What is a BATNA?

Where the term comes from

Roger Fisher, William Ury and Bruce Patton coined it in Getting to Yes. Ury later described it in Getting Past No as your walkaway alternative, the best way to look after your interests if the other side won't agree. His everyday example is haggling with a salesperson. Your BATNA might be asking for the store manager, and if that goes nowhere, trying a different shop.

The important part is that it's something you can do. "I'm sure something will turn up" is a hope, and the person across the table can usually tell the difference.

What a BATNA is not

Deepak Malhotra and Max Bazerman are refreshingly blunt about this in Negotiation Genius. Your BATNA isn't what you think is fair, and it isn't what you originally paid. It's what you're left with if you walk away.

Picture selling a car you bought for $24,000 three years ago. A dealer offers $11,000, and suddenly that original price feels very relevant. It isn't. Your BATNA is whatever the next best buyer would really pay, minus the hassle of finding them.

Why it decides who has leverage

People tend to assume the bigger, richer or more senior side holds the power. Ury argues that what matters more is how good each side's alternative is. A small supplier with three other interested buyers can afford to hold firm with a big client. A big client with nobody else who can deliver on time often can't.

It also explains why desperation is so costly. If you've got nowhere else to go, it tends to show in how quickly you give ground, whether or not you ever say it.

From BATNA to walk-away point

Once you know your alternative, you can work out where to draw the line. Malhotra and Bazerman call this your reservation value, the worst deal you'd still say yes to. Their example involves a property seller who already has a $38 million offer from another buyer. The obvious move is to treat $38 million as the floor. But the seller reckons that buyer could be pushed up by 10 to 15 percent, so the real walk-away point is higher than the offer already on the table.

Barry Nalebuff puts it neatly in Split the Pie: the whole point of negotiating is to do better than your BATNA. The value two sides create together, over and above what each could get on their own, is what you're really dividing up.

It's worth estimating the other side's walk-away point too. If your minimum sits above their maximum, there's no deal to be had on those terms, however well the conversation goes. You'd need to reshape what's on the table, or leave.

How to find and strengthen yours

Ury suggests three places to look. What could you do on your own? What could you do that would make the other side take your interests more seriously? And is there someone else who could step in and help?

Then improve the best option before you sit down. Leigh Thompson lists this as her first strategy in The Mind and Heart of the Negotiator, and in practice it's often fairly mundane. Get a second quote. Take the recruiter's call. Work out what a month's delay would actually cost you. Her next piece of advice is just as useful: decide on your reservation point, then keep it to yourself.

Mistakes that weaken a BATNA

The most common one is treating a hope as a plan. Close behind is using your alternative as a threat, which usually just gets your bluff called or makes the other side dig in. The one people tend to miss is time. An option that pays more in six months can easily be worth less than a smaller deal you could sign this week.