Knowledge is power in any negotiation. Skilled negotiators prepare carefully, taking time to identify their key interests and their alternatives if no deal is reached (in negotiation parlance, their “BATNA” — their best alternative to a negotiated agreement).
These negotiators understand that that’s just one side of the equation. It’s not just enough to know your own alternatives; you also have to know the alternatives your counterparts are weighing. It protects you from making poor decisions at the negotiating table.
In “Nudge, Shel Silverstein, Smart, and Negotiation,” Joel Schoenmeyer, who blogs at Death and Taxes, recounts a snappy anecdote about a negotiation over royalties to show what happens when you don’t bother to do your homework about the other guy’s BATNA. Go read it — it’s got a great punchline.