The Brooklyn Rail

MAR 2011

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MAR 2011 Issue

The Luxury City

Adapted from Chapter Four of
Bloomberg’s New York by Julian Brash

By summer 2002, the elements were in place for the Bloomberg administration to prepare “all of New York to compete, and win,” as the mayor had put it. The C.E.O. mayor had put the “right people” in place, drawing on the best offered by the private, public, and nonprofit sectors. He had established clear benchmarks and methods of measurement that would allow for the evaluation of performance. Bloomberg and his ex-private sector compatriots were applying their corporate management experience and deep knowledge of the private sector to create the organizational capacity necessary to achieve results. Agencies were being reorganized, core missions redefined, strategic plans written, and PowerPoint presentations prepared. Only one thing was missing: a strategy for competitive success.

University of Georgia Press, 2011.
University of Georgia Press, 2011.

In June 2002, Economic Development Corporation (EDC) President Andrew Alper told the city council how the administration was going about developing such a strategy: “We are trying to make sure that we do a better job of marketing and positioning New York City as a brand.” For the administration, competitive success required nothing less than the rebranding of New York City. And so, for the first year of the Bloomberg administration, key economic development officials and agencies embarked on an effort to understand and reformulate New York City as a brand. In doing so, they followed the nostrums of branding science to a significant degree. Drawing on everything from consultations with experts and corporate executives to brand surveys, they first identified a “target market” and then explored how New York City could be made distinct—in ways both tangible and intangible—from its competitors in the minds of those in that target market.

One thing was absolutely clear at the outset of this process: a new strategy was needed. The office towers standing on the western shore of the Hudson River were a galling reminder of the exodus of jobs and businesses from the city over the past three decades. During the 1990s, company after company had moved tens of thousands of back-office and high-end employees to Jersey City, Hoboken, and the rest of Hudson County. The extended stock market boom of the 1980s and 1990s had masked an erosion of the city’s ability to compete for jobs, revenue, and the highly educated workers demanded by high-margin, high-value-added corporations. And while Mayor Giuliani’s law and order campaign had played a crucial role in reestablishing New York’s image as a safe place to do business, his administration’s overreliance on tax incentive deals to spur economic development, as those Jersey towers demonstrated, had proven a failure.

However, there was no consensus on the best way to move forward. Planning groups stressed the importance of maintenance and enhancement of the city’s transportation infrastructure and development of its waterfronts. Labor, liberal academics, and community groups pushed for job training, wage floors, and the protection and strengthening of manufacturing and other heavily unionized sectors. Policy organizations and experts with a neoliberal bent, along with the Partnership for New York City, called for support for the biotechnology industry and the cultivation of links between the city’s universities and high-tech sectors. Finally, real estate elites were calling for steps to stimulate office construction. While the Bloomberg administration paid attention to these groups and drew on their ideas, it listened most carefully to the city’s current and prospective “clients”—that is, private-sector corporations.

Faced with a failed competitive strategy and uncertainty about how to proceed, Mayor Bloomberg, Deputy Mayor Daniel Doctoroff, and EDC President Alper did what any smart executive would do: they brought in the consultants. In spring 2002, the administration asked management consulting firm McKinsey & Company to do its part to aid the city’s post-9/11 recovery by conducting a pro bono study of the city’s market position. Centered on a survey of corporate executives, the study aimed to measure perceptions of the city as a place to do business, to evaluate its competitive strengths and weaknesses, and ultimately to formulate a strategy to enhance the city’s ability to attract and retain business.

The administration used other means to understand the city’s strengths and weaknesses as a place to do business. In a 2004 interview, Patricia Noonan, the vice president for economic development at the Partnership for New York City, told me, “Our guys know those guys. There’s a personal thing there. Someone with a business background recognizes that business people have good ideas. . . . There have been more opportunities for sharing and [discussing] best practices in areas where there is business expertise than there was previously.” By “our guys,” Noonan was referring to the C.E.O.s who formed the Partnership’s core membership. By “those guys,” she was referring to Mayor Bloomberg and Deputy Mayor Doctoroff, both of whom had been members of the Partnership before entering city government. From very early in Mayor Bloomberg’s first term, administration officials engaged with the Partnership’s staff and member C.E.O.s in both formal task forces and informal brainstorming sessions.

