What is a best alternative to negotiated agreement (BATNA) in negotiat

Negotiation is full of acronyms. One of the most important concepts to learn is the ‘BATNA’ – your ‘best alternative to a negotiated agreement’. But what does that even mean?

Put simply, it’s your fallback plan. It’s the action you will take if you cannot reach an agreement by negotiation. For example:

If you cannot agree on the salary for a new job you’re offered, your BATNA might include staying at your old job.
If you can’t agree on the price of goods from a new supplier, your BATNA might include sticking with the old supplier.
If a Union seeks a pay increase for its members and the talks don’t amount to any meaningful change, their BATNA might include strike action.

It sounds pretty simple, but it’s such a powerful concept to master. Working out your BATNA is a key part of your preparation before you enter a negotiation. Here are some key points to consider, which we’ll deep dive into:

You can have more than one BATNA.
You should revisit and adjust your BATNA as you negotiate.
You should try to work out what your counterpart’s BATNA is, but you should not assume that you know for sure (even if they have told you – they may be misleading you)
You can let on that you have a BATNA, but you should never tell your counterpart what it is
To work out your BATNA, you must also know your ‘bottom line’ – the worst outcome that you would accept.

Let’s find out more about each of those key points.

You can have more than one BATNA

It sounds counterintuitive, but you can have more than one ‘best alternative’ to any particular negotiated agreement. Let’s take the simple example of trying to reach an agreement with a new supplier. Say, you’re trying to find a better price for goods that you currently order elsewhere.

One BATNA might be to continue with your current supplier. Another might be to engage another new supplier, or try to produce the goods you need yourself. By understanding those possibilities and the costs and timeframes involved, you better understand exactly what you stand to lose if your current negotiation fails.

And during the negotiation, you might learn all kinds of things. Say you had said to yourself “Well, if this doesn’t work we’ll just make the goods ourselves. Our current supplier is too expensive.” but you find out from the supplier that the manufacturing process requires far more expensive machinery than you had realised. If that was your only BATNA, you now have zero back-up plan. That puts you in a very difficult situation, and means you might have to adjust your bottom line and accept a less favourable outcome.

Sure, you can still work with your current supplier, but your mindset will be biased against that if you had already written it off as an option. And, if you don’t come to an agreement, continuing to work with that supplier will feel like a failure. If you had included it as a BATNA all along, you’d see it as a beneficial alternative that saved you from accepting poor terms.

You should revisit and adjust your BATNA as you negotiate

As you saw in the previous example, you’ll learn new information during your negotiation that might affect your BATNA. You’ll learn more about your counterpart, the field you’re negotiating in and about other stakeholders and third parties.

The passage of time – especially for negotiations that play out over weeks and months – will also change things. Prices fluctuate, stakeholders change, reputations are impacted by news stories. All kinds of things can happen.

So be sure to revisit your BATNA and your bottom line regularly. And always check and update your BATNA before you come to a final agreement as a bare minimum.

You should try to work out your counterpart’s BATNA

Let’s keep working with that new supplier example. In trying to work out their BATNA, your research might give you information that can inform your negotiation strategy. For example, you might learn that:

They just signed a major new customer. Your deal probably isn’t super important to them because their alternative might just be ‘very profitable business as usual’.
They just lost a massive existing customer. Gaining your business probably matters more than ever – their BATNA might include making lay-offs to cover their losses

But never assume you know for sure. Life is complex, and you’ll only ever see a tiny slice of the action that’s going on behind the scenes. The major new customer might not be starting their contract for six months, meaning you could get a really great deal in the meantime, for example.

And never take your counterpart’s word when it comes to their position. They’ll rarely give you a full and accurate depiction of what’s happening – why would they?

You can let on that you have a BATNA

If your counterpart knows you have a strong BATNA, it can help prevent them from ‘lowballing’ you. Say the supplier knows you’ve already got a good supplier and you just want a better price, they won’t push too hard on price. But if they know exactly what price you’re getting, or the other concessions the supplier offers - say, a loyalty discount - they’ll be sure to only offer something a fraction better.

Don’t just come out with ‘I have a BATNA’. You can let them know you’ve got one by mentioning that you know you have other options in conversation.

To work out your BATNA, you must also know your ‘bottom line’

If you want to know what your best alternative to a specific agreement is, you have to understand your current position. Otherwise, you can’t tell if the new agreement will put you in a stronger or weaker place. So part of your pre-negotiation preparation should always be working out your bottom line.

Your bottom line is the very worst outcome you would accept. Anything offered that falls below this standard is what you will reject in favour of your BATNA.

The ‘very worst’ outcome you would accept doesn’t have to actually be bad, of course. It should always be more favourable than your current situation. This is why you need to understand that situation first. Make sure you have done your research and given yourself enough time to calculate your position first. And be sure to consider concessions that your counterpart might make as part of the deal. This includes discounts or added incentives, such as faster delivery or other benefits.

Always remember that your BATNA is not a target. You should aim for better – otherwise there’s no point negotiating in the first place. It’s an insurance against getting poor terms. It can give you the confidence to walk away with dignity. It can prevent conflict, give you confidence and help mitigate the fear of failure.

And of course, a bad BATNA is just as bad as a bad deal. It can lead to regret if things go wrong and you end up left with substandard outcomes. So, as always in negotiation, preparation is everything. Start with a strong BATNA and you won’t go far wrong.

Read more: What is BATNA? How to Find Your Best Alternative to a Negotiated Agreement by the Harvard Law School.