BATNA (Best Alternative to a Negotiated Agreement)
Your walkaway power is your real negotiating power
BATNA is the standard against which any proposed agreement should be measured. It replaces the concept of a 'bottom line' which is rigid, arbitrary, and limits creativity. Your BATNA is your Best Alternative To a Negotiated Agreement: the course of action you will pursue if the current negotiation fails to produce an agreement.
The relative negotiating power of two parties depends primarily upon how attractive to each is the option of not reaching agreement. A wealthy tourist in Mumbai has less negotiating power than a poor street vendor who knows the market and can sell to someone else. A small town that can annex a factory has more power than the multinational corporation that built it. The person with two job offers negotiates salary differently than the person with none.
Developing your BATNA requires three operations: inventing a list of actions you might take if no agreement is reached, improving the most promising ideas into practical alternatives, and selecting the one that seems best. The better your BATNA, the greater your power. Developing your BATNA is perhaps the most effective course of action you can take in dealing with a seemingly more powerful negotiator.
- Your real negotiating power comes from your alternatives, not from wealth, political connections, or military might
- A BATNA is flexible where a bottom line is rigid: it permits exploration of imaginative solutions rather than ruling them out
- The better your BATNA, the greater your ability to improve the terms of any negotiated agreement
- You should also consider the other side's BATNA to realistically estimate what you can expect from the negotiation
- If both sides have attractive BATNAs, the best outcome may be not to reach agreement at all
- Not knowing your BATNA means negotiating with your eyes closed
- Invent alternativesGenerate a list of actions you might conceivably take if no agreement is reached. What could you do? Take a job elsewhere? Look in another city? Start a business? Call a strike? File a lawsuit? Go to a different supplier? Brainstorm broadly without filtering.Pro tipDo not see your alternatives in the aggregate. The sum of all possible alternatives looks more attractive than any single one, but you can only pursue one. Evaluate each individually.WarningOne frequent mistake is being psychologically too committed to reaching agreement, not having developed any alternatives, and becoming unduly pessimistic about what would happen if negotiations broke off.
- Improve the most promising ideasTake your best ideas and convert them from possibilities into practical, real alternatives. If you are considering working in another city, try to get an actual job offer there. If a union is considering a strike, take a vote to authorize it. With a real alternative in hand, you are better prepared to evaluate any deal.Pro tipApply knowledge, time, money, people, connections, and wits into devising the best solution for you independent of the other side's assent.
- Select the best alternativeFrom your realistic alternatives, select the one you would actually pursue if negotiations fail. This is your BATNA. Judge every offer against it. The better your BATNA, the greater your ability to improve the terms of any negotiated agreement.Pro tipWhether to disclose your BATNA depends on how attractive it is. If extremely attractive, let the other side know. If weaker than they think, keep it private.
- Formulate a trip wireIn addition to your BATNA, identify a trip wire: an agreement that is far from perfect but better than your BATNA. If negotiations approach this threshold, take a break and reexamine the situation before accepting anything worse. The trip wire provides early warning and preserves margin for a mediator to work with.Pro tipA trip wire can also limit the authority of an agent: 'Don't sell for less than this amount until you've talked to me.'
- Consider the other side's BATNAThink about what alternatives the other side has. If their BATNA is very good, you may need to change it. If they overestimate their BATNA, help them think through whether their expectations are realistic. If both sides have attractive BATNAs, the best outcome may be no agreement.Pro tipIf their BATNA is so good they see no need to negotiate on the merits, consider what you can do to change it, such as filing a lawsuit or creating competitive pressure.
BATNA was coined by Roger Fisher and William Ury in Getting to Yes as an alternative to the traditional 'bottom line' concept. They observed that bottom lines are rigid, often arbitrary, and limit creativity. A bottom line says 'I won't accept less than X.' A BATNA asks 'What will I actually do if this negotiation fails?' The concept emerged from the Harvard Negotiation Project and has become one of the most widely used concepts in negotiation theory and practice worldwide.