BATNA stands for "Best Alternative to a Negotiated Agreement.” It is your fallback acceptable outcome if negotiations fail. It is a concept that Roger Fisher, William Ury, and Bruce Patton introduced in their book 'Getting to Yes: Negotiating Agreement Without Giving In.’ BATNA is generally thought of in commercial negotiations, but it also has applicability to interpersonal and corporate relationships. I have personally experienced it in this manner several times throughout my career, and most recently the concept surfaced in a discussion with an entrepreneur about their relationship with a cofounder.
Think of it as the hill you are willing to die upon. In the extreme, it is a question of whether you are willing to quit your job rather than compromise on a negotiated outcome. When you simply cannot reach agreement, what is your alternative? Life is too short to tolerate untenable situations for very long, so consider your BATNA as the rip cord or exit hatch. Thinking in terms of BATNA can bring clarity to your situation and often it will paint a future picture that is so undesirable that it forces you to reconsider your negotiating position to become more open to compromise just to avoid your BATNA.
The recent scenario that brought this to mind was a founding partnership that was hitting a rough patch. At the inception, the partners agreed upon a division of responsibilities and corporate roles. As the business matured, it emerged that the original division of responsibilities did not truly play to each partner’s strengths, and the division of roles was creating a leadership challenge regarding who was in charge and what decisions could be made independently. I faced an identical situation at the start of my career, when my co-founder and I agreed to operate as a partnership, but for the purposes of creating a corporate structure, one of us took the CEO title and the other became the COO. As the business matured, the titles started to actually mean something, and the “partnership” concept became very stressed. Someone had to be in charge, and that meant the other founder had to cede authority. In my experience, and in the instance of the more recent scenario, the negotiated outcome essentially created a winner and a loser.
Interestingly, the same BATNA may apply to both parties. For the nominal winner, the question is whether they are willing to press the issue even if the outcome means their cofounder may decide to leave the business? For the nominal loser, if their only negotiated choice is to accept a lesser position, are they willing to move forward, or do they feel the need to leave the business? Both parties share the same BATNA - one winner and one loser with the BATNA resulting in a parting of ways.
The recent situation reminded me of the biblical story of Solomon. Two women claimed to be the mother of the same baby. To determine the true mother, Solomon suggested cutting the baby in half; the real mother immediately offered to give up her claim to save the child's life, revealing her identity, and Solomon awarded her the baby. In the corporate setting, the two founders are both claiming to be the better leader, and therefor the CEO role, but to save the company’s life, the true leader has to decide what are they willing to do to reach an outcome. Are they willing to force their promotion, or go along in a lesser role, or do they bow out and leave the company in the hands of the other founder? How honestly committed to what is best for the success of the business is each co-founder, versus how important is it to preserve their own ego.
At the risk of stretching the metaphor too far, in this situation, the board of directors should perform the role of Solomon. A key responsibility of the board is to ensure effective corporate leadership, and when necessary, to hire and fire the CEO. An engaged board will perceive the conflict between the founders and the inefficiency of the leadership of the company. If the founders are not addressing the situation expeditiously, it is up to the board to step in and force the hard decision that has to be made to put the company on a solid footing. Co-founders typically start out as friends, and it is difficult for friends to face the realities of their situation. However, the board is uniquely positioned to exercise impartial governance and drive an outcome that is best for the business.
In situations like this, the relationship between the board and the key executives is a critical factor. Perhaps even more important, the relationships among the non-executive board members, and the effectiveness of the board as a team will become critical. In my experience, the non-executive board members need to have a solid working relationship. Independent of the executive founders, who may also be board members, the non-executive board members will need to work together, and speak with one voice to drive resolution. Individual board members back-channeling and voicing their support to one executive or another can lead to a toxic situation. If there is a chance to avoid the BATNA of one executive leaving the business, then the board has to be seen as a deliberative body and an impartial arbitrator of what is best for the company. If the board concludes that the best outcome is in fact for one executive to leave, then they have to be clear and resolute in that decision.
Strong, efficient, decisive leadership is critical for company success, and corporate culture. When there is strife or conflict or even just visible discord between key executives, the business suffers. Allowing this situation to fester is the equivalent of an ‘own goal.’ If the execs cannot fix the situation, it is up to the board to step up and step in.