Like many other subjects, the study and practice of negotiation has become a club shrouded in acronyms. Insiders throw terms like BATNA and ZOPA around like everyone should be teaching their kid to spell them in their alphabet soup. For the rest of though, many of these acronyms are simply meaningless.
When you enter into a negotiation with one or more parties, it’s usually under the premise that you want to improve your current position. Maybe that’s a new job, selling your company or getting your young daughter to hold still while you brush her hair. When negotiating any arrangement, your BATNA is your Best Alternative To a Negotiated Agreement. Or simply put, plan B.
For example, you’ve been offered that new job and now its time to negotiate salary. You want to make $185,000 a year but your new prospective employer is offering you $125,000. If you get your new employer up to $185,000, awesome. If not, then you better know what you’re BATNA is.
Depending on your circumstances, this could be any number of things: accepting whatever they offer you, taking a different job, staying where you’re at, or starting your own business. The point is that, in most cases, you’re not going to voluntarily enter into an agreement that will make you worse off than your best alternative.
Strengthening your position
Typically, the stronger your BATNA, the stronger your overall position. This almost always translates into more power at the table during negotiations. Intuitively this makes sense, because the other party is more likely to come your way if they know you have other options (unless of course they have a better BATNA than entering into an agreement with you).
Most people undervalue the power of a strong BATNA. Both in the construct of knowing when to “walk to your BATNA” – meaning knowing when its best to walk away from the deal on the table; and also when to stay at the table to reach an agreement because your own BATNA sucks.
If you have not thought carefully about what you will do if you fail to reach an agreement, you are negotiating with your eyes closed. (Fisher, Roger; Ury, William; Getting to Yes: Negotiating Agreement Without Giving In)
Check your emotions
Keep in mind that emotions play an important role in the BATNA evaluation process, and should be weighed with a critical eye. It’s easy to get excited about an opportunity and put your entire focus and energy into getting the deal done. Whether you’re negotiating that new job offer and you stop looking for other jobs under the assumption that its going to come through, or you’re negotiating a multimillion dollar sales contract and you drop all other initiatives – you have to constantly think critically about your overall position, and how to simultaneously strengthen your BATNA.
Not just for negotiations
The concept of BATNA is not just for negotiations. Carefully evaluating your options and alternatives when making any decision is a good habit to get into. I’m a big fan of developing BATNA’s for life planning and when making key business decisions.