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  • Writer's pictureGillian Brunton

Beyond BATNA: Unveiling the Power of Your Best Alternative in Negotiation

What is BATNA

BATNA stands for "Best Alternative To a Negotiated Agreement." This term comes from negotiation theory and is a method developed by Roger Fisher and William Ury[1] of the Harvard Negotiation Project. It essentially refers to the most advantageous alternative that a negotiating party can take if negotiations fail, and an agreement cannot be made.

For instance, if you're negotiating to buy a car and you can't reach an agreement with the seller, your BATNA might be to buy a similar car from a different seller. Your BATNA serves as a measure against which any potential agreement should be assessed.

Ideally, you should not accept a worse resolution than your BATNA. Thus, knowing your BATNA can empower you during negotiations, because you have a clear alternative if the negotiations don't lead to the desired outcome.

How to you calculate your BATNA

Calculating your BATNA involves the following steps:

1. List all alternatives: Start by brainstorming a list of all the possible alternatives you could pursue if the negotiation falls through. These should be realistic and actionable alternatives.

2. Evaluate each alternative: Once you've listed all the alternatives, you should evaluate each one based on its feasibility and the value it could deliver. This assessment should consider both quantitative factors (like cost, time, resources) and qualitative factors (like relationships, reputation, risk).

3. Select the best alternative: The alternative that appears to be the most beneficial and feasible becomes your BATNA. It's the course of action you'll take if the current negotiation fails to materialise into a satisfactory agreement.

4. Continuously review your BATNA: As the negotiation progresses, your situation may change, new information might come to light, or new alternatives may emerge. This can change the attractiveness of your BATNA. Therefore, it's important to review your BATNA regularly to ensure it's still the best course of action.

Keep in mind that your BATNA is a personal decision that depends on your specific situation. It's also a confidential piece of information that gives you power in a negotiation. You could decide to reveal it in the negotiation if it strengthens your position, but often it is kept hidden as strategic information.

Lastly, it's important to remember that having a strong BATNA can often lead to better negotiation outcomes, as it provides a safety net and allows you to negotiate from a position of strength. If you have no good alternatives, you might feel pressured to accept subpar deals.

Will a mediator calculate my BATNA for me?

As a neutral third party, a mediator's role is to facilitate communication and negotiation between the disputing parties, helping them to find a mutually acceptable resolution. The mediator does not make decisions for the parties, nor do they typically provide advice or suggest solutions. Instead, they guide the process and help parties communicate more effectively.

Regarding your BATNA, it's generally something you need to determine for yourself (or with the help of your legal or professional advisors) before entering into a negotiation or mediation. The mediator might help you think through your alternatives or understand the potential consequences of different decisions, but ultimately, the responsibility to identify and assess your BATNA lies with you.

In some cases, a mediator might introduce the concept of BATNA to both parties, if they feel it could help move the negotiation forward. However, they would not typically calculate or determine the BATNA for any party. That's because doing so could potentially compromise their neutrality or give the impression of favouring one party over the other.

In brief, a mediator's role is to facilitate the process, while the parties themselves (or their advisors) are responsible for their own decision-making, including the identification of their BATNA.

Example calculation

Let's take a hypothetical example of a business dispute over contract terms between two companies: Company A and Company B.

Company A and Company B are in a dispute over a supply contract. Company A wants to increase the supply price by 20%, but Company B is only willing to accept a 10% increase.

Company A has already explored its alternatives and found another company, Company C, willing to pay a 15% increase. However, Company C is smaller and less reliable than Company B, so the risk of default is higher. This 15% increase with Company C is Company A's BATNA.

Company B, on the other hand, has found an alternative supplier, Company D, who would only increase the price by 12%. But Company D's goods are of a slightly lower quality. This 12% increase with Company D is Company B's BATNA.

In the mediation process, each company would calculate their BATNA and use this as a basis for their negotiation strategy. Company A knows it has a guaranteed 15% increase with Company C, so it's unlikely to settle for less than this from Company B. Similarly, Company B knows it can get a decent quality product with a 12% price increase from Company D, so it might hold firm at a maximum of 12% increase with Company A.

The mediator, knowing each party's BATNA, would then guide the negotiation process with these thresholds in mind. The goal would be to find a solution that is more attractive to both parties than their respective BATNAs. If parties fail to find a solution better than the BATNAs, they may decide to walk away from the negotiation and pursue their best alternatives.

BATNA’s are not only about money

Keep in mind that BATNAs are not always solely about monetary value. They can incorporate other factors such as business relationships, reputation, time, risk, and overall strategic alignment.

If we think about a reputational BATNA the following is a good example:

Let's imagine a dispute between a well-known author and a publishing house. The author is unhappy with the terms of their publishing contract and is considering self-publishing.

The author's BATNA would involve weighing the potential reputational benefits and risks of self-publishing versus staying with the traditional publisher.

To calculate this BATNA, the author (or their representative) would need to consider questions like:

1. How would self-publishing affect the author's reputation in their genre or field?

2. Would self-publishing give them more creative control and allow them to build a stronger personal brand?

3. Would the lack of a traditional publisher's marketing support hurt their book's sales and their reputation?

4. How would their readers, peers, and critics view the move to self-publishing?

5. Would they be able to maintain or improve their reputation by staying with the publisher and negotiating better terms?

The mediator, knowing the author's BATNA, would guide the negotiation process, accordingly, helping the parties explore options that might be more attractive to the author than their BATNA, this is also known as a ZOPA – Zone of Potential Agreement. For instance, the mediator might help the author and publisher negotiate compromises on creative control or marketing support that could make staying with the publisher more appealing than self-publishing.

Remember, the goal in mediation is to find a mutually satisfactory resolution. Knowing and understanding your BATNA be it monetary or other is critical to this process.

[1] Fisher, Roger, Ury, William & Patton, Bruce (Ed.); ‘Getting to Yes: Negotiating Agreement Without Giving In’, Random House Business Books, 2nd Edition, 1991, pp. 50-54.

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