Don’t put all your eggs in one basket: The power of a BATNA in negotiation
Posted on December 1, 2020 by Jonathan Symcox
“Maybe you should up your offer? After all, you don’t want to lose the house…”
Perhaps the agent is just creating the perception of applying pressure on you to force you into a decision. But if the house has been on the market for 6 months, isn’t it strange that only now there are other interested parties?
The agent in question is presenting a BATNA to you, or Best Alternative To a Negotiated Agreement. The implication is that if the vendors do not accept your offer, they have other buyers lined up waiting to pounce. BATNAs are used all the time in negotiation and when planned and implemented appropriately they can yield increased power to the user. (In this example, you might want to refer to the other house you have been viewing as your own BATNA…).
So, let’s take a look at how to use these tools, and the advantages and pitfalls of presenting BATNAs when negotiating. Here is an example illustrating the importance of credibility. In January 2018 then Prime Minister Theresa May made a statement to the EU: “No deal is better than a bad deal”. This introduced the UK government’s BATNA to the EU’s deal.
Perhaps the UK government did have a better option. Or maybe they were just positioning to increase their perception of perceived power in negotiations. Either way, Mrs May then backtracked from that statement – and there was an argument that this could have damaged her credibility for future negotiations.
The lesson for commercial negotiators is that if you publicly make reference to the strength of your BATNA, be prepared to execute it – otherwise your position of power could be compromised.
With that in mind, the following guidelines are designed to deliver a compelling BATNA that moves the deal in the most appropriate direction for you.
Preparation is everything in negotiations, start researching early.
- Be creative. Identify all your possible alternatives and brainstorm with internal stakeholders and colleagues to create a BATNA that increases your bargaining power.
- Don’t just focus on yourself. Power comes from being inside the other party’s head, so also plot and predict the other party’s alternatives potential BATNAs and think about how you can counter these in the negotiation.
Make sure all of the alternatives you are presenting are credible.
- Focus on facts, not posturing. Some negotiators overestimate their BATNA and present an incredible alternative which just backfires.
- Utilise strong preconditioning strategies to increase the perception of your BATNA. Often being indirect can be more powerful than being direct when presenting a BATNA.
Present them to the appropriate person at the appropriate time to maximise the effect.
- There is a reduction of the bargaining impact if you present your alternatives to somebody who is not empowered to make the decision you want. The more times it is relayed up the chain of command the more diluted the message becomes.
- Plan when to present your BATNA. Do you want to introduce it at the start of negotiations to manage expectations early, or would it be more effective to keep it up your sleeve until the closing stages? Depending on the circumstances, both can be equally effective. Deals normally reach a crescendo point towards the deadline when power can be leveraged with a BATNA…however if you leave it too late then it could lose all credibility.
- BATNAs can be even more effective if they are presented in combination with a deadline, especially if you are trying to force a decision. Just be sure that you are prepared to follow through if the deadline is reached.
BATNAs can be dynamic and changing evolve during the course of a negotiation.
- You could introduce a third party to aid your strengthen your position. For example, an alternative logistics/haulage provider could offer a credible alternative to using the manufacturer’s services.
- Neutral advisory parties can bring a new slant to the thinking and planning stage of negotiation. They may be able to redesign or repackage your deal to make your BATNA more powerful. For example, you could commission an alternative business valuation from an independent firm when buying a business to provide leverage for negotiations.
- Often it can be useful to take a step back and look at the bigger picture, and not having a direct vested interest in the deal can facilitate this.
In summary then, BATNAs can be a highly effective source of control in a negotiation if used appropriately. But don’t skimp on planning and preparation; think through the timings and delivery; remain open to the plan evolving; and consider independent advice if appropriate.
Heeding this will ensure the “Best” in BATNA lives up to its name.