Is BATNA in Negotiations that Important? Negotiate As If You Don't Have Alternatives
Negotiation experts have always touted the term BATNA, best alternative to negotiated agreement, as if it’s something holy. BATNA essentially means that you should leave yourself options to walk away from the negotiation table by having another alternative negotiation option. However, in this video, I am going to argue against treating BATNA as something holy, because being mindful of alternatives all the time might create more harm than good to your current negotiations. The primary reason this could happen is that having other alternatives gives people a convenient excuse to leave the negotiation table. Whereas if you had no other options, you might be forced to negotiate harder, which would allow you to secure better negotiation terms than you might have otherwise.
In this blog, we will look at the psychology of determination and choices. An American psychologist named Barry Schwartz wrote a book called “The Paradox of Choice – Why More is Less”, which describes how more choices may paradoxically become a problem instead of a solution. In particular, our obsession with choice may make us feel worse since we are more likely to worry about missing out on other options. We will go back to this later in this blog.
Sun Tzu, a famed Chinese war strategist, also sheds insight into why having no options may benefit us more in negotiations. One of his famed lines is that “when you surround an army, leave an outlet free”. When an enemy is entrapped into a corner without any exits, it will be more likely that the enemy becomes even more determined and aggressive since there is no way out. When an enemy is psychologically beaten, you should never force the enemy to a point of no return, otherwise, they would have no choice but to fight back. Therefore, in negotiations, we shouldn’t think in a way where we can always have another option to fall back on. Otherwise, this will weaken our determination to fight for a good deal at the negotiation table, leaving us in a handicapped position where we can’t concentrate 100%.
Let’s look into the determination of China’s success of getting what they want, regardless of whether it is right or wrong. A major reason why China always seemed to get what they wanted is because they never seem to budge. In our last blog, we talked about setting anchors to control negotiation proceedings, in which they are masters at. What they are even better at is not budging from their position. Take the Sino-British negotiations over the Hong Kong handover again. Once they laid out their proposition, which is not to give democracy to Hong Kong, they never backtracked. The Brits on the other way, wanted to demand full democracy but they couldn’t persist in their demands as negotiations went on. There’s a few reasons why China was able to not budge, with a major one being their strong ideology. They have a strong desire for control and any power sharing with democratically elected politicians would deem unacceptable to them. This gave them the mental will and strength to stay firm in their demands. A second reason is because they didn’t want to look weak, and they viewed backtracking in negotiations as such. This reinforced their thinking to never budge. In order to press on with their demands, they also employed tactics like time stalling, which they were very successful at, since everybody knew the handover was scheduled to be on the 1st of July 1997 – the Chinese simply had to stall negotiations to get what they wanted. It was reported that the Brits at some stage, tried to plead China for a delay in the handover, but of course, China gave a firm “no.” Again, their ability to not budge is down to a strong set of beliefs, which in this case, is that Hong Kong has always been China’s and any delay in the handover would mean insult to the whole nation.
From this negotiation case study, you should come to realize that having the option to budge is not necessarily a good thing. Budging or walking away from negotiations could mean that you do not have a strong enough belief in what you are negotiating for. Having too many fall back options may cause you to become psychologically weak, hence BATNAs might not be a good thing. Obviously you shouldn’t over demand, since you might risk completely cornering your opponent, but budging or walking away from negotiations should always be the last option. The matter of the fact is, if you can’t convince your opponent why you deserve your own demands fulfilled, why on earth should your opponent oblige?
If you compare the contrasting negotiation outcomes between the West and China, except perhaps under the Donald Trump era, it seems that China always had the upper hand in negotiations, whereas the west could never seem to fully get they want. My personal opinion is that the west feels uncomfortable, more times than not, in fighting too hard for their demands, which could be down to cultural roots. However, in the East and Middle East, there is a strong, deep rooted haggling culture in many places, hence a lot of these countries are unafraid of persisting with their demands. Let’s take the Iran deal as an example. As the Washington Post confirmed, the Obama administration paid Iran more than a Billion dollars in cash in return for four American hostages. There was widespread disapproval in the US regarding what has happened. Even as a non-American, I don’t believe that the US should show such weakness to Iran – as the world’s largest economy and technological hub, the US has tons of leverage over countless countries technically, but for some reason they didn’t fully leverage their position. Kudos has to be given to Trump where he managed to get a North Korea hostage back without paying anything, which I guess is down to his strong belief that saving Americans from kidnaps is a non-negotiable item. I’m not saying that other US presidents don’t care about US lives, but the US should reflect on why they can’t negotiate for favorable terms most of the times. Another example is the disastrous retreat from Kabul, Afghanistan. Surely the US could have negotiated with the Taliban to allow for more time to retreat? To win a negotiation, or at least get the upper hand in a negotiation, one cannot always think along the lines of a win-win for both parties. It is vital that the negotiator believes not just 100%, but 110% in what they are demanding for in negotiations. Otherwise, the negotiator will not have the will to fight for what they actually need.
Returning back to the paradox of choice, it has been proven time and again that too many choices hinder our decision making mechanism. Psychologist Herbert A. Simon in the 1950s separated decision makers into 2 categories: maximizers and satisfiers. A maximizer is somebody who is driven to make the best possible choice, meaning they have to evaluate options extensively, or even exhaustively. It is found out that these people are often less satisfied than satisfiers who know how to become content in decision making. In negotiations, overthinking can cause you to not settle for what can be deemed as good terms, causing you to miss out on the ability to close out good deals.
As a businessman involved in the recruitment industry, I once had to negotiate with several IT firms regarding how much they should pay me if I filled up a vacancy in their firms. The industry standard was 20% of a candidate’s annual salary per vacancy filled at the time, yet I was pushed by every firm to go lower. I had the choice to either accept their offer or move on with other firms, since I had a huge list of accounts. However, I went into every negotiation with the mindset that I do not have any other options but to strike a deal with every firm at the 20% market rate. This gave me reasons not to budge and actually encouraged me to think about why I deserve the market rate. Whereas if I went into negotiations with a mindset that I can always leave the negotiation table to focus on other negotiations, I definitely would air on thinking about reasons to give in to my opponents’ demands. As a result of my determination, I was able to stave off my opponents’ demands to actually have them follow my line of thinking. I reasoned with them, saying that if I were to accept their demands, I would be missing out on what I should get, which is the market rate. I told them straight up that I wouldn’t be so stupid as to accept a much lower offer than what their competitors would pay me. This got them to budge and I got what I wanted.
The lesson of my case study is that mental resilience plays a huge part in gaining an advantage in negotiations. Before going into negotiations, you should always think of ways to strengthen your resilience, whether that might be constructing a stronger ideology or thinking about the negative consequences of not getting what you want. Without mental resilience, you have no chance of getting what you want. Based on my years of negotiations, you should never allow yourself to settle for your so-called BATNA – fight 110% in every negotiation and you might get more than what you first wanted! If you wish to watch our negotiation video on this blog’s content, click on the following link, watch our youtube video and like and subscribe to our channel!
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