win-lose mindset.

Yet as the concept of win-win negotiation diffused to became a catchphrase, confusion grew about what exactly it entailed, as Susskind notes in Good for You, Great for Me. In win-win negotiation, are counterparts supposed to divide resources evenly? If one party has more to offer, shouldn’t they get the bigger piece of the overall pie? How could a powerful party justify a 50-50 split to its constituents? Was competing really so bad, anyway?

More to the point, can it still be a win-win negotiation if you’re trying to gain as much as possible for yourself?

The answer to that question is a definite yes. Win-win negotiation doesn’t require you to split resources right down the middle with a sole focus on being “fair.” It doesn’t mean automatically making a concession just because the other party made one. And it doesn’t mean that you should try to avoid conflict and tension at all cost.

Rather, win-win negotiation involves working to get the best deal possible for yourself while also working to ensure that your counterpart is satisfied (see also, Win-Win Negotiations: How to Manage Your Counterpart’s Satisfaction). It means making offers that are good for them and great for you, according to Susskind. And it means thinking creatively about how you can get more of what you want by helping the other side get what she wants.

A win-win negotiation example

Consider the following examples of a highly creative win-win negotiation. In a recent blog post for Forbes, Hootsuite CEO Ryan Holmes how, at the tail end of his team’s difficult negotiation with a potential vendor to sell Hootsuite’s education product, the two sides reach an impasse on the question of who would pay for the credit-card fees associated with their future sales. The fees were only a small fraction of sales, but both sides felt they’d given enough and refused to budge.

As the deal threatened to collapse, Hootsuite finally agreed to pay for the fees—on the condition that the vendor agree to take two Hootsuite representatives out for a nice steak dinner each time they achieve revenues of $100,000. Though the “steak dinner clause” was financially lopsided at first (the dinners cost far less than the credit-card fees), Holmes says it’s turned out to be a “huge win-win.”

Why? Because the dinners turned out to be “a powerful way to build a business relationship with this vendor,” according to Holmes. “We now do more business with the vendor than ever, a relationship that both sides have benefitted from.” A minor sacrifice on price—a win for the vendor—proved eventually to be a win for Hootsuite, as the steak dinners generated lucrative new business opportunities.

Win-win tradeoffs in negotiation

As this example shows, what might first look like a win-lose negotiation may turn out to be a win-win negotiation down the road. Finding your way to a win-win negotiation often involves reaching mutual gains by trading off their differing preferences to create value.

Here are a few types of differences that negotiators can capitalize to build win-win negotiations:

1. Different interests and priorities.

Hootsuite had a strong interest in building a long-term partnership with the vendor; the vendor was focused on getting a great deal on price. This difference led Hootsuite’s team to propose a value-creating tradeoff that led to a win-win deal over time.

2. Different beliefs about the future.

When parties have different beliefs about how the future will unfold and affect their agreement, they can negotiation contingent contracts—“what if?” proposals that stipulate what each side will do if its vision of the future does or does not come true, writes Susskind. If each side truly believes its predictions will play out, both should be happy to “bet” on those predictions in their contract—and enable a win-win deal.

3. Different attitudes toward time.

Negotiators often have different time horizons that enable wise tradeoffs. Suppose that two investors are interested in buying a business together. One is looking for quick returns, while the other can be more patient. They might reach a win-win agreement by agreeing that the less patient party will get a larger percentage of early returns in exchange for agreeing that the more patient party will earn a much larger share of returns down the road.

Clearly, win-win negotiation offers far more flexibility than just splitting resources 50-50. By capitalizing on differences and negotiating assertively, negotiators can move into win-win territory.