Negotiation Skills Company, Inc.
Negotiation Skills Company, Inc.

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Why Is BATNA Important

From: Jackol, Hong Kong

Question: Can you please explain BATNA to me and tell me how it is useful in negotiating?

Response: BATNA is the acronym for Best Alternative To a Negotiated Agreement. If you look at it from the simplest standpoint, your BATNA is the choice you can make if you conclude that negotiating with a particular party is not likely to yield a favorable result. You can walk away from a negotiation if your BATNA is better than the likely outcome of that negotiation.

BATNA, however, covers far more than that. One view says that BATNA is the measure of the balance of power in a negotiation. If other parties need you in order to reach their objectives, your BATNA is strong; your negotiating circumstances are strong. If you want to buy a new car and the same model is for sale at several car dealers, you have a strong BATNA because you can benefit from their competition for your business.

It is crucial to think of BATNA as having two stages in a negotiation. You start off with your 'walking-in' BATNA; the things you can influence or control before the negotiation begins. However, once negotiation starts, the BATNA is a dynamic element, changing as you derive information about the interests of other parties and their constituencies and as you compare the resources each party (including you) has available to bring about and fulfill an agreement.

You can think of BATNA in negotiation like playing a game of cards. Your walking-in BATNA may be the first cards you are dealt. In many card games, your hand may change during the play as new cards are dealt to you (and others). So your BATNA changes as new cards come into your hand. If those new cards are only known to you, you develop a greater understanding of your own apparent strength. If the new cards are dealt to all the players in a way that allows each player to see at least some of the cards in each player's hand, you learn more about the comparative strength of your BATNA. In negotiation, rather than looking at cards, we are assessing information about our own resources, those of other negotiating parties, and the influences on each negotiator from their constituencies.

By looking at BATNA as an ongoing, changing measure of negotiating strength, as a mechanism for deciding whether and/or when to quit, we develop a disciplined, informed approach to our negotiations.

Hope this is helpful.

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