Translate Your BATNA to the Current Deal

By Guhan Subramanian on / BATNA

Adapted from “Taking Your BATNA to the Next Level” by Guhan Subramanian in the January 2007 issue of the Negotiation newsletter.

If your current negotiation reaches an impasse, what’s your best outside option?

Most seasoned negotiators understand the value of evaluating their BATNA, or best alternative to a negotiated agreement, a concept that Roger Fisher, William Ury, and Bruce Patton introduced in their seminal book Getting to Yes: Negotiating Agreement Without Giving In.

Here’s a classic illustration of the BATNA concept:

While haggling over a rug in a bazaar, you’re aware that you can purchase an identical rug at a nearby stall for $100. Assuming that you want only one rug, you won’t pay more than $100 in the negotiation at hand. Such clear-cut BATNAs tend to exist more in theory than in reality. In truth, your best alternative to a negotiated agreement is rarely, if ever, apples-to-apples comparable with the deal at hand.

The implication?

When negotiating, take time out for an explicit translation process to ensure that you aren’t giving up a good deal in hand for a BATNA in the bush.

For example, as the renewal deadline for Sam’s homeowner’s insurance policy approached, he decided to do a “market check” to compare prices. Sam’s existing insurer – let’s call it Acme – had been raising rates by 7% and 10% annually for the past three years, and Sam wasn’t sure he was getting the best deal. He then found a carrier that offered a policy for 30% less than Acme’s renewal rate.

Delighted, Sam cam very close to switching to the new insurer. But after doing some digging (and receiving some self-interested guidance from Acme), Sam identified important coverage and term definitions buried deep in the legalese of the two policies. After going through a translation process to make the prices comparable, Sam realized that Acme, his current insurer, was offering him a better deal.

The lesson: Rather than assuming that the deal on the table matches your BATNA point by point, translate your BATNA to fully understand what it means for the current negotiation.

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