In BATNA Analysis, Knowledge Is Power

You may know that your BATNA, or best alternative to a negotiated agreement, is a prime source of negotiating power. But did you know you can get a better deal by assessing—and even worsening—your counterpart’s BATNA?

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In negotiation, awareness of your BATNA, or your best alternative to negotiated agreement, is often your greatest source of power. What is a BATNA in negotiation? It can be thought of as the best back-up plan you can reasonably expect to achieve. Think of a solid job offer that you plan to accept if your current salary negotiation is unsatisfactory, for example.

Knowledge of your BATNA can help you assess the quality of a proposal and decide whether you can do better elsewhere, as Roger Fisher, William Ury, and Bruce Patton write in their landmark negotiation book Getting to Yes: Negotiating Agreement Without Giving In (Penguin, 1991).

There’s another key aspect of BATNA analysis that negotiators often overlook: their counterpart’s BATNA. It’s important to think through the other party’s BATNA as carefully and objectively as you think through your own BATNA, according to Harvard Business School and Harvard Law School professor Guhan Subramanian. You may not be able to assess the other party’s BATNA precisely, but considering what they might do without a deal can offer you valuable insight.

BATNA Basics

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Discover how to unleash your power at the bargaining table in this free special report, BATNA Basics: Boost Your Power at the Bargaining Table, from Harvard Law School.

Why It Pays to Ask

Negotiators are sometimes reluctant to ask counterparts about their BATNA for fear of discovering that it’s impossible to compete with. In fact, this is knowledge to welcome rather than avoid. After all, if there’s no way you can give your counterpart what they can get from someone else, you would save everyone’s valuable time by revealing this fact and ending the negotiation.

Ideally, your queries about your counterpart’s BATNA could reveal that she has a terrible one—valuable information that will immediately put you in a stronger bargaining position.

At times, you may also be able to improve your bargaining advantage by worsening the other party’s BATNA, as a story about a Trump administration negotiation suggests.

A Missed Opportunity

At his February 2019 State of the Union address, President Trump unveiled an ambitious plan to eradicate the human immunodeficiency virus (HIV) nationwide by 2030. As part of that plan, the White House negotiated with pharmaceutical company Gilead Sciences to donate enough of its drug Truvada, the only drug federally-approved for prevent HIV infection, to supply 200,000 patients annually for up to 11 years, the New York Times reports.

HIV activists and experts told the Times that the White House-Truvada agreement was a good start, but they noted that it addressed only one-fifth of the demand for the drug in the United States. In 2019, only about 18% of at-risk Americans who needed Truvada had access to it, according to the Kaiser Family Health Foundation.

Gilead has long been criticized for pricing Truvada out of reach for most patients: a month’s supply, which costs about $6 to make, sells for more than $1,600. Gilead has kept affordable generic versions of the drug off the market through legal action and side deals with potential competitors, according to the Times.

This was true even though Truvada’s development was largely funded with taxpayer dollars and the Centers for Disease Control and Prevention holds a patent on the drug. Trump’s Justice Department was investigating whether Gilead owes the U.S. government back royalties on that patent—as much as $1 billion.

By making a credible threat to sue for those royalties—that is, by threatening to worsen Gilead’s BATNA—Trump may have been able to secure the drug for thousands of additional Americans. In failing to make such a threat, the president squandered significant leverage in the negotiation with Gilead, an op-ed by the Times’s Editorial Board argued.

Worsening Their BATNA

Months later, in November 2019, the Trump administration did sue Gilead for failing to refund the taxpayer funds it spent on research for Truvada and another HIV-prevention drug, Descovy. U.S. Health and Human Services Secretary Alex Azar confirmed that the lawsuits were “not related” to the White House’s negotiations with Gilead for Truvada donations.

As this squandered negotiation opportunity suggests, you may be able to put the other party in a weaker bargaining position by worsening their BATNA or threatening to do so. That doesn’t mean resorting to hardball tactics, such as rash, idle threats, just to get your way. Rather, it can mean highlighting inequities and unfairness, and explaining that you are ready to follow through to correct them if you can’t reach a mutually beneficial deal.

What other BATNA tips do you have to share from your own negotiations?

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