3 things we can learn from the 2 trillion dollar stimulus negotiation

Late last week, the U.S. government successfully negotiated a historic stimulus plan while under great pressure to help mitigate the economic hardship due to the coronavirus pandemic.

A noteworthy outcome for many reasons, it was especially so when considering the dynamic and fast-moving conditions in which two highly adversarial parties had to come together and reach agreement.

Here are three things I believe we can learn from the negotiation:

Create the proper environment

One reason the negotiation was successful is that careful thought was given to who would lead the negotiations for each side.

For example, when negotiations began between the White House and House of Representatives, Treasury Secretary Steven Mnuchin took the lead on behalf of the White House while House leader Nancy Pelosi took the lead for the Democrats.

This was effective for two reasons. First, the post impeachment fallout prevented the possibility of direct negotiations between Nancy Pelosi and President Trump, as the two have not exchanged words since their contentious meeting last October. Second, Nancy Pelosi and Steven Mnuchin have an established track record of success working together on important negotiations, such as the initial coronavirus relief bill, and debt-ceiling negotiations last summer.

The lesson to be taken here is the importance of creating the best environment for our negotiations to thrive. The goal should be to create a face saving environment, where negotiators who’ve proven the ability to stay rational and bring positive versus negative relational baggage into the interaction are the ones sitting across the table.

Be prepared for a rocky ride

Throughout negotiation there were a number of inflection points when new demands were made, dramatic threats were issued, and breakdowns seemed likely.

For example, days after Nancy Pelosi negotiated terms with Secretary Mnuchin on behalf of the House, Senate Republicans revised the legislation with terms that were greatly in their favor. Days later, Senate Democrats successful played hard-ball, creating an impasse to secure concessions on items they considered non-negotiable. And even after the final night of negotiations, a lone representative attempted to prevent the planned vote from happening, throwing Congress into a last minute scramble. Luckily, negotiators from both sides were able to stay focused on the end goal, continuously reverting back to problem solving each time curveballs appeared.

The lesson to be taken is to embrace the process, especially in regards to the posturing and power plays that invariably occur. Likewise, realizing that oftentimes for negotiators to persuade their constituents to accept an outcome – or to accept it themselves – they have to feel they’ve made a stand. Don’t get rattled by this ritual. Control your emotions, and never be surprised by last minute tactics to bulldoze, they’re often the norm.

Be flexible, yet firm

Finally, both sides were able to come to terms because each took a pragmatic approach, putting down their foot when needed while easing back when they were pushing the limit.

For example, after Republicans tried to renegotiate better terms for their side, Nancy Pelosi conveyed that the new terms were simply unacceptable for the Democrats, vividly and matter of factly telling Republican negotiators, “the two animals couldn’t mate.” Yet in the end, Democrats accepted enough of the newly proposed terms to ensure that a bill that included their priorities would be unanimously passed and swiftly signed by President Trump.

The lesson here is finding the right balance. Many negotiations will call for a more firmness, while some will call for more flexibility. Some will even call for us to walk away, an option that’s far more available in everyday negotiations than it was for Congress. However, as author and researcher Adam Grant pointed out in his recent NY Times article titled “In Negotiations, Givers Are Smarter Than Takers”, collaborative negotiators who use their intelligence more than their toughness tend to create better outcomes for both parties. The key then, perhaps, is to be firm yet intelligently flexible, providing ourselves with the best opportunity to discover whatever it takes for “the animals to mate”.

Dalio and Kissinger on playing the Infinite Game

Earlier this week, Ray Dalio, author the brilliant book Principles, posted on his social media a speech that he gave at an event for the Committee on US-China relations. He also shared another short speech from the event by Henry Kissinger, who famously opened our relations to China in the early 1970s. In addition to some great insights on power, influence, and conflict resolution, I found what I believe is a strong connection to the philosophies and concepts in Simon Sinek’s recent book The Infinite Game.

In addressing the conflicting opinions that many have over the policies over the United States and China, Dalio spoke about the importance of being able to see through the other’s eyes. For example, if looking at the emphasis in the United States on the individual compared to the emphasis in China on the family or collective, we could better understand the actions of the other party.

Next, Dalio presented an incredible chart demonstrating the rise and falls of empires over the course of history. In this visual Infinite Game, we see in stunning context the ups and downs of China throughout history. However, despite having their ups and downs, it’s clear to see their consistency among the leading empires.

Wrapping up his remarks, and lightly addressing the ongoing negotiations between the two countries, Dalio stated:

So when I look at it, I hope that it is done with mutual understanding, that instead of wars which mean lose-lose relationships that we approach this with win-win relationships by seeing each other through each other’s eyes, and not expecting the others to be like us in all respects and as we evolve through time.

Next, Kissinger spoke about US-China relations, also from a wide lens to provide context. Kissinger emphasized his belief that part of the problem between the US and China is that many feel the other party is an adversary. Kissinger recommended – alla Sinek’s The Infinite Game – that they should instead be seen as a rival, and that we should not be focused on competing to win but on coexisting over time, while doing our best to find solutions to the problems we have. In his remarks, he illustrated:

So both countries, used to being exceptional countries, and used to being unique countries, have to get used to the fact that they have a kind of a rival, and that competition is, in a way, permanent. Modern economics and modern technology link the world into one system, and when two great countries encounter each other in this manner it is inevitable that on many issues there may not be a complete agreement. But what is imperative is that both countries understand that a permanent conflict between them cannot be won...

So, what can we take away from all of this? I believe three things:

  1. There is great power in seeing through the other party’s eyes, and accepting that there might always be some level disagreement for the relationship to exist.
  2. That in contentious conflict context is important. When we take a wider lense and see the overall process, we see that we are players in an Infinite Game. Taking this perspective humbles, yet it also something from which we can draw confidence.
  3. As Kissinger so widely believed though his decades of diplomacy and negotiation with China, it is correct to view the other party not as an adversary to beat permanently, but instead as a rival to complete with while we all try to be exceptional playing in the Infinite Game.