Disadvantages of traditional negotiations
Typically, there is tension between the buyer and supplier during negotiations. The purchasing department wants to get the price as low as possible, the supplier the price as high as possible. Alternatively, the purchasing department may want to negotiate particularly short delivery times, while the supplier wants more leeway with the delivery times. Sometimes a supplier may also pursue a solo position with the customer, while the latter, for the purpose of risk minimisation, prefers to bet on multiple suppliers.
Generally, negotiations start out with the two parties coming to the table with sometimes extremely different positions. Once they have analyzed the initial scenario, both parts meet each other half-way. Both sides then prepare a new offer, which is then negotiated. Several rounds of negotiations may be required until a consensus is met.
In real life, the stubborn negotiations of positions may of course succeed. Experience shows, however, that at least one party will feel like they've made too any concessions. The Harvard Concept takes a different approach to negotiations.
Achieve a win-win situations with the Harvard Concept
As described above, traditional negotiating strategies are often about achieving a win-lose situation or finding a compromise. The Harvard Concept, on the other hand, aims to balance the interests of both negotiating parties, thereby achieving a win-win situation.
At the heart of the matter, the Harvard Concept aims at the disclosure of their interests by both parties so that one negotiator realizes at what point it can offer the other party compensation for a less favorable constellation.
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The four principles of the Harvard Concept
1. Separating the personal level from the case level
One of the most important principles of the Harvard Concept is the separation of the personal level from the case level. The case level is comprised of the neutral data and facts of the negotiation while the needs, feelings, and wishes of the negotiating partner are assigned to the personal level. In order to prevent the influence of the personal on the case at hand, it is important to first compile all questions for the case as well as any potential interpersonal concerns. After that, possible solutions for both levels should be recorded.
2. Determine needs and interests
The second principle of the Harvard Concept is the determination of needs and interests. Purchaser and supplier take different positions during negotiations. According to the Harvard Concept, these should initially recede to the background during a negotiation in order to focus on the real issues. Let's say the parties are negotiating over an orange: Perhaps one of the negotiating parties wants to make juice out of it, while the other only needs the peel in order to bake a cake? A classic 50-50 split of the orange here would not be practical. With the Harvard concept, it is important to ascertain precisely which interests the negotiating parties are pursuing. To achieve this, it is important for both sides to create two lists: one with differing interests and one with common interests.
3. Come up with options
After the interests of the negotiating parties have been disclosed, the third principle of the Harvard Concept must be taken into account: the development of options. To that end, creativity is the primary requirement: instead of looking for the proper solution, both parties should develop as many options and solutions as possible. It is important that the parties do not only search for benefits that suit them, but also for positive outcomes for the other party.
4. Define fair criteria
Once possible options have been found, the fourth principle of the Harvard concept comes into play: defining fair criteria Ultimately, the two parties want to assess the result of their negotiations and clearly see why they chose these particular options. Feasible criteria are first time scenarios, the legitimization by statutory provisions and quality standards.
Negotiations based on the Harvard Concept will always produce better results since they make it possible to include multiple levels for more flexibility. The Harvard Concept does however require that both parties are in a position to expand the subject matter of the negotiation. In distributive negotiations that target, for instance, a fixed volume, this negotiation strategy is therefore difficult to apply.