In 1981, William Ury and Roger Fisher published their bestseller Getting to Yes: Negotiating Agreement Without Giving In, a book about negotiating that spawned the technique known as BATNA. This technique helps you to identify a good Plan B and keep it up your sleeve and ready to use, in case the main goal of your negotiations turns out to be impossible to achieve.
Want to find out the meaning of BATNA and to learn about its main features, as well as how to make the most of any negotiation?
BATNA is an acronym for Best Alternative to a Negotiated Agreement. This is a technique that helps us determine and secure the best alternatives in a negotiation, with the aim of being prepared to face any scenario and reach the most profitable agreement possible.
Thus, by reviewing all of the options in advance, we can pick the best alternative in the case of not reaching the desired results in the first round of negotiations. Having a good BATNA means you have a stronger safety net and more negotiating power.
As noted by James Sevenius, a Harvard professor specialised in negotiations and the creator of the negotiating in 3D concept, good negotiation techniques and designs are not enough, preparation away from the negotiating table also adds a third dimension, essential in this field. In his book he posits the importance of ensuring the correct parties are involved and explains this as follows:
The owner of a restaurant wants to expand his business, so he negotiates the purchase of the yoga studio next door. However, its owner was asking for too high a sum and he was forced to bargain if he didn’t want to miss out on this chance to grow his business.
When he thought outside of the box, he realised that the same building housed other businesses that, although not right next door, were connected by a rear corridor. So he was able to ditch his initial idea to instead negotiate with the owner of one of these properties. Specifically, a cosmetics business that was pretty quiet but which the owner refused to close.
They decided to build a new partition wall to redistribute the space, for which the restaurant owner would pay rent. In this way, both parties were winners: one business survived, and the other grew.
Now that you know the meaning of BATNA, it’s time to determine the best BATNA and secure a yes in your negotiations. It’s important to follow this process:
In the following examples, you can see how important it is to have a good, solid BATNA.
The Harvard article Negotiation Tactics, BATNA and Examples for Creating Value in Business Negotiations highlights the importance of being able to translate your BATNA to understand its implications for the current negotiation. Let’s look at an example:
Sam has to decide whether to renew his insurance policy, but he has noticed that his insurance company has increased his policy by 7 - 10 % in recent years and doesn’t think it is offering the best deal. After doing market research, he has found a different company offering him a policy for 30% cheaper and is considering not renewing his current policy.
However, after digging a bit deeper, he has found several important differences in the policy cover, terms and conditions hidden in the legal jargon. Sam has compared the prices and realised his current company is actually offering the better deal.
Besides translating the other party’s BATNA, it’s vital to understand your own BATNA in every negotiation. Let’s look at an example:
Lucy wants to sell her bakery business for the sum of €450,000. She knows the market well and is sure that this is a good starting price, as the business is located in a good area, has recently been renovated, and is being sold with all of the equipment and machinery necessary to operate the business from day 1. However, she needs to make an urgent sale due to a financial situation, so she sets her BATNA at €420,000.
Michael is looking for a similar business and is interested in buying this one, but he’s not ready to pay as much: his limit is €350,000, although his BATNA is €380,000. Their positions seem to be too far apart and it looks too difficult to reach an agreement. However, Laura, who has prepared the negotiation, has come up with another alternative: sell for €380,000 without machinery included, renting this out instead of selling it. Laura’s BATNA helps her reach an agreement suitable for both parties.
As shown, it’s vital to know the meaning of BATNA, since it is an extremely valuable negotiating technique. Improvising is one of our worst enemies when it comes to negotiations, because without a good plan it’s difficult to reach the best possible outcome in line with our interests.
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