Guhan Subramanian is the Joseph Flom Professor of Law and Business at Harvard Law School and the H. Douglas Weaver Professor of Business Law at Harvard Business School. He teaches in several HBS Executive Education programs, including the Advanced Management Program (AMP). Here he explains why negotiation skills are more important today than ever before—and how AMP equips leaders to become exceptional negotiators.
We demonstrate that negotiation is much bigger than the bargaining table. We want executives to step back and think not just about the dynamic in the room, but also about how they can arrange the chessboard in advance—to the point where the hard work is mostly done by the time they go into the room.
AMP participants learn how to approach negotiation situations more systematically and how to maximize their effectiveness at the table. What should they do or say to make sure they can create value and capture value for themselves and their organization?
To accomplish this, we systematize and put some vocabulary around what many executives are doing instinctively. We also provide research and theoretical grounding on effective negotiations. Once that grounding is established, we help executives take their game to the next level.
As executives rise to higher levels in the organization, they shift from being functional experts —in finance, accounting, or marketing, for example—to a general management perspective. Many executives who come to AMP have reached that inflection point. And general managers, as we all know, are constantly negotiating—with customers and suppliers, to be sure, but also internally. As businesses have shifted from command-and-control hierarchies to flatter, matrix-style organizations, senior executives must figure out how to build bridges—within or outside the company. It becomes the bulk of what they do, and negotiation is a key skill in that enterprise.
I'm always struck by AMP participants' wealth of experience. But what's equally striking is that many executives have never had systematic training in negotiation—even those who have been very successful negotiators for many years. AMP gives them a chance to think more systematically about negotiation, and then expand their toolkit so they can become even more effective.
I always enjoy learning about the negotiation situations these executives face, especially those that have the potential to transform their organizations and their careers. Consider the process of acquiring a significant company. It's critical to get the price and other deal terms right—and also to make sure that the deal will work for the longer term. The parties have to work out plans for the ongoing governance of the new entity. These pieces have to be negotiated upfront in order to make the deal a success.
The real essence of negotiation is often misunderstood, especially among less experienced negotiators. For some people, negotiation is about the art of the haggle—getting the best price you can, as if you’re in a bazaar trying to bargain down the price of a rug. For others, it's about persuasion—getting the people in the room to see the wisdom of your point of view. Executives who see negotiation solely in these terms often engage in a clash of wills that can be unproductive.
At the highest levels, negotiation is not about the clash of wills, but rather about parties trying to solve problems so they can both move forward and accomplish their goals. In AMP, we develop this different conceptualization of what negotiation is about.
In our course, we discuss research findings on techniques that can help improve the odds of persuading others to your point of view. So we take it seriously. We also spend time developing that skill, but it is just part of the overall toolkit for what it means to be an effective negotiator.
The case study method is a very powerful approach. You can have theoretical frameworks and models, but unless they give you traction in the real world, they're of no use. Traction means two things—being able to diagnose what's going on in a situation, and then being able to prescribe next steps. The case study method offers this traction. In every HBS case, there's a protagonist and a decision to be made.
When we discuss a case in class, executives have to put their own opinions out there. It's fascinating to see the range of perspectives that come to the table. At the end, we discuss the protagonist's actual response, assess its effectiveness, and draw lessons from it.
When I first joined the faculty, I would sit in on other professors' classes—as many as I could—to experience the variety of styles used in the classroom. The most important advice I got from my mentors at the time was: "Never try to replicate someone else's style. Learn from others, but when you're in the classroom, be genuine. Do it your own way—the way that makes you comfortable."
My own approach is not to lecture, but rather to have a conversation. I want to make sure that every person in the room has an opportunity to participate. The best way for executives to learn is through actively engaging in the process of learning. We take participatory learning very seriously. It's by far the most effective way to achieve transformational change.
I have high expectations for the AMP classroom, but the AMP participants regularly exceed those expectations. The depth and range of their experience is truly extraordinary. It's rare when you don't have someone in the room with direct firsthand experience in the industry or even in the company you're talking about that day.
First, we teach executives negotiation principles through reading and classroom sessions. Then they get to try out what they've learned with a role assignment, which involves individual preparation and negotiation of a negotiation situation with a fellow AMP participant.
Two things make these exercises very powerful. First, it's a risk-free environment. Participants can try things out, see what works and what doesn't work for them, and in doing so they expand their repertoire of skills. Second, in our debrief, we get to see 20 to 40 observations of the same exact negotiation situation. The diversity of processes and outcomes provides the raw material for thinking about what caused the outcome to move in one direction or another, and by extension, what constitutes effective negotiation.
I had lunch recently with an AMP participant from South America who is responsible for negotiating with his company's labor union. Each year, he told me, management and labor agree on a wage rate increase, and then they turn to other issues. In class one day, I presented the idea that effective negotiators keep multiple issues on the table and negotiate across them: "Nothing is decided until everything is decided." The participant told me that he called his team in South America, which was negotiating the union contract while he was here on campus. He told his team: "Ask the union to put their wage rate demands on the table, but don’t agree to anything until you’ve worked through all the issues together." He told me that it became a much easier negotiation, and better in the end for both sides because they could use the wage rate as another lever in the negotiation, rather than pinning it down and then turning to other issues.
That's an example of the kind of insight people gain from AMP. These executives learn to step outside their day-to-day work and think broadly, consider a context that might not be their own, and then bring those lessons back to their context. That's the power of the AMP learning approach.
Since 2007, I've been jointly tenured at Harvard Business School and Harvard Law School. For my research and teaching, it's the perfect job. I study and teach courses and programs at the intersection of law and business. To be able to have a foot in both schools has been an amazing experience.
I conduct research on corporate negotiations, such as mergers and acquisitions. In fact, starting this January, I will be chairing a new HBS Executive Education course on mergers and acquisitions. I take pride in the fact that my research is cited regularly by courts and practitioners, and I think it does shape the way M&A deals are done. Our entire faculty is focused on improving the practice of business in our various fields of expertise. The School takes that goal very seriously.
Participants who get the most value from AMP unfreeze existing behaviors, open themselves to new ideas, and then think systematically about how to implement those new ideas in their own organizations.
A few AMP participants are just seeking confirmation of what they're already doing. Everyone benefits from receiving confirmation. But if you come looking only for that, you’re not going to get nearly as much out of AMP as those who say, "Let me take it in. I’m willing to change." Openness to change is powerful—it's what enables people to reach the next level.
A few months ago, I had lunch with a very senior corporate lawyer in New York City. He said: "You know, the scarce resource in the world is not legal talent, it's not medical talent, it's business talent—the ability to lead people, motivate people, and inspire people to move in the same direction. If you have this ability, it's worth its weight in gold." That's what we're trying to do here at HBS—to educate leaders who make a difference in the world.
