Coming up with your best alternative to a negotiated agreement

- There's an important term when you're negotiating: BATNA. B-A-T-N-A. This is an acronym which means the best alternative to a negotiated agreement. Why is this so important? Because whenever you're negotiating, you are trying to reach a solution that will be better for you than what you could do on your own. I mean imagine you are going to ask for a raise, and your alternative, if they tell you no, is to quit and be unemployed and starve to death. I mean whatever they tell you... Actually, they could tell you, "We're going to lower your salary "because you asked for a raise." And you'll have to say, "Okay this is better for me than starving to death." So almost anything will be better. Now put yourself in the same situation but you are going to ask for a raise because you have another job offer that pays actually a little more than what you're asking. Well if they say no, you can say, "Thank you, I appreciate that. I'm leaving." Totally at peace. You don't have to argue. The floor of the outcome of this negotiation is going to be given by your outside option. So perhaps the most important part of the negotiation happens before you start the conversation, which is to prepare your plan B. What do you do if the negotiation doesn't yield a good outcome? What's the best you can do without the cooperation of this other person? And that's why it's called BATNA. What's your best alternative to a negotiated solution? What would you do if you can't agree? That's very strategic, but that's something you have to do before you start the negotiation. You don't develop your BATNA while you are speaking to the other person, you take a step back and say, "What would I do if we can't agree? "What's the best thing I can do alone?" In a non-organizational situation, when you are negotiating with someone that you don't have a long-term relationship, or you don't belong to the same company, well your options are you stay or you leave, or you agree or you disagree, and you can agree to disagree and part ways. When you are working in the same company, you can't do that. You can't just say, "Well, you know, we agree to disagree "and then we're not going to do anything." Let's just say I'm the engineer that wants a certain feature in the product and you're the product manager that thinks that feature is not helping. Well we can't just agree to disagree. The product will either have the feature or will not have the feature. We have to resolve the conflict somehow. And what if we talk, we understand, but we generally disagree about what to do? How do we solve this? Well, in general, BATNA is not a good way. People can't go and say, "Okay I'll put the feature alone." Or, "I block your feature all by myself." In an organization, you need to involve a person that has the authority to make a judgment call. At LinkedIn, we have something called The Five Day Alignment Process, for example. And five days means if two people disagree about anything, and they cannot agree after five days of thinking about the issue, then they have to escalate. And by escalate we mean something very, very specific. We mean escalate in a clean way. How do you escalate in a clean way? What's the plan B within an organization that wants to keep a good network of relationships and collaboration? Well, the first thing is both people go together. There's no such thing as unilateral escalation. You never go behind the other person's back. So both people agree that they can't agree, that they see differently, and there's no obvious solution to this problem. And then they say, "Okay, we'll escalate together." And then they both go to see their manager and they explain to the manager what are the trade-offs that they see, what is one person's position, what is the other person's position, and what may be some ways to move forward either by choosing these two or by relaxing some constraint and allowing both things to be integrated at a higher level. That is a very collaborative conversation with the manager. We don't essentially disagree about what we're trying to do, we are disagreeing about what's the best way to accomplish what we are trying to do together and we'd like your help, Mrs. Manager, because you have the authority to make a judgment call and we'd like to explain to you how we see things and trust that you'll make a call that is in the best interest of the system as a whole. So, in a company, the plan B is not you part ways and you do something else, but you actually join ways and you go see a person in authority together to get their help in making a judgment call on how to move forward.