BATNA: Your New Favorite Negotiation Tool

The best alternative to a negotiated agreement (BATNA) is one of the many pieces of information negotiators look for when formulating their choice. If your current negotiation reaches a plateau, what’s your plan B? BATNA is both a skill and strategy in bargaining. It is the most advantageous alternative you can take if negotiations fail and an agreement cannot be reached. Generally, you should not accept a resolution any worse than your BATNA, taking into account every cost: relational value, monetary value, time investment.

If you can figure out the BATNA of the other party, you put yourself in a position of power. But the most important part is, of course, having a strong BATNA yourself. It’s a reference point that helps you decide whether to accept a negotiated offer or pursue your alternative. Say you’re negotiating a salary. Your BATNA: another job offer with a higher salary. So you have absolutely no reason to accept an offer below that level. A robust BATNA takes away the pressure of settling for unfavorable terms. You have a viable fallback option at all times.

It’s related to optionality in this regard: winning is guaranteed, since you have multiple doors to walk through. Think: a company negotiating a contract with a supplier. If the firm has connections to an alternative supplier that offers competitive terms, they can leverage that as an unbeatable BATNA in getting a better deal. The key is then to find and improve your BATNA before negotiating deals. For instance, an entrepreneur could secure a secondary investor — acting as their BATNA — before negotiating with the investor they are genuinely interested in. This keeps the entrepreneur from settling for a substandard deal, all the while shielding them from having no investors whatsoever.

A BATNA is therefore not just a safety net, but a point of leverage in negotiations. The authors of the legendary negotiation book Getting To Yes give three suggestions for developing a BATNA: (1) create a list of actions you can take if no agreement is reached; (2) convert some of the promising ideas into tangible alternatives; (3) select the alternative that sounds best to act as your BATNA. A BATNA is a priceless tool for any negotiator to have in their shed.

Real-world instances of BATNA:

• Job Negotiation: a candidate is offered a job with lower salary than expected. The candidate has a BATNA: another offer from a different company with a higher salary and better benefits. They use their stronger offer as leverage to negotiate a higher salary or opts for the alternative if negotiations fail.

• Business Contract Negotiation: a business is negotiating a supply contract. The business has a BATNA: an alternative supplier who can meet quality and cost demands. Having this viable alternative strengthens the business’s position, enabling them to secure better terms.

• Diplomacy: two countries are negotiating a trade agreement. Each country has some level of economic resilience and alternatives for trade partnerships — these are their BATNAs. The country with more robust alternative trading partners can negotiate more assertively than it’s weaker counterpart, knowing it can mitigate the impact of a less favorable agreement.

How you might use BATNA as a mental model and negotiation tool: (1) list your alternatives — before you negotiate, figure out what substitutes you have if the current negotiation fails; (2) pick out your BATNA — assess how viable and valuable each of those alternatives is, from the tangible to intangible aspects, and that will act as your BATNA; (3) reinforce your BATNA — look for ways to improve the alternative, such as by gathering backup offers, building relationships with alternative providers, or developing resources for your fallback position; (4) leverage your BATNA — now that you have a hardy plan B, you can use it as a benchmark in your negotiations, knowing that if the offer on the table is unacceptable you have a better one waiting for you; (5) say goodbye — walk away from negotiations if the terms do exceed or at least meet the value of your BATNA.