What Is Better Than Your BATNA?

Best Alternative to a Negotiated Agreement (BATNA) is a well-known concept, coming out of the work of the Harvard Negotiation Project and immortalized in the 1981 book Getting to Yes. It means what you would do to meet your interests if you don’t come to an agreement with your counterpart.

A couple of months ago, I advised in a previous article to make sure you keep your BATNA in mind as you negotiate (and, if you are a leader, enable your people to do so in their negotiations with customers, suppliers and partners). Based on the feedback I received, it seemed like many folks appreciated a reminder that not every deal is a good deal and that sometimes “no” is the right answer. But that feedback also got me thinking: How well do negotiators really understand what it means to do a deal that is “better than your BATNA”?

Dispelling The Myths

To answer this question, I’ll start by refuting three myths negotiators commonly believe about BATNAs:

1. Your BATNA is not your “bottom line.”

Many negotiators are confused about what their BATNA really is, believing it to be “the least we'll take” or “what we'd settle for.” Instead, your BATNA is what you would actually do if you don’t get to "yes." Your bottom line should be based on what that action is worth (and how hard it is to achieve). Don’t set some arbitrary point at which you plan to walk away, only to find that your BATNA is worth less or costs too much to implement. Similarly, don’t accept a deal that is worse than what you could have done by saying “no.”

2. Your BATNA is not something you could do in addition to this deal.

A lot of negotiators tell themselves, "If I walk away from this deal, I’ll just move on to another one." That is almost certainly true—but if you could have closed both deals, then moving on is not really an alternative. And if the next customer is going to have the same objections as this one, will you really do a better deal with them?

To understand whether a particular deal is a good one or not, you need to compare it to something you would do instead. If you would do this deal and what you are calling your BATNA, then the comparison doesn’t tell you very much about whether you should say yes to this one. To understand your true alternative, you need to consider resource constraints (can you really do both?) and your and your company’s broader interests. Take into account, for example, the use of your time, your company’s delivery capacity, the precedent that discounting this deal may set for others, etc.

3. Your BATNA is not static.

Finally, plenty of negotiators believe their BATNA is fixed. But in my experience, your BATNA can change with fluctuating market conditions, the weather, how much time has passed since you brought that boatload of fish into port and on and on. When you prepare for a negotiation, you should consider how the passage of time impacts your (and their) BATNA. And not just the effects of time but what you could do with that time. For example, one client I worked with used the time during an impasse to build alignment among key stakeholders about what they could do instead.

Three Questions To Consider

With those myths out of the way, here are three questions to ask yourself as you compare your BATNA to a possible deal on the table:

1. How confident are you of your ability to implementyour BATNA if you walk away?

The answer to this question should make or break your decision about whether or not to accept a less-than-terrific deal on the table. If the deal in front of you seems “real” and your BATNA is a vague, untested hypothetical, guess which one wins?

If you want your organization’s BATNA to serve as a real backstop to bad deals, then prioritize validating walk-away alternatives before you negotiate. I spent a lot of time working with one of the U.S. armed services on systematically improving their ability to walk away from “bad deals” with single-source suppliers. Getting aligned ahead of time about what that looks like, who has to support that decision and what that means for the organization’s interests has made all the difference in the world in their ability to make that call.

2. How well do you understand how the deal on the table compares to theirBATNA?

The answer to this question should tell you whether or not you really are at decision time or should still be negotiating. Even a bit of informed speculation about how well their BATNA meets their interests might help you move from having to choose between “yes” and “no” to being able to propose “what if…?” Putting something on the table that meets some key interests of theirs in ways that are better than their BATNA may allow you to find your way to a deal that is better than both your BATNA and their “final offer.”

3. What happens next time?

Recognizing how small our world is today, how much relationships and reputation matter and the ways that technology and markets are always evolving, you need to take into account how both your BATNA and the deal on the table may impact future deals. Will you set a better precedent by saying “yes” or “no”? How will it impact your relationships? Are there ways in which the “less valuable” choice in this deal is really an investment that will pay off in the next one? One technology client I worked with found that occasionally drawing the line and walking away over a key issue in some small deals, even if their BATNA was not great, paid off in the credibility they needed to make larger deals work for them.

Knowing you should think about your BATNA is a good first step. But I have found that thinking broadly and strategically about it is what drives better negotiation results.

Originally published by Forbes.