The World’s Greatest Negotiator
I was a fledgling young college graduate with little to no experience in business; there was so much to learn. Among the countless things for me to foster was the development of an approach to negotiation. Some people are born into an environment that teaches haggling or negotiating. Think of a street vendor in Delhi; he and his offspring are likely well versed in how to banter back and forth until a deal is struck. On the other end of the spectrum, I had absolutely no history to draw upon and was blind to how to negotiate anything. I quickly decided I had to get smarter; if I was going to have success in business, I had to learn how to strike a deal.
Fortunately, I stumbled onto the work of Roger Fisher and William Ury, two Harvard professors who had published their 1981 bestseller, Getting to Yes: Negotiating Without Giving In. I didn’t read the book but did read a Harvard Business Review piece which discussed the concept of BATNA, which refers to the best alternative to a negotiated agreement. Simply put, this defines the best outcome you can expect if you fail to reach agreement in a negotiation with the other party.
The theory is based on the notion that if you know what your best alternative is, and ideally, you know what the other sides’ best alternative is, you are equipped to find common ground that will enable both parties to move forward. Gaining this level of understanding, admittedly, can take some work and may be difficult to achieve in every case. However, if you can get a clear awareness, success is more likely, timelier, and if the agreement is a forward-looking understanding of parameters for co-existing, more sustainable. Think of countries’ negotiating peace deals or trade deals.
A good example of a negotiation that works great using BATNA is the purchase of an operational business. Presumably both sides understand what they are willing to do and what they aren’t; thus, leading to the conclusion of a deal. But it can be more subtle than that. I remember a time when I was serving as an advisor to a business that was seeking a sale and had received several viable offers. We settled on one buyer and put our heads down trying to negotiate the details and close the transaction. The devil is always in the details.
Negotiations can get emotional and, in this case, the seller, my client, was selling a business he had founded; running the business was all he had done for twenty plus years and everything about it was personal. Obviously, that led to strong negative reactions to items the buyer was seeking; most of which were completely reasonable. With all the anxiety you can imagine, the deal muddled along and reached the point of the final item to address. At this point my client balked and said he couldn’t go forward. The transaction, the daily focus on terms, the weight of his personal decision had caused him to obsess over things that, had he been asked about months before he was in this place about their importance, he would have said that is a non-issue. No more, in the state he was in, everything was heightened and critical.
What was I to do? My job was to represent the client and help him get the deal he wanted. I had to ask myself was his behavior reflective of what he wanted or, had he lost control of the process. I concluded it was time for a BATNA conversation.
I acknowledged to the client he didn’t have to do anything. He could walk away and there would be no repercussion; but I followed with “Then what.”
“What do you mean,” he said.
“I mean after we walk away, you are back where you started. You told me you were miserable and needed a life change. If we pass on this, your best alternative is something you can’t stomach.”
He looked at me with a painful expression: part anger, part submission.
He did the deal. Two weeks after it was over and he had his money, he called me and wondered what the hell he was thinking. “Was I really that close to making the dumbest decision in my life,” he asked.
The answer I chose not to say to him was, yes, he was precariously close to messing up big time.
Over the years, I have found BATNA to be a great guide for anchoring my approach to how I want to negotiate various interactions.
However, BATNA has its challenges. For example, it may cause things to take longer. If only one side is thinking of the deal this way, it can lead to one person playing chess while the other is playing checkers. This used to frustrate me to no end. Like most things in my early days, I couldn’t accept why the other side was so ill-informed as to not know BATNA and practice the art of negotiation. Holding that attitude was as silly as silly as it sounds to write it today. It was arrogant and naïve. Ironically, arrogance is present in most negotiations; my attitude was just another manifestation of poor negotiation skills.
In time I have learned that there are generally two types of negotiating approaches: those that practice BATNA or some form of it, and those who negotiate on extremes. The latter group is the one that will offer half a million dollars for a house that is clearly worth a million. Their style is akin to bargaining for a rug in Marrakech with a street vendor, expecting they will do the same and eventually you will get to common ground. This approach can work; it also has problems.
I historically have hated dealing with people who approach negotiating from extremes. I would almost immediately try to alter the conversation to a more collaborative conversation hoping to thoughtfully engage. In hindsight it’s not that the other side wasn’t thoughtful, it was just that their approach bothered me; it seemed more like a bullying tactic than a sincere desire to build a win-win. And maybe that is the point. Negotiators who haggle from the extremes don’t always seem determined to reach a mutually beneficial outcome; they want to win. And hey there is nothing wrong with winning.
Over the years, I have learned the best strategy to respond to an aggressive extreme negotiator is to ignore them and their offer. You can’t give the proposal credence; you can’t allow them to set a baseline that is far removed from your BATNA. Generally speaking, that approach has worked.
In no way, however, would I consider myself to have reached the level of a great negotiator. I am a keen observer though and am thus fascinated by the self-proclaimed best deal maker on the planet. Historically, he has negotiated from a position of the dominant power in the transaction. He has bullied his way through most business deals and has negotiated by throwing out extreme positions and working from there. Now to be clear, it could be he understands BATNA and uses it in his calculus when he proposes terms. That blending of the two approaches would be brilliant on one level. However, I don’t know if that is what he is doing, and I doubt we will ever know.
What is clear also is that countries are starting to follow the path I have chosen which is to ignore him when he throws out wild positions. You can look at Greenland, Panama, and Canada who have all told him to go pound sand. Maybe his domineering approach will work, maybe not; time will tell.
The same holds true on tariffs. Countries throughout the world have reacted differently to his broad, aggressive demands: some countries have rejected/ignored him; you could argue they don’t need the US or more likely have determined their BATNA doesn’t require the US but could mean closer ties to China. Other countries have come to the table to cut a deal. And then there is China. Over the weekend the US and China agreed to a pause on the extreme tariffs. To me, this is a signal that they both know their BATNA can’t exclude working with each other.
As I said, the outcome of this will be studied and I believe will impact the research around negotiation. Maybe he is the greatest negotiator of all time. Maybe he is a bully who lives on extremes and pushes people to do what they don’t want to do. I hope he is the former. Causing people to do something that they don’t want to do creates lingering anger. Yes, there is short-term gain, but the long-term impact could be worse than the quick upside. It is telling that almost everyone who has previously done business with Trump will no longer work with him.
This country, no doubt, needs to improve its economic position with certain countries, but we don’t need to create an imbedded negative attitude in the process. History has shown that skilled negotiation can achieve both a good outcome and have the other side feel the same way. Here’s hoping history describes the current, bold approach in that light.
