Know your “or else”

After you have created the list of alternatives, decide which alternative is most acceptable to you. Pick your personal or else. Decide what you want to do if the negotiation doesn’t close. Think about that course of action. Play the scenario out in your mind.
Knowing what your “or else” is — that is, knowing what your favorite option is if the deal doesn’t close — defines your limits for each negotiation. Suppose that you’re willing to pay $300,000 for a house before you set your “or else.” Then remind yourself that you have choices and list all of them. After you write down your list, you may decide that you can accept another house that is cheaper. This way, you can be firm or even lower the $300,000 price you were willing to offer. On the other hand, if you decide that no other house would be right for you, the price could go up rather than down.

A few years ago, the Harvard Negotiating Institute came up with something it calls BATNA — the Best Alternative to a Negotiated Agreement. That’s the Harvard way of saying “or else.” BATNA is a core element in its negotiating course. It defines your best alternative if you can’t close a deal. Most negotiations settle before either party’s limits are tested. World-class negotiators have been doing this for centuries. The “or else” label is my own tag that I used with a client as a young lawyer, and it has stuck with me ever since. But your limits and the other party’s limits loom over every negotiation like peregrine falcons circling high above, ready to swoop down for the kill. You are much better accepting this reality before the negotiation ever starts.