BATNA is the "Best Alternative To a Negotiated Agreement". It really means what you will do if you did not come to an agreement in your negotiation. Since we recognise that we might have to walk away from a negotiation, we must understand what we would be walking towards! And that will be your BATNA.
Why do you need one?
Apart from the obvious alternative, a BATNA also levels the playing field. We all know the impact that power has in a negotiation, don't we? When Big Boy tries some strong-arm tactics to cower us Puny People into submission? Well, if you have a strong BATNA, you can resist those tactics. You can negotiate with a confidence that makes Big Boy think you have something up your sleeve - and you do! The power to walk away cannot be discounted in a negotiation!
So here's 5 things you need to do BEFORE you enter your next negotiation to create your power-levelling BATNA.
1. Define your intent clearly
Understand EXACTLY what you are trying to achieve. If you are negotiating to sell your business to an acquiring company, an intent of "cashing out" will be very different from an intent of "maximising long-term value". So before you negotiate, sit down with all your stakeholders and get their inputs about what the intent is and be very clear.
2. Brainstorm alternatives
Ask yourself the question, "In addition to the negotiated solution, how else can I achieve my intent?" If you cannot come up with any option, you have a very weak (or no) BATNA. The more options you can come up with, and the more viable they are, or the cheaper they are, then your BATNA is more powerful. (In fact, if you can come up with a cheaper option to meet your intent fully, you don't even need to negotiate!)
3. Secure contingency commitment
Even if the negotiated agreement is your best option, you need to work on a fallback position. Look to your alternative solutions and see if you can get a contingency agreement. At least you know the cost and availability of your alternative solution, should you have to resort to it. So, if you are looking for a good second hand car, and you will be negotiating with the owner of your first choice, get on the phone with the second choice owner and see if you cannot come to a contingent agreement like holding the price for one day for a small fee (e.g. $200). This $200 strengthens your BATNA when dealing with the first choice owner.
4. Get stakeholder agreement
We cannot go into a negotiation with our hands tied. We will be giving our negotiating counterpart undue advantage. So before you enter into discussions, make sure all the stakeholders in your party agree with the strategy. They have to back you 100% of the way and you need to feel confident that if you walked away from the deal, they will support your decision. This means there might be negotiations before the negotiations to align stakeholder expectations.
5. Figure out your counterpart's BATNA
Now that you have determined your BATNA, try to figure out what your counterpart's BATNA may be. The bigger the deal, the greater the imperative is for you to get this done. Of course you will not be able to totally get it, but if you can build a few scenarios, get in some information and keep them in your mind as you start your negotiations, you will be able to come up with their BATNA and assess their trigger points. This will go a really long way for you to achieve agreement!