In Getting to Yes, by Roger Fisher and William Ury, there is a concept discussed called identifying the best alternative to a negotiated agreement (referred to as BATNA for short) while negotiating an agreement with another party. This concept alone can be a very powerful to employ to drive effective negotiations.
What is the best alternative to a negotiated agreement?
Every time we are involved in a negotiation, we have other options outside of reaching an agreement with the other party that we are negotiating with. One of our other options would be to reach an agreement with a party outside of the current negotiation. An example of this would be negotiating the purchase of a vehicle and having the alternative to take your business to another auto dealership. In this case, your best alternative to a negotiated agreement is to purchase a different vehicle from a different dealership.
In some cases, our best alternative might be unclear as it might not be as simple as just purchasing from somewhere else. This can occur when we are negotiating something that cannot be easily purchased or provided elsewhere. When this is the case, sometimes our best alternative to a negotiated agreement might be to simply do nothing. We shouldn't forget that walking away from a negotiation and doing nothing is always an option and part of effective negotiations.
Knowing Your Own BATNA
Knowing the best alternative to a negotiated agreement can help establish effective negotiations in two different ways. First, if we clearly identify what the best alternative to a negotiated agreement is for the negotiation we are involved in, we will immediately improve our clarity and position in the negotiation.
If we go back to the purchase of a vehicle example, when we do not fully identify and become aware of our alternatives outside of the agreement we are negotiating, we can get sucked in and get wrapped up in incentives and become vulnerable to the other party’s negotiation tactics. By having our BATNA at the top of our mind, not only will we stand to make better decisions during the negotiation, but we will also likely give off a stronger presence and impression to the other party.
Knowing The Other Party's BATNA
Know your own alternatives during a negotiation is very helpful, but for effective negotiations we must know the other party’s best alternative as well. This involves identifying what the other party’s next best option is if you are not able to reach an agreement.
By knowing what the other party’s BATNA is, you will be able to have a better read on the strength of their position in the negotiation. If the other party’s BATNA is very good, then their position is strong. And on the flip side of that, if the other party does not have a good BATNA, then their position is weak. By having this information, you will have more clarity and a better understanding for how to handle the negotiation in terms of how hard to push and what to ask for. Without this, it is like driving a car without a speedometer.
*Source: Getting to Yes, Roger Fisher and William Ury
*Source: Essentials of Negotiation, Roy Lewicki, Bruce Barry, David Suanders
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