BATNAs: Beyond the Basics

In negotiation, our most powerful asset is often a strong BATNA, or best alternative to a negotiated agreement, as Roger Fisher, William Ury, and Bruce Patton explain in their landmark negotiation book Getting to Yes: Negotiating Agreement Without Giving In. Experienced negotiators scan the environment before and during a highly anticipated negotiation to determine their backup plan: Job hunters follow other job leads, buyers talk to suppliers’ competitors, union members consider the pros and cons of a strike, and so on.

Your BATNA can be both a useful measure of the quality of a proposal you’re considering and a source of power. When you compare a potential deal to your BATNA, you have a better sense of whether to accept it or push for more.

Although BATNA analysis is critical, an overly narrow focus on our BATNA can lead us to make major mistakes in negotiation and leave significant value on the table.

BATNA and Long-Term Partnerships

Because the BATNA concept is often defined as an “outside option,” independent of one’s current negotiation, it can be difficult to apply to negotiations conducted between people involved in established partnerships, writes Harvard Business School professor James Sebenius in the Negotiation Journal.

“Think of a reasonably content married couple or successful business partners negotiating an issue of keen mutual interest on which they have different preferences,” writes Sebenius. If that married couple can’t agree on where to live after retirement, the only obvious “outside option” would be separation or divorce—hardly an appealing BATNA. Similarly, when partners in a successful business can’t see eye to eye on a critical issue, they are unlikely to view the dissolution of their partnership as an acceptable BATNA.

Rather than thinking of our BATNA as an “outside option,” Sebenius advises us to think of it more broadly as a “no-deal option.” When we frame our BATNA in this way, exercising our BATNA doesn’t require us to walk away from our current negotiating partner if we’re unsatisfied with their proposal; it just requires us to keep saying no.

Specifically, Sebenius recommends that we consider the full consequences of saying no to the other side and how we might try to influence those consequences to our advantage. Such consequences might include “costs or risks borne by each side, foregone benefits, altered settlement possibilities, damage to the relationship,” and so on, he writes.

Assess Your Opportunities for Value Creation

In the Harvard Business Review, New York University professor Jay A. Hewlin argues that a focus on BATNAs can lead negotiators to give up on a promising deal before thoroughly exploring opportunities for value creation.

To ensure that we work on both value creation and claiming, we need to ascertain why and to what degree our counterpart needs what we’re offering. According to Hewlin, focusing on mutual dependence advances the conversation from “How much can I get out of this deal above my BATNA?” to “In how many ways can I demonstrate my value to my counterpart based on their needs?”

Hewlin tells the story of a co-owner of a relatively new sustainability company who pitched his company’s services to a local school district. The co-owner faced strong competition from established companies, but he won a contract by asking questions that identified how his company was uniquely positioned to serve the district’s needs and by designing a multitiered plan that deepened the district’s need for his services. In this case, the business owner’s relatively weak  BATNA was rendered irrelevant thanks to his ability to create value for his counterpart.

Beyond the BATNA Basics

The following advice from Sebenius and Hewlin will help you take a broader view of your BATNA analysis and reach better negotiated agreements, particularly with long-term partners:

• View your BATNA as a no-deal option rather than an outside alternative. Productive relationships can be irreplaceable, so don’t assume you have to threaten to walk away from one to get what you want. As you continue to reject the offer on the table, look for ways to put pressure on the other party to compromise.
• Work to enhance the deal on the table. Negotiators who believe they have little power often leave the bargaining table empty-handed. Those with strong BATNAs, meanwhile, sometimes walk away from a deal too quickly. In both cases, negotiators pass up opportunities for value creation. Avoid this common mistake by probing your counterpart’s interests and exploring how you might meet them. The more value you can create, the more willing both parties will be to leave their BATNAs behind.
• Increase your counterpart’s dependence on you. In addition to determining your own BATNA, you need to research your counterpart’s likely BATNA. Then explore ways you might put pressure on them to do a deal by deepening their dependence on you.

How have you put the BATNA concept into action in your business negotiations?