#36 How To Come Up With Your BATNA

In their groundbreaking book on negotiation, Getting to YesFisher and Ury introduced the concept of Best Alternative To a Negotiated Agreement (BATNA). The authors present the BATNA, which is also applicable to conflict situations, as a more useful and powerful concept than having a ‘bottom line’.

The bottom line is the worst deal that is still acceptable to you. Being informed by your bottom line has several liabilities. In order to settle most disputes bottom lines have to move, so if you become fixated on one, you are essentially blocking settlement.  Yet, to move away from your bottom line can mean abandoning a commitment to yourself.  This may create a difficult to resolve dilemma for yourself. Furthermore, settlements often require imagination; but bottom line thinking is usually deficient in this needed quality. Finally, if the other party will not meet your bottom line, you may be left without an alternative.

 

Being informed by your bottom line has several liabilities. Having a BATNA is more useful.

Being informed by your bottom line has several liabilities: having a BATNA is much more useful.

 

The benefit of a BATNA is at first counter intuitive because it may seem like planning for failure instead of success. Developing a BATNA means to thoroughly consider, research and prepare for another means of meeting your interests – other than through dialogue or communication with the other party(ies).

For example, in purchasing your dream condominium, your bottom line could be  $450,000., which would be the most you think you are willing to pay. Your BATNA on the other hand could be:

– Another condominium not as ideal, but currently available for $440,000

– Getting a real estate agent to take over the search for you

– Walking away from the search for an ideal residence altogether, and taking a one year motor cycle trip around Europe until the market improves

With one of these as your favourite alternative to paying the $470,000 asking price on your ideal condo, you are in stronger place in the negotiation. If $455,000 becomes possible you ask yourself: How does this compare now to my alternative? You now compare the potential deal with something that you have researched and planned that you can do, no matter how the negotiation proceeds and how the other party responds.

The three possible BATNAs above illustrate three types of BATNAs that I think I have identified:

1- Another one of the same thing (another condominium)

2- Another process (agent instead of direct communication)

3- Walk away option (motorcycle trip)

These three types of alternatives are also considerations in all conflicts as well as what is understood as negotiation. In the next blog I will look at applications of the BATNA to workplace conflict.

 

BATNA!

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4 Responses to #36 How To Come Up With Your BATNA

  1. Tyler says:

    Real estate is a great illustration that blends business and pleasure. I’m currently in the process of writing a paper about BATNA, and my Professor and I are looking at it with regard to the healthcare/life science industry. So, if we’re trying to break ground, should we acquire a company that has already broken the ground, should we do it ourselves, or should we consider not breaking the ground at all. I think these three options match up with your three condominiums. Am I applying your concept correctly do you think? Also, if you would be interested in reading my paper, please let contact me. I thought yours was very well done.

    • Gordon White says:

      Hello Tyler,
      Thank you for commenting on the blog. And, I would be happy to read your paper and provide my feedback. Regarding your breaking ground example, unless I misunderstand, which I may have, I think you are off the mark. Here’s why. A BATNA may exist in the context of a negotiation. If there is someone with whom you are heading towards negotiation, then you have the possibility of alternatives to that negotiation. In your example there is no explicit negotiation; therefore, in my view the three you cite as BATNAs are not BATNAs; they are simply three possible ways of proceeding or not proceeding in a condo development scenario. You could ask your professor what she or he thinks. I will send an email re your paper.
      Thank you,
      Gordon

      • Tyler says:

        Hello Gordon,
        I appreciate the thoughtful response. Let me frame my situation a little differently and see if it makes more sense:
        I am running a pharmaceutical company and want to put out a new drug in an area that is unfamiliar to my company, so I enter into negotiations to purchase a smaller firm that has expertise in the area and is already developing a drug that accomplishes my goal. Instead of acquiring this company, I could could either:
        1) acquire a different company
        2) I could innovate myself and begin the project from scratch
        3) walk away option (do neither)
        Does this make more sense? I was trying to keep my last post brief, but upon reading it again, I should have framed it better.

        Thanks again for the thoughtful response. I will send our paper to you sometime next week.
        Best,
        Tyler

        • Gordon White says:

          Hi Tyler,
          That’s it exactly. I came up with these three when teaching. The concept of BATNA takes a while for some people to grasp. I was trying to speak about it in more graphic and specific terms, then realized I might be on to something.
          Best wishes,
          Gordon

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