Negotiation Technique Review: BATNA

One of the most powerful concepts you can master in negotiations is BATNA – Best Alternative to a Negotiated Agreement.

Whether you're negotiating multi-million-dollar contracts, supplier terms or internal resources; understanding and effectively utilizing your BATNA can be the difference between a successful outcome and a disappointing compromise.

In this newsletter, we’ll dive deep into what BATNA is, how to apply it in procurement negotiations, and how to effectively respond when it’s used against you.

Hello and welcome back to another edition of our newsletter.

Let's get straight into it;

1) What does BATNA mean? BATNA is an acronym for Best Alternative to a Negotiated Agreement. This was coined by Roger Fisher and William Ury in their groundbreaking book "Getting to Yes," BATNA is the most advantageous course of action a party can take if negotiations fail and an agreement cannot be reached. Simply put, BATNA is your fallback option. It represents the alternative plan you can pursue if the current negotiation doesn't result in a satisfactory agreement. The stronger your BATNA, the more leverage you have in negotiations because you can confidently walk away if the terms aren't favorable.

2) How To Apply BATNA in Procurement Negotiations: To apply BATNA in your negotiations, you have to start before the negotiation. Ask yourself this pertinent question: what are my alternatives if the deal with the current supplier is unsuccessful?

Possible alternatives could include sourcing from a different supplier, making the product or bringing the service in-house, or perhaps even postponing the purchase to a more suitable time. Consider the feasibility and inherent risks of each alternative option considered. The stronger BATNAs are best for strengthening your negotiation position.

If you have a strong BATNA, use it as leverage to negotiate better terms with the supplier. For example, if another supplier offers better pricing or delivery terms, you can use that to push for concessions from the current supplier.

You should also reach out to alternative suppliers before negotiations to assess available terms or assess their willingness to improve delivery schedules. By doing this, you not only enhance your alternatives but also gain valuable insights into the market, which can further bolster your negotiations.

3) How To Respond to BATNA: Knowing your BATNA is great. Taking a step further to ascertain the other party’s BATNA is golden! What could their alternatives be if the deal is unsuccessful? Knowing this upfront would place you well ahead on the negotiation table.

When the other party mentions their alternatives, take the time to evaluate the strength of their BATNA. They might be bluffing or overestimating the attractiveness of their alternatives. If the other party's BATNA seems strong, you can either make efforts to strengthen your BATNA or focus on getting the best out of the deal.

Strengthening your BATNA may involve revisiting your alternatives or even creating new options that weren’t previously considered.

If you don’t have other alternatives to explore when faced with a strong BATNA from the other party, it’s essential to shift the focus from rigid positions to underlying interests. This will help you unearth what’s most important so that you can arrive at a mutually beneficial compromise.

Remember, the key to successful negotiations isn’t just about knowing your BATNA; it’s about how you apply it.

PS: If there are any particular negotiation topics you'd like me to cover in subsequent editions, do let me know.