“How to Create Added Value” by Iwar Unt.

How to Create Added Value

Iwar Unt

If there is motivation, an open mind and enough freedom for individuals in an organization to look for and find new paths, considerable added value can be created only if negotiators know in which direction they are to look. Added value increases the room for negotiation and the cake which can be divided.

An arrangement which is exclusively based on one part’s victory over the other is barbaric and can never be humanized. It can only be maintained as long as the part who has the upper hand can force the opponent into submission. Sooner or later it will collapse. The alternative is co-operation and partnership. But the person who does not understand the theoretical reasoning behind the idea of partnership and added value, is not motivated to be open and run the risks inherent in a more open negotiation climate. In order to dare co-operate, we must have accepted the theories.

The objective of partnership is to identify, develop and safeguard the added value realized. Added value, which means that the business can develop and grow, that there is a bigger cake to share. You have to test the limits and find the solutions in a businesslike manner and try to secure as much as possible for yourself. You should win the negotiation without leaving the other party feeling like a loser. Partnerships or partnering is rewarding companies who can get beyond traditional ways of conducting business, and it is punishing companies who cannot get outside the traditional mindset.

Many people perceive the room for negotiation as the difference between the highest price that a buyer is willing to pay and the lowest price a seller can come down to. It will only be possible to strike a deal if the buyer can pay a price above the seller’s threshold of pain. The real room for negotiation becomes much larger if you learn how to create added value. Our studies indicate that 40% of the actual room for negotiation is never exploited because negotiators have not learned to identify and utilize the potential added value. You will be able to locate the added value by finding the answers to the following questions:

What can I do to assist the other party in reducing his costs and risks or to increase his profits?
What can the other party do to assist me in reducing my costs and risks or to increase my profits?
What can we do together to reduce costs and risks or to increase profits? Here you can locate added value.

1 2 3 4 Next
Back to Index

September 2004