CONFLICT RESOLUTION: THE BATNA ANALYSIS (# 13)

In his best-selling book Coming to Yes, Roger Fisher and William Ury talk about the shared interests of the negotiating parties. A report in LikedIn influencers highlights Virgin Airline founder and billionaire businessman Richard Branson, who proposes the importance of protecting downsides. These notions lead us to an extremely important concept in negotiation. That concept is BATNA. BATNA stands for Best Alternative to Negotiated Agreement. Specifically, BATNA is the list of your alternatives if the negotiation is unsuccessful or if the negotiation is not an option. This is exactly what Richard Branson is referring to when he talks about knowing or, to use his term, “protecting” disadvantages.

In conflict management, all parties have some kind of shared interest. For example, in large-scale international conflicts, the shared interests of the parties may include land use and sovereignty. In our constant daily interpersonal interactions, shared interests may include the use of the copier. If it weren’t for a shared interest, there would be little motivation for someone to negotiate.

At times, these interests can be quite subtle and transcend the negotiating parties’ opening statements or even their overt behaviors. In many conflict situations, neither party is aware of these underlying, unexpressed and fundamentally shared interests. The diverse interests of each party, the roots of these interests, and the behavioral manifestations of their interest should be primary concerns of both parties. The BATNA analysis is the first discovery step in the process that addresses these concerns.

Although a BATNA test is simple, it is not particularly easy. It basically consists of making a list of all the possibilities in case the negotiation process fails. Each item in the list must have numerous sublists to completely exhaust all the ramifications of those possibilities. Often times, inexperienced negotiators will converse with each other and determine the ideal negotiated outcome for the stakeholders or perhaps what they are willing to accept. But very often they do not consider or consider only superficially what might happen if an agreement is not reached or if the negotiations break down completely.

The value of doing a BATNA test is manifold. It forces one to consider all the BATNA alternatives with the fine detail and focus that must be given. You may not even need to enter into a negotiation. This may not be known until the pros and cons of BATNA are considered. In addition, the BATNA analysis should include issues such as time, expenses, personnel costs, profit and loss options, and resource allocation needs. The invariable BATNA analysis will lead to broader perspectives and fine tuning of trading strategies. Deeper insights will structure the angle and process of negotiation interactions. Remember, a deeper understanding always structures the direction and the process. This occurs simply as a result of stepping back and doing a BATNA.

Now, this is the step that separates the beginners from the pros. After doing a BATNA test, professionals will always do a BATNA test on the other side. Wouldn’t it be helpful to know if and to what extent the other party or parties have financial or time constraints? Wouldn’t it be helpful to know if this negotiation is something they are willing to do “with everything”? Or they’re just going to try it at the old college and then go home.

Bill gates often talks about his friendship with Warren Buffet. You have recently written about what you have learned from Warren’s investment strategies. Warren buffet told him that no matter how much money you have, you can’t buy time. Temporal orientation is a prominent aspect of the BATNA analysis; individuals and cultures view it very differently.

An informative historical example of time orientation is the famous Paris peace talks that began in 1968 for the purpose of ending the Vietnam War. It would appear that neither party was clear about the BATNA options of the other parties, especially those regarding time commitments. When the American negotiators arrived in Paris, they got some hotel rooms. When the North Vietnamese negotiators arrived, they rented houses and apartments! The final signing of the agreement occurred on January 27, 1973, five years later! Moral of the story … know your BATNA and know the BATNA of the other parts. And above all, try to accurately estimate the time orientation of all negotiating parties. The temporal orientation cannot be underestimated.

It is not possible to know all the options, outcomes and hopes of the other side, but learning as many of these unknowns as possible should always be the primary goal of pre-trade and certainly during negotiation. Don’t be afraid to ask the other parties what they think your BATNA options are. These types of questions almost always produce unfamiliar and sometimes transformative information. It is always useful information that can be vital and beneficial to your trading strategy.

The lesson here is to think about BATNA before considering a negotiation of any dimension. Get in the habit of doing this, even in small everyday situations, and things will get better right from the start.

Ian Glickman, Ph.D.