In Roger Fisher and William Ury's classic negotiation book Getting To Yes: Negotiating Agreement Without Giving In, they use decision theory to craft the notion of BATNA, or best alternative to a negotiated agreement. Many people have heard of this term, but how many actually think about it before or during negotiations?
The only reason to negotiate is to produce a result better than you can obtain without negotiating. What is the result the negotiation is producing? What are the alternatives? What is your BATNA - your Best Alternative To a Negotiated Agreement? According to Fisher and Ury, that is the standard against which any proposed agreement should be measured. They go on to claim that that is the only standard which can protect you both from accepting terms that are too unfavorable and from rejecting terms it would be in your interest to accept.
Not every negotiation concludes with an agreement. There are times when you can do better by walking away. In any negotiation alternatives exist. They may not all be attractive, but they will be there. The best alternative is your BATNA. A successful negotiation will end with a result that is better than your BATNA. If the result is not better than your BATNA you should walk.
Preparing your BATNA before negotiating is essential when determining when to walk or when to talk. If your "bottom line" is arbitrarily pulled out of the air it won't help you much when making decisions. Your bottom line should be based on your alternatives and what you can get elsewhere. If your bottom line is not based on your BATNA, how will you know if it is realistic or not? How will you know if you can do better? If you know your BATNA is better than the opposing side is offering, you can walk with confidence. If it's not, you can become more creative with your negotiating and work toward a deal.
Know Your BATNA
Some negotiators enter negotiations without knowing what they will do if they cannot reach agreement. This can lead to being insecure and unsure of when to continue negotiations and when to walk. Negotiators who know what they will do if they don't reach agreement have much greater confidence during the negotiations.
To determine your BATNA ask yourself, "what could I do to satisfy my interests if we do not reach an agreement?" Come up with possible alternatives and list the pros and cons of each. When you have a list of alternatives, determine what you will really do, out of the possibilities, if no agreement is reached between you and the other side. This will most likely be your BATNA. I say most likely because many people don't think creatively about other ways to satisfy interests. So be sure to spend a little time to really determine alternatives.
Additionally, we must remember that alternatives are usually not fixed in stone. Once you have determined your BATNA, take a few more moments to think about how you might make your BATNA easier, more probable, or better at satisfying your interests.
Taking the time to determine your BATNA and thinking of ways to strengthen your BATNA will improve the outcome of your negotiations. If you only accept deals that are better than your BATNA, improving your BATNA guarantees you a better result. No matter what happens you are in a better position and knowing this will boost your confidence during the negotiations.
Consider Their BATNA
Every negotiator has a BATNA including the other side. Whether they have thought about it or not, they have one. During your preparation for negotiations, it can be extremely beneficial to determine at what point they should walk out of the negotiation. What is their best alternative? If you knew this, wouldn't negotiation be easy? You certainly won't be able to determine their exact BATNA with any degree of confidence. Negotiations involve making decisions in the face of uncertainty. However, you might be able to make a good guess at what they might do if you do not reach agreement. Do this and you may be able to determine ways to make their BATNA less attractive, harder to implement, or less valuable, all of which may help your side of the negotiations.
Your BATNA, or Best Alternative To a Negotiated Agreement, is an important concept for negotiating. Unfortunately, some negotiators fail to think about their and their opponents BATNAs before negotiations begin. Those that do, including those that don't know the term but instinctively think through their BATNA as they prepare, enter negotiations with much more confidence knowing where they are going if they decide to walk away.
Roger Fisher, one of the authors of Getting To Yes that I mentioned at the beginning of this article, also co-wrote another book with Danny Ertel titled Getting Ready To Negotiate: The Getting To Yes Workbook, A Step-By-Step Guide To Preparing For Any Negotiation. Besides being a resource for this article, this book will help you with your negotiation planning, including determining BATNAs. It contains a number of worksheets to help you think of alternatives, select your BATNA, and identify alternatives open to the other side.
Regardless of how you determine your alternatives, remember that knowing your Best Alternative To a Negotiated Agreement will make you a more confident negotiator. Knowing when to walk is powerful. And by knowing and strengthening your BATNA you will improve the outcomes of all of your negotiations.
This article first appeared in the October 2007 issue of The Montana Lawyer.