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We all know the dream. You find yourself at school in your pyjamas; you are making a presentation without any clothes - or you go into a negotiation without a BATNA.
What is BATNA and why do you need one when preparing to negotiate?
If there is just one thing where the Harvard Negotiation Project has left its mark, it is their concept of identifying a Best Alternative to a Negotiated Agreement (BATNA ). BATNA wasn’t and isn’t a revolutionary idea - alternatives, plan B, options, bottom line and so on have been around for years. Yet BATNA seemed to capture the hearts and minds of negotiators worldwide, whether they be purchasers, sales professionals, HR, project managers or business owners. BATNA is the one thing you must do when preparing to negotiate. BATNA
- protects you against agreeing to a bad deal,
- makes you carefully consider your negotiating position and the business case driving the negotiation,
- forces you to develop feasible alternatives.
But do we always prepare our BATNA carefully enough?
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Is a BATNA always realistic?
When you want to buy a car, you have the choice of other makes and other dealers. If you want to repair your house, you ask for many quotations. What if you want to negotiate a pay rise with your boss and you do not have another job offer in your pocket? What if you are negotiating with a supplier in a seller’s market and the only alternative supplier has doubtful quality and a long lead time? Is a BATNA always realistic? From my own experience in delivering negotiation seminars, the perception that the other party has all the power and agreement is only possible on their terms is an all too common scenario.
Finding your BATNA – am example from the pharmaceutical industry
I recall working with some pharmaceutical executives who for the first time in their lives had to negotiate prices with the Verband der Gesetzlichen Krankenversicherung (GKV) or National Health Insurance Association. As one of the managers put it, “we no longer had a licence to print money”. They felt they were approaching the negotiations with no alternative but “yes”.
Sure concessions had to be made on price without too much suffering, but did they really have a BATNA? Did they have a viable alternative to agreeing to an unfavourable deal? After brainstorming and discussions, they found there were some very powerful BATNAs available to big Pharma:
- Accept a lower price … but insist on volume share
- Refuse to market in Germany, i.e. to do the initial marketing in another European country and deprive German patients of access to this new drug.
- Agree to a less than ideal price, but restrict the quantity for the German market.
- Similar to point three, limit the drug to certain treatments, where a higher price could be argued.
The pharma negotiators had at the very least the feeling they had some control over the negotiating process and outcome. They were no longer naked negotiators.
No deal is better than a bad deal
When there is no obvious BATNA, then maybe no deal is better than a bad deal.. At the very least rational analysis substitutes negotiating by chance. And you won’t sit down at the negotiating table naked.
