Lessons from Lawrence Susskind on BATNA

26 March 2021
On the 8th of March 2021 the MGA-network organised a webinar with MIT Professor Lawrence Susskind. Prof. Susskind spoke with 75 Dutch MGA
professionals about the fifth principle of the Harvard
Negotiations principles: ‘Know your BATNA’.

BATNA stands for 'Best Alternative To a Negotiated Agreement'. BATNA is your best alternative; essentially what you’re left with if the negotiation fails. It is very important to know your own BATNA, and preferably also the BATNA the other stakeholders have. Why this is so important and how you effectively can
use this information, often remains a question. Prof. Susskind offered various inspiring insights into these questions:
  • It is better to not letwishful thinkingguide you during negotiations. This can cloud
a realistic perspective as to what is possible. Knowing your BATNA offers you the
opportunity to compare the value of the negotiations with the value you have when
you walk away from the table. You will be better able to judge if it is in your advantage
to come to an agreement or if your next best option is of higher value.
  • If you are ot entirely sure of your own BATNA you can make the following equation: BATNA = possible alternative x probability – the cost of the alternative.
  • It is sometimes presumed that most work is done at the negotiation table. However, it is worth while strengthening your BATNA by looking for other offers, outside of the negotiation table, in order to increase your leverage at the table.
  • It is preferred to negotiate with someone who is also well aware of her of his BATNA.
It will make it relatively easier to come to an agreement that is better for both parties
under the condition that the ZOPA (Zone of Possible Agreement) will allow for it.
  • What interventions can be used if a party doesn’t know his or her BATNA or overestimates it?
    - Sometimes the other party has no clue about their own BATNA. You can intervene
    by laying out a few alternatives for them. This can stimulate the other party to
    consider their own BATNA.
    - Sometimes it is necessary to question the assumed BATNA of the other party. You
    can intervene by talking about the insecurities of their alternative and create an
    overview of the costs of the alternative.
    - With the presence of an independent mediator it is also possible to help the other
    party createor consider their BATNA by asking questions.

Susskind recognizes that the use of BATNA is easier in bilateral transactional negotiations than in a multistakeholder processin the public arena. Nonetheless, also in these processes you will have a stronger position if you are aware what your alternatives and those of the other parties are.

In an MGA negotiation you always try to create as much value as possible. Therefore it is good practice to include everything that you are able to bring to the table in the negotiations.

Of course, reaching agreement as such is not the biggest milestone for success. Serving your or the public interest is. If an agreement is the sole purpose, you are at risk of a dynamic that results in less value than BATNA.

Click here to watch the full webinar with prof. Susskind (in English):