By the beginning of 2003, this exploration of New York City’s competitive strengths and weaknesses—its brand—was beginning to bear fruit. One conclusion emerged most clearly: given the city’s real estate market and the costs of providing public services, the city would never be able to compete on the basis of cost alone. Rather, it was the city’s labor pool and its intangibles—the particular value that a city location offered businesses—that gave it a unique competitive advantage. This conclusion was a product of experience and identity, as well as of rigorous analysis. Bloomberg’s own business background at the intersection of the media, information technology, and financial industries—all high-margin and high-value-added industries—had shaped his own ideas about the relative importance of cost. As a C.E.O., Bloomberg had been notable for emphasizing high-quality customer service, generosity to employees (in exchange for expectations of absolute loyalty), and the creation of a comfortable, even luxurious, work environment. He stuck to this strategy even during tough times, avoiding the usual corporate practice of paring back expenses or eliminating jobs. As Partnership President Kathryn Wylde put it: “He is not a guy out of corporate…He is an entrepreneurial growth guy. He believes service is the way to build a business, and to build a brand.”

As any newly minted M.B.A. would be aware, the choice between cost-based competition and value-based competition (which allows for premium pricing) is one of the fundamental choices any corporate manager must make. And there is little doubt which path branding experts see as more beneficial. As Management super-guru Tom Peters has put it: “In an increasingly crowded marketplace, fools will compete on price. Winners will find a way to create lasting value in the customer’s mind.” If Bloomberg, Doctoroff, and Alper had been anything in their private careers, they had certainly been winners. Their own experience and state-of-the-art branding theory emphasized value over cost; these ideas were now being reinforced by the consensus of economic development experts, the McKinsey report, and the administration’s brainstorming sessions with the Partnership.

In January 2003, nearly a hundred of the city’s top businesspeople and civic leaders attended an economic development summit cosponsored by the Partnership and EDC. Closed to the press, the summit featured three roundtable discussions, including, according to a city press release, one focused on ways in which the “private sector can strengthen New York City’s fundamental competitive advantages and strategies to retain and attract private sector investment and jobs,” and another on “marketing New York City domestically and abroad to encourage investment, job attraction, and expanded tourism.” Robert Rubin, former secretary of the treasury and chairman of Citigroup, moderated the roundtables, and Mayor Bloomberg took part in all three. Issues addressed included the need for viable office districts in the boroughs outside of Manhattan, strengthening the city’s “first-class talent pool,” and the need to “collaborate in branding and presenting the City’s attributes to non-resident companies to stimulate economic growth and diversification.”

Inside the Bloomberg Tower at One Beacon Court, New York, NY. Photo courtesy of Ianqui Doodle, flickr. com.
Inside the Bloomberg Tower at One Beacon Court, New York, NY. Photo courtesy of Ianqui Doodle, flickr. com.

In his remarks during and after the summit, Mayor Bloomberg indicated that his experience as a C.E.O. had shaped his approach to economic and urban development policy. “I’ve spent my career thinking about the strategies that institutions in the private sector should pursue,” he said, “and the more I learn about this institution called New York City, the more I see the ways in which it needs to think like a private company.” And what was the mayor’s conclusion in thinking about the city like a private company? “New York City is never going to be the lowest-priced place to do business; it is just the most efficient place to do business,” Bloomberg told reporters after the summit. “You have to get value for the moneys that you’re going to spend.” However, only certain companies would be able to spend this amount of money and take advantage of the value offered in return. Thus, New York City would not compete for those companies for which cost was an overriding concern in locational decision-making. Instead, it would target a more upscale market segment: “If New York City is a business, it isn’t Wal-Mart—it isn’t trying to be the lowest-priced product in the market,” said Bloomberg. “It’s a high-end product, maybe even a luxury product.”

