This is a guest blog post by Jacopo Romei. Author of the Italian version of the book Extreme Contracts, and author of an upcoming book on the same topic in English.
In 2011 I had the ultimate bad experience that pushed me to investigate how I could craft better agreements with my customers. I had already spent months fighting a battle to bring home a web development project for a large Italian non-profit. Requirements were very volatile, the product owner—the person in charge of defining them and their priority—was candid enough to declare “I don’t understand anything about the web.” In general, in that organization, getting even the slightest focus on the project they had assigned to us seemed impossible.
We had set up an iterative development agreement to deliver working software every two weeks so that we could use it as an effective measure of progress. Iteration by iteration, we had tried to make sense out of the mess of requirements that kept emerging from the product owner and other random users, all the while hoping to converge on a successful conclusion of the project within the planned deadline. We had signed a fixed price agreement with a fixed delivery date. That meant—now I know—only one thing: they had the upper hand, and had no incentive to reduce the ever-growing volatility in their requirements. Unsurprisingly, the project ended up being very late, after the advance payment we got was way overspent.
“How can I avoid this in the future?” was the question I had to answer…
When it seemed the product owner was ready to reach the end of the project, it sounded like a blessing to us. We were finally getting out of that nightmare, regaining our capacity to invest in other projects, with other customers. Above all, we thought we were about to get our hands on some well-deserved money. The fixed-price contract had us starving until the very end of that project.
When the product owner accepted the delivery and we sent the invoice, though, we had a bad surprise. The boss of the product owner, who had shown no interest in the project up to that point, all of a sudden decided to take a brief look at the website we had developed. Despite the product owner’s acceptance of our delivery, he decided unilaterally and irrevocably to deny the payment and started asking for more features he thought were missing and for changing a few of the delivered ones. Unfortunately, only the boss had the authority to press the big red “BANK TRANSFER” button, so we found ourselves hostage to his requirements.
“I got rid of a customer who had cost us too much”
It was too much. In a burst of anger, I decided to quit our collaboration, let the money go and got rid of a customer who had cost us too much and was about to cost even more.
No negotiator is an island
What happened in the story above is perfectly described in Ury’s book “Getting to Yes“: you never negotiate with just one person. You always negotiate with a system, and the person you are talking to is probably just the touchpoint, or one of the possible touchpoints, with that system. No negotiating person is alone.
So, for example, if you are to negotiate the release of some hostages from a hijacked airplane, you have to take into account not only the hijackers interests, but the interests of the whole complex of influencers around the hijackers: their leader, the community they are representing, the global audience watching their actions, their families and so on.
The same “negotiate with the system” pattern became very relevant a few years ago for a friend of mine: she is an architect and had to re-design a kitchen. She used to consider the owner of the flat as the only decision-maker about the design, but she eventually realized she was wrong. A kitchen re-design is a system of interests: the needs of a whole family are involved, which includes the owner, the partner and a few children too! Everyone was pressing to get their desires included in the final project and, despite my friend talking to just a person. She achieved a breakthrough only when she understood that the person she was talking to, was also trying to make sense of many different, sometimes inconsistent needs.
The problem gets even more wicked when you end up negotiating with the person who has the least power to make decisions about your collaboration! Nassim N. Taleb once wrote:
Never trust the words of a man who is not free. https://twitter.com/nntaleb/status/931514819701698560
And he’s right! A person whose decisions about our contract may be overridden by their boss cannot truly maintain their promises. If they commit to decisions that can be later subverted by someone with higher authority, then those promises are just either denial or betrayal of trust. Your trust.
Because of this understanding, Extreme Contracts practitioners make sure every promise is validated by testing them with the only people that may break them: “the grinder”. We strive to talk with those who actually decide. “Talk to the grinder, not the monkey”, we want to make sure we are relating to the grinder playing the organ at the corner street, and not to the monkey performing the tricks and holding the cup to collect the offers.
Negotiation is among organizations. Trust is among people.
The real aim of a successful negotiation should be to build trust as quickly as possible because a good result for all the parties is a byproduct of a trustful collaboration. During one of our countless conversations on how teams of knowledge workers organize their work, Alberto @ziobrando Brandolini once said:
“Trust among organizations doesn’t exist. Trust among people exists. The higher the stakes in a collaboration between two organizations, the more fragile is trust as a concept. I may look my customer in their eyes, but if in six months they will be gone working for another company, all our trust, all our capital, all our preferential relationship will be worth less than zero.”
Trust is at the core of successful collaborations in knowledge work, so Zio Brando’s insight is critical. If trusting the person who is negotiating with us is crucial, to the point of making it the real goal of the whole negotiation, can we really trust a person who is negotiating with no decision-making authority? The answer is no.
Following the bad ending of the project with the big Italian non-profit, I started broadening the conversation to all the key decision-makers from the very beginning of the negotiation. This allows for every voice to be listened to, for every nuance to be considered, and for every perception of the problem to be acknowledged. And you know what? When people feel listened to, considered and acknowledged, trust kicks in.
Talking to all the decision-makers also allows me to assign to me, and only me, all the responsibility of delivering a clear and honest message I want all the final decision-makers to understand. When we allow an intermediary without decision-making authority to be our counterpart in the negotiation we allow our message to be
- distorted by our counterpart’s personal perceptions and private agenda;
- simplified by badly phrased summaries;
- made probably similar to our competitors’, the death of your so-called unique selling proposition.
We shouldn’t hinder our chances of success. Our negotiation should always be escalated as soon as possible, as high as possible. We should always test the true authority of the person we are negotiating with—more on that in a future article. We should kindly-but-firmly escalate the issue up to the first manager able to make final and clear decisions quickly to avoid having a blow up in our hands later.
In Extreme Contracts, we call this principle “Talk to the Grinder”.
About Jacopo Romei
Jacopo is an independent strategy consultant, with a strong background in Agile product development.
Jacopo is also an entrepreneur & writer. After having founded a couple of IT companies and practiced agile software development, he started as a full-time freelance agile coach, coaching teams in Italy, Germany and UK.
He has worked with eBay Italia team to set their agile process up. Product ownership and agile UX are added skills acquired in the field.
As a writer, Jacopo published a couple of books on agile coding practices and the Italian version of “Extreme Contracts: knowledge work from negotiation to collaboration“.
Jacopo is a frequent public speaker in international conferences and events about how the way of working is changing in the software industry and organizations management.
