Knowing When To Walk Away From a Negotiation
One of the most common dilemmas for negotiators has been to determine when the time has came to leave the negotiation table, and consider a given deal as lost and not profitable enough for the interest for their companies.
Furthermore, even when the decision to “walk away” has been made by the negotiator or by the decision makers involved, the negotiator sometimes feels like having failed to deliver upon his mission, his duty… The pressure coming from his colleagues not directly involved in the negotiation reinforces this feeling; but is this sentiment in fact justified?
From experience, we don’t need to wait for the face-to-face negotiation to define when will be the time to walk away from the negotiation, moreover, it is strongly not recommended to try asking this fundamental question in real-time during the actual negotiation… this question needs to be answered during the preparation phase.
The answer is driven by an concept named BATNA.
BATNA is an acronym described by Roger Fisher and William Ury which means “Best Alternative to a Negotiated Agreement”. It is the alternative action that will be taken should your proposed agreement with another party result in an unsatisfactory agreement or when an agreement fails to materialize.
If the potential results of your current negotiation only offer a value that is less than your BATNA, there is no point in proceeding with the negotiation, and one should use their best available alternative option instead. Prior to the start of negotiations, each party should have ascertained their own individual BATNA.
It took me long to understand this idea… During the early years of my career, I used to be depressed when negotiations went in the wrong path or were not as fluid as we would have liked… In some cases, I was finding myself trying by force to find creative ways to conclude deals at virtually any price… This is what I use to call the “investment” project syndrome, or in other words, justifying a deal you foresee will be with a negative NPV (or an NPV nearly equals to zero)… This can be explained by the level of effort you’ve invested in preparation, brainstorming, negotiation, etc… at some point, you start being emotionally involved…
With time, I’ve realized this perception was in fact erroneous… stopping negotiation when you reach a dead-end (the value of the deal is less than your BATNA) is more an opportunity than a failure… an opportunity to win even bigger with your alternative option…
Regards,
Yohan Albo
Labels: negotiation
1 Comments:
yohan, very interesting, and this Batna is helpful it seems not only when making negotioations in the fields of business but also in vary situations for example when you negotiate with your new boss about your salary wage, if its below your batna, you van say to him, sorry, i cannot accept your last offer and simply stop negotiating there. probably he'll run after you and will make a better offer. Practicing the BATNA model ensures that you won't agree for any other reason to lose.
very interesting post.
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