Amazon’s announcement on February 14 that it was backing out of a recent deal to build a major new campus in New York City was as bitter as a Valentine’s Day breakup could be. But the budding relationship between Amazon and New York didn’t have to end in acrimony and broken dreams, Harvard Business School professor James Sebenius writes in a new HBS Working Knowledge article. A series of negotiation strategies could have helped Amazon mount the type of negotiation campaign it needed to succeed. In fact, these negotiation strategies can help any negotiator facing opposition to a complex deal.
Backroom Dealmaking
New York and the Washington, D.C. area were the ultimate winners in a heated contest that Amazon stirred up among hundreds of North American cities and regions to host its second headquarters.
But some New Yorkers were outraged when they found out that the state’s governor, Andrew Cuomo, and New York City’s mayor, Bill de Blasio, had secretly promised Amazon $3 billion in government incentives to get the contract for a New York campus. Amazon insisted the incentives were a small price for the New York region to pay for 25,000-plus jobs, but some community groups and politicians complained that a company worth more than $1 trillion didn’t need the corporate welfare.
According to polls, a majority of New Yorkers, including residents of Queens, supported the Amazon campus. Amazon executives tried to win over the vocal minority who did not through public meetings, fliers, and the promise of jobs and job training programs for local residents. However, the company continued to face strong opposition to the new campus from community groups and politicians such as U.S. congresswoman Alexandria Ocasio-Cortez, who represents a district near Amazon’s proposed Queens campus. That opposition ultimately led to the company’s decision to back out of the deal, the New York Times reports. The news was a blow to Cuomo and de Blasio, and was widely panned in New York and beyond.
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Why Complex Deals Fall Apart
Amazon’s decision to withdraw from its planned New York project contains valuable lessons for business negotiators in other realms, writes Sebenius in his HBS Working Knowledge article. In fact, he notes, it’s common for highly promising deals involving multiple parties and potential deal spoilers to fall apart.
Why? Typically, because the principal negotiators limit themselves to negotiating with those who have power and authority rather than reaching out to potential deal spoilers and skeptics. This mistake is known in the negotiation world as Decide-Announce-Defend, or “DAD.” In Amazon’s case, that meant Decide—on Long Island City in Queens; Announce its choice publicly; and Defend itself from attacks. And ultimately, it meant adding a final “A” to the acronym—Abandon, according to Sebenius.
Mount a Negotiation Campaign
How can business negotiators avoid the type of debacle that occurred in New York? By building a winning coalition through consensus—that is, earning support from the right parties, including potential deal blockers, to ensure the deal will overcome hard-bargaining tactics and hold up during the implementation stage. Sebenius and his colleague David Lax refer to this process as a negotiation campaign.
Looking beyond current negotiations in the news, to mount a successful negotiation campaign, negotiators need to follow these negotiation strategies:
- Never take victory for granted in a complex, multiparty setting.
- Actively monitor local opinion on the issues involved.
- Identify and nurture potential allies before you need their support.
- Identify all of your likely and potential opponents at the start of the process.
- Beware of the possibility of opponents with diverse concerns teaming up to form a blocking coalition.
- Listen to the concerns of potential opponents and address them to the extent possible.
- Remember that negotiation continues during the implementation stage and requires ongoing support to succeed.
When complex projects are being planned and negotiated, the likelihood that they will face strong opposition and naysayers is high, writes Sebenius. Negotiators can reduce the odds that a project will be felled by a blocking coalition and reach a lasting negotiated agreement by adhering to the negotiation tips and techniques outlined above. That means staying attuned to the concerns of the communities and other groups involved, nurturing allies, anticipating opponents and addressing their concerns to the degree that you can, and building enough support to overcome those who remain hostile.
Are there other negotiation strategies you have found useful for managing deal spoilers and ensuring that your complex deal succeeds during implementation?
