Amazon & NYC fail to negotiate the P.I.E.

Prepare. Insights. Explore. This simple negotiation framework could have been used to avoid what became a disastrous negotiation outcome for both New York City and Amazon. The city failed to gain 25,000 jobs and Amazon failed to anchor its HQ2 in a major talent pool. What are some of the lessons for negotiators from this case study in how a negotiation went wrong?

Prepare a comprehensive deal map and process

Before beginning a complex multiparty negotiation, it's important to analyze the parties and interests that will come into play. A deal map outlines the parties' positions and interests, then the possible alignment with deal outcomes. Crucially, the map also identifies those parties that may not be directly in the negotiations (as they don't sign any agreements), but are directly affected by the outcome. As in the HQ2 scenario, this is particularly important if an outcome gives distributed benefits to a wider group (the state and wider city workforce), but inflicts pain on a concentrated few (local residents who would pay higher rents and face increased congestion). There were also a concentrated few winners (local property owners).

For the HQ2 negotiation, there was great complexity with competing interests within the NYC side of the table (the city, state and local officials). For this reason, a key preparation point is to ensure that any intra-party negotiations are staged first so that the larger negotiation can occur with united principals and unified principles on the same side. It became clear over time that several of the interest groups not directly at the table (local residents groups and unions) would be the key stakeholders able to block a deal.

Insights are needed to change minds

From most negotiators' experiences (and the overwhelming consensus of psychology research), it is very difficult to get people to change their minds through brute argumentative force. What works far more effectively is enabling the conditions where people are open to considering new information and then making their own interpretations.

In the HQ2 case it seems that the key principal negotiators from the two sides were not fully aware of the likely spill-over effects of planting a huge employer into an already congested city. Gaining insights from local residents on how their quality of life would be impacted may have changed the calculus of how the deal was crafted. The negative optics of giving tax breaks to a company owned by the wealthiest man on the planet would probably also have become more evident with greater public interaction.

Explore solutions that create maximum benefit

"Expanding the pie" is a common refrain for how to achieve a better negotiation outcome - and for good reason. A really successful negotiation not only achieves a favorable outcome for all parties, but also creates value that would not have been available without the parties agreement. This synergy occurs though combining newly thought of ideas to invent better solutions. I have been involved in negotiations where there has been an audible gasp when the parties realize that they have come up with a new solution that works for all.

For HQ2, many of the negative spill-over effects could have been reduced through targeted infrastructure improvements with guarantees of low-income housing and rental supports. There was likely enough long-term economic gain for Amazon, the city/state budget and local building owners to have figured out how to pay for this. The infrastructure improvements would have also been of long-term benefit to all of the parties. Unfortunately this did not happen in time for the project to go ahead. It now seems likely that Amazon will just slowly add incrementally to the thousands of employees it already has in NYC.

So the lessons are that if the preparation stage has been effective in creating a process for new insights and learnings for all parties, then the final stage of exploring and crafting solutions will have the most benefit of all. Maybe someday the Big Apple will still get the Amazon smile back.

Craig Mullett is an experienced negotiator, having worked on hundreds of negotiations around the world, completing deals in 16 countries. Craig has studied negotiation at leading institutions, including the United Nations International Leadership Academy, Harvard Business School and the Netherlands Business School. He speaks frequently at global conferences and has commentated in The New York Times, Forbes, Inc and Financial Mail. Craig has advised global businesses, non-profits, trade unions and governments on negotiation strategy.