The Bloomberg administration’s importation of private-sector conceptions into the public-sector practice of economic development had reached its logical conclusion. The mayor could operate as a C.E.O., corporate management techniques such as strategic planning could be deployed in city agencies, businesses could be treated as valued clients, and the EDC could be restructured along the lines of an investment bank. Then why not conceptualize the city as a product with a certain position in the marketplace, a product that could be effectively branded and marketed, just like any other? And the particular market for this product? The very high-end corporate market from which Bloomberg and his ex-private sector compatriots had emerged, and which the Partnership represented.

The upshot of the summit was clear. Out was the old “one size fits all” approach, where a lower-cost environment, achieved through tax cuts and tax incentives, was the be-all and end-all of economic development policy. In was an approach that focused on attracting those firms for which cost was not the paramount concern in locational decision-making. Economic development was no longer a matter of bribing companies to stay but rather of, first, identifying and informing firms with appropriate needs of the advantages New York had to offer and, second, building on those advantages.

In his 2003 State of the City address, given two weeks after the economic development summit, Mayor Bloomberg publicly presented a comprehensive and coherent economic development strategy driven by the city’s brand as a luxury product. After arguing that only a growing economy could solve the city’s long-term fiscal and economic problems, the mayor neatly summed up the premises and principles of his administration’s economic development strategy: “New York is in a fierce, worldwide competition; our strategy must be to hone our competitive advantages. We must offer the best product—and sell it, forcefully.”

Mayor Bloomberg went on to present the city’s competitive strengths and weaknesses in his address. Reflecting his administration’s consultations with the Partnership and McKinsey, he presented the city’s labor pool as its greatest economic asset. “Our unique value added is our diverse 8 million citizens and workforce,” Bloomberg said. “It’s what makes us the best city to live in and do business.” He indicated which of the city’s citizens and workers actually constituted this “value added”: “the best, the brightest,” “the most talented,” that is, the well-educated professionals who staffed the postindustrial sectors.

Mayor Bloomberg also laid out a multipronged strategy for “offering and selling the best product.” Some of the elements of this strategy were predictable—an aggressive urban marketing campaign, for instance. Less predictable was a move away from the tax-cutting orthodoxy that had long held sway in the city, as Bloomberg made it clear that he would not trade away essential services for lower taxes and that his administration would narrow the use of specific tax-incentive deals aimed at particular corporations. Most remarkable was the notion that urban development could be treated as product development, as Mayor Bloomberg argued that exploiting the city’s competitive advantages required nothing less than an aggressive transformation of its physical form in order to produce an environment appropriate to the needs and desires of well-educated professionals and those businesses in the financial, media, and business services sectors that employed them. “To capitalize on [our] strength[s],” he said, we’ll continue to transform New York physically…to make it even more attractive to the world’s most talented people.” Bloomberg went on to outline an aggressive and comprehensive program of urban development, which would be followed faithfully over the next few years by the agencies under Deputy Mayor Doctoroff’s control. This development agenda would create a luxurious urban environment, a set of “unequaled amenities,” as Bloomberg put it, attractive to well-educated professionals: lush parks, extensive leisure opportunities, and aesthetically pleasing residential options. It would also, in the words of Deputy Mayor Doctoroff, “offer different products for different corporate customers,” by developing “areas outside the traditional central business districts of Midtown and Lower Manhattan so that companies that need to diversify or need lower cost alternatives can be accommodated within the five boroughs.”

