I’d like to be able to tell you that your next negotiation will go smoothly. You’ll sit down at the negotiating table and the other side will be ready to deal with you. You’ll have some informed discussions, a deal will be reached, and both sides will shake on it. However, all too often this is not the way that things turn out. Instead, during the negotiation no matter what negotiation styles or negotiating techniques we use, we can run into an impasse – both sides want different things. When you encounter this situation, you are going to have to be aware of what your BATNA is so that you can determine what your next step needs to be.
The Power Of A BATNA
If during your next negotiation you reach an impasse, what’s your best outside option? Most experienced negotiators understand the value of evaluating their BATNA, or best alternative to a negotiated agreement. Even those negotiators who don’t know the term probably think through their BATNA instinctively as they prepare for a negotiation. An awareness of what your BATNA is – particularly if it’s a strong one – can give you the confidence you need to walk away from a subpar agreement. Here are two strategies that can help you take the BATNA concept to the next level and gain a critical advantage in upcoming negotiations.
Find A Way To Translate Your BATNA In To The Current Deal
So let’s take a classic example of how a BATNA can be used during a negotiation: while you are haggling over a rug in a bazaar, you’re aware that you can purchase an identical rug at a nearby stall for US$100. Assuming that you want only one rug, you won’t pay more than $100 in the negotiation at hand. Unfortunately, such clear-cut BATNAs tend to exist more in theory than in our negotiations.
In truth, your best alternative to an agreement is rarely, if ever, apples-to-apples comparable with the deal at hand. So what’s the implication? When you are negotiating, take some time out for an explicit translation process in order to ensure that you aren’t giving up a good deal in hand for a BATNA in the bush. Make sure that you don’t rush to make rash assumptions. Rather than assuming that the deal on the table matches your BATNA point by point, take the time to translate your BATNA to fully understand what it means for the current negotiation.
Make Sure That You Know What Your WATNA Is
So how much control do you have over your BATNA? Negotiators are often the ones complaining that their best alternative away from the table is rarely a sure thing. In order to deal with this, some negotiators focus instead on their worst alternative to a negotiated agreement (WATNA) . Is this a wise strategy? In all honesty, probably not. Instead, you should try to calculate your probabilistic BATNA – the full range of possibilities if the negotiation fails and the probabilities associated with each.
Decision-tree analysis is something that lawyers often use to assess the BATNA of going to court if settlement talks fail. This approach can be just as helpful in the business world. Taking the time to make a decision tree involves graphing the possible outcomes of each decision you are facing. Negotiators need to realize that decision-tree analysis has three benefits. First, it illuminates aspects of your BATNA that you can and probably should shore up before you negotiate. When you are facing talks with an existing supplier, identifying another ready supplier of the product beforehand would eliminate concerns about your WATNA and might even transform your BATNA into a sure thing.
Second, decision trees can help you assess your risk tolerance. Would you prefer a sure thing at the negotiating table to a chance at a better outside option? Start with a risk-neutral assessment of your BATNA, and then spend some time adjusting your willingness to close the current deal based on the fact that your BATNA is not a sure thing. Finally, when you are assessing your BATNA, using a decision tree facilitates the familiar negotiation advice “Look forward and reason back.” At each node in the tree, you need to ask yourself “And then what?” Even if you cannot attach probabilities all the way down the tree, you can gain a better understanding of possible moves and countermoves.
What All Of This Means For You
Dealing with a principled negotiation that has encountered an impasse is never an easy thing to do. Negotiators need to understand that impasses can occur and we need to go into our next negotiation prepared to deal with them. What this means is that we need to know what our BATNA is and how to go about using it.
Knowing your BATNA can give you the confidence that you will need to be successful in your next negotiation. In order to be able to get the most out of our BATNA, we need to take the time and map it to the negotiation that we are currently involved in. An alternative to a BATNA is a worst alternative to a negotiated agreement (WATNA). Decision tree analysis can be used to help sort out the various decisions that need to be made during a negotiation. Decision trees can also be used to assess what your risk tolerance is.
Negotiators never want to go into a negotiation without being prepared. Having a BATNA, knowing what it is, and understanding when and how you would go about using it is key. We always have be ready to deal with an impasse if it shows up. If we are aware of the options that we have, then we’ll prevent ourselves from rejecting deals that we should take and accepting deals that are no good for us.
– Dr. Jim Anderson
Blue Elephant Consulting –
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Question For You: If you have a strong BATNA, how should this affect how your negotiate?
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What We’ll Be Talking About Next Time
I would suspect that most of us don’t go into a negotiation thinking about what we can give up. Rather, I suspect that we will be going into our next negotiation thinking about what we can get the other side to give us. It turns out that if our goal is to reach the best deal possible with the other side, then we just might be going at this all wrong. If we want to get the best deal possible, then we might want to spend some time thinking about what the other side really wants and how we can go about giving it to them.