Archipelago

Alternatives

What would we do without an agreement?

ALTERNATIVES are the walk-away possibilities that each party has if an agreement is not reached.

In general, neither party should agree to something that is worse than its “BATNA” – its Best Alternative To a Negotiated Agreement – the best each party can do “away from the table” or independent of the other party.

Actions we can take away from the table without the other party.

You may be familiar with the term “BATNA” - Best Alternative to a Negotiated Agreement.

We want to weigh any potential deal against the best of our alternatives. So our first thought with regards to Alternatives is to use our BATNA Finder.

Working Assumption

Determining and developing your best walk-away alternative to anegotiation protects you from bad outcomes and helps you to negotiate better ones.

Problem

People reach agreements that they later regret. This result usually stems from one of two causes. You may feel that you have been pressured into accepting a “bad deal,” or you may wish you had not accepted an offer so quickly.

You feel you could have done better had you acted more resolutely or cautiously. It is distressing to believe that you failed to get what you ought to have gotten simply because the other side seemed more powerful or spoke so persuasively.

Approach

Analyze each party’s alternatives to reach an agreement. Another approach would be to focus on the consequences of walking. Ask yourself, “What will I do if we fail to agree?” “What is my Best Alternative To a Negotiated Agreement (BATNA)?”

To protect yourself from agreeing to a deal you should have rejected, compare the deal on the table to your BATNA. When preparing, investigate all possible alternatives to agreement. What can you do without relying on the other side’s assent?

Generate a similar list for the other party. Identify their BATNA in order to develop realistic proposals and deal with situations where their overconfidence prevents them from accepting a good offer.

When you know your BATNA, you can more accurately identify the point at which you should reject a deal. It may even help you shift that point since, in negotiations, power is partially determined by the willingness of each side to walk away. If you are truly willing to walk, you can present your interests more forcefully.

Cause

People decide to agree based on their prospects “at the table.” Often, you must decide at several points in a negotiation whether or not to agree with the other side. When they make an offer, threaten to walk out, or say, “Take it or leave it,” you need to determine how to respond. You too must decide whether to talk (or ask) or walk. To help decide, people tend to consider the consequences of talking.

You think about what you could expect to gain by further bargaining and compare this expectation to the offer on the table. Making this judgment, however, requires a difficult estimation of each party’s influence across a range of hypothetical negotiation scenarios. Your judgments are bound to be subjective and imperfect. They may leave you overconfident or demoralized, and/or more prone to make regrettable decisions.

Consider the following guidelines

  • Devote resources to improving your BATNA. Verify that what appears to be your BATNA is, in fact, realistic. If your BATNA could be better at a reasonable cost, improve it. Resources expended on making your BATNA more attractive pay off by insuring that the outcome will be better for you, regardless of whether you reach an agreement.

  • Consider ways to weaken their BATNA. To lower the inflated expectations of another party, reveal what you know of their BATNA. If their BATNA seems so good that you doubt they will negotiate seriously, you may be able to take steps to change it. Care is required since such a strategy can appear illegitimate and damage the relationship.

  • Gauge the potential for agreement. If you and they both have attractive BATNAs, reconsider whether negotiations are appropriate.

Consider the following guidelines:

  • Devote resources to improving your BATNA. Verify that what appears to be your BATNA is, in fact, realistic. If your BATNA could be better at a reasonable cost, improve it. Resources expended on making your BATNA more attractive pay off by insuring that the outcome will be better for you, regardless of whether you reach an agreement.

  • Consider ways to weaken their BATNA. To lower the inflated expectations of another party, reveal what you know of their BATNA. If their BATNA seems so good that you doubt they will negotiate seriously, you may be able to take steps to change it. Care is required since such a strategy can appear illegitimate and damage the relationship.

  • Gauge the potential for agreement. If you and they both have attractive BATNAs, reconsider whether negotiations are appropriate.

You may be familiar with the term “BATNA” - Best Alternative to a Negotiated Agreement. We want to weigh any potential deal against the best of our alternatives. So our first thought with regards to Alternatives is to use our BATNA Finder.