While all the elements of this two-pronged “five-borough development strategy,” as the mayor repeatedly called it, were important, one project was given priority: the Hudson Yards plan, which by 2002 had developed into one of the most ambitious planning ventures in city history. In his State of the City address, Bloomberg called the plan “our first priority” and devoted several minutes to discussing the plan, while barely mentioning plans for World Trade Center site redevelopment. The Hudson Yards plan served as both the capstone of the Bloomberg administration’s urban and economic development strategy and a microcosm of the strategy itself. It would create the city’s next great high-end office district, an extension of Midtown Manhattan, which was rapidly running out of space to grow and which was clearly viewed by the mayor and the deputy mayor as the city’s premier central business district. Its 80-story office buildings would provide suitable homes for the high-margin companies that administration officials had indicated were best suited to capitalize on a New York City location. Moreover, the Hudson Yards plan included luxury housing, waterfront development, and new open spaces, not to mention a convention center expansion that would stimulate the tourism industry. Finally, the stadium was the most important element of NYC 2012’s plan for the Olympics, the biggest mega-event of them all, one that reinforced the ideas of competition, ambition, cosmopolitanism, and diversity so crucial to the administration’s efforts to market the city.

New York City’s brand as a luxury product—the idea that, at least for the target market of high-valued-added companies in the media, finance, and business services sectors, the value inherent in a city location outweighed its high cost—provided a coherent strategic framework for a host of policy areas. While there were precedents for much of what was included under the rubric of the city’s brand—marketing of city merchandise, plans for the development of themed districts like the far west side, and the bid for the Summer Olympics, for instance—it linked these interventions with policy domains not typically included in past branding campaigns: basic fiscal policy, service provision, proactive outreach to business, and policies governing the use of corporate tax subsidies. The city’s brand as a luxury city shaped the details of particular policy areas and bound these policy areas into a coherent competitive strategy.

In large part this was due to the fact that those formulating development policy were immersed in the practice, conceptions, and language of branding. But if this fusion of branders and governmental officials in the Bloomberg administration allowed for a remarkable level of policy coherence and coordination, it also engendered new forms of political conflict. For both the selection of a target market for the city’s brand and the imagining of the city that animated it were deeply influenced by the class identity of the branders now ensconced in City Hall. The notion that New York City was a luxury product was deeply affected by the particular experiences and interests of key officials and administration allies. In fact, in this case the branders selecting the “target market” essentially chose to target themselves and those like them: executives and upper professionals in high-value-added, postindustrial sectors. But these individuals and groups represented a severely limited, if dominant, slice of New York, one that excluded not just low-wage service workers or middle-income professionals squeezed by the high costs of living in the city, but much of the city’s business community, including many real estate elites, small business owners, and owners of manufacturing and other industrial businesses.

As would be demonstrated in what was to come, the conflicts and tensions generated by the selection of the target market for the city’s rebranding strategy were not just about economic interest alone, but were linked to highly charged issues of meaning, representation, and identity. The Bloomberg administration’s urban branding campaign, like all such campaigns, not only tried to fix a target market but also, in its selection of a new brand for the city, to fix a particular imagining of the city as official, dominant, and consensual. For those who contributed to the development of this brand, the city was a place of not just luxury but also cosmopolitanism, globality, elite sociality and leisure, competition, innovation, and ambition. This imagined New York City served as the symbolic undergirding for the administration’s branding campaign—to the exclusion of other extant and possible imaginings of the city. It was a product of the particular class position and experience widespread among the administration’s top officials, as well as among the participants in its branding research, including the executives surveyed by McKinsey & Company and the C.E.O. members of the Partnership for New York City.

The branding of New York as a luxury city was thus loaded with political significance. For many New Yorkers struggling with the high costs of housing, food, and other necessities, the city’s luxuriousness was exactly the problem. Moreover, for many New Yorkers the decidedly nonluxurious qualities of the city—its grittiness, embrace of radical difference, and status as a fount of alternatives to the cultural mainstream—constituted its appeal. The administration’s institutionalization of branding served to inject issues of urban meaning and identity directly into the heart of development politics. What would be at issue in these debates was not just the shape of particular plans or neighborhoods, but what New York represented and what being a New Yorker meant: urban development politics were about to become intensely personal.


Julian Brash


The Brooklyn Rail

MAR 2011

All Issues