Dear Amazon, New York doesn't want you: Negotiation Know-how
“Know everything about the companies and people you are going to be negotiating with. Insist on getting the names of everyone participating in the negotiations. Leave no stone unturned; find out as much as you can.”
In case you missed it, the Guardian headline in November 2018, told the story in just seven words. Amazon had announced, with New York Mayor Bill de Blasio and Governor Andrew Cuomo, they would open a major office in New York. This office would bring 25,000 jobs paying more than US $100,000. With a deal negotiated with the two decision makers, what could go wrong?
At least once in their career, every negotiator will make the same mistake as Amazon: if you negotiate with the decision makers, they can ensure the deal will work. In theory yes, in practice, no! In a deal affecting multiple parties: opponents are unavoidable.
So, how will you know when you are negotiating a deal where you risk making the Amazon mistake? Ask a simple question: who could help or hurt your deal?
Asking this question would quickly show Amazon some other parties who they should consider. For example, who might be interested in 25,000 jobs? Politicians who need to ensure the city can cope with these new jobs with transport, housing and schools. And who else might be interested in jobs? Unions. The Guardian summarised: “New York City is a union town; Amazon is an anti-union company.” So, Amazon should have considered the unions.
Negotiation expert, Professor James Sebenius offers some wise advice in “Seven Negotiation Lessons from Amazon’s HQ Disaster in Queens.”
In a complex, multiparty setting, don’t take victory for granted, ever.
Actively monitor local currents and cross-currents of opinion.
Identify and nurture potential allies before you need them.
Identify all likely and potential opponents at the outset of the process.
Beware of opponents with diverse concerns joining forces to form a ‘blocking coalition’.
From the beginning, actively listen to the concerns of potential opponents and address them to the extent possible.
Remember that negotiation does not end with a ‘yes’, but requires enough ongoing support for implementation and sustainability.
https://hbswk.hbs.edu/item/seven-negotiation-lessons-from-amazon-s-hq-disaster-in-queens
Let’s look at some practical implications for lesson seven.
Practical Tools: who could help or hurt your deal?
James Sebenius advice gives us some good principles to apply when we recognise we are in a negotiation where multiple parties matter. Based on lesson seven, we suggest negotiators should always carry a reminder:
Negotiation doesn’t end with ‘yes’, because you need ongoing support to implement the deal.
As we mentioned earlier, start by asking who could help or hurt your deal. Here are some possible external parties:
Use this table to identify any specific party that could help or hurt your deal. Next, classify each party by Power (low or high) and Interest (low or high). Then plot them in one of four squares on a Power versus Interest grid; then manage all parties in a square in one of four ways: Keep Satisfied, Manage Closely, Monitor or Keep Informed.
Let’s go back to New York and see who opposed Amazon and what were some of the issues. And let’s see if our approach would have identified these parties. Two of fiercest opponents were New York Councilman, Jimmy Van Bramer and State Senator, Mike Gianaris. Also, opposing the deal was Federal Republican senator, for New York, Alexandria Ocasio-Cortez. In the grid, we would expect these politicians to have a high interest in a high-profile company bringing a high number of jobs. The only question would be to ask are they high power, needing to be managed closely or low power, needing to keep informed.
Power can be complicated to diagnose, but we can classify power as Formal, Economic or Political where Formal means they are legally involved, Economic means they can affect money, and Political means they can influence. All three would appear to have Formal and Political power, yet it appears they were all unaware of the deal until it was announced. Some might call this a “brave” strategy.
As mentioned earlier, unions would be highly interested in the deal and in New York would appear to have high power, so needed to be managed closely, but were not.
Other issues excited opponents. Part of the deal was Amazon getting a $3 Billion tax incentive, which was half what nearby Newark offered -- $7 Billion. However, Jeff Bezos is the richest man in the world worth about US $150 Billion. And in 2018, Amazon paid no Federal taxes on $11 Billion profit, so it’s easy to see how, in some people, incentives could provoke emotions. The logical argument, giving $3 Billion incentive would generate $27 Billion in new taxes, a nine times return could never overwhelm the emotions.
Another New York hot topic is congested transport, so New Yorkers were always going to ask, how will they get to work with 25,000 more Amazon workers on the road or subway? What makes this issue worse is Amazon got a hard-to-get permit for a helipad when New York already has two public helipads.
And finally, New York is filled with renters, so how much would Amazon workers paid $100,000 push up the rent? And how would it affect the homeless --all 63,000 people.
Even from this passing glance, we can see there are several more parties—Regulators, Lobby Groups and Special Interest Groups—who belong on the Power versus Interest grid. And each of these needs to be managed in one the four ways.
Final lesson
Please don’t make an Amazon mistake; always remember, Negotiation doesn’t end with ‘yes’, because you need ongoing support to implement the deal.
Always ask: who can help or hurt your deal? Then use a Power versus Interest grid to see how to manage parties: with high Power, Keep Satisfied or Manage Closely and with low Power, Monitor or Keep Informed.
Let’s leave the last words to Amazon:
While polls show 70% of New Yorkers support our plans and investment, some state and local politicians oppose our presence and will not work with us to build the type of relationships required to progress with the project.