In Their Shoes: From negotiating for a rock band to negotiating frictionless contracts, an #ExtremeContracts principle

This is a guest blog post by Jacopo Romei. Author of the Italian version of the book #ExtremeContracts, and author of an upcoming book on the same topic in English.

Being part of an underground band is not easy. You are weak in every aspect of your business model. You have no stable audience, you have very thin revenues, you have to accommodate your “real life” needs and, above all, organizing gigs is a nightmare. Trying to negotiate a good deal with the owner of a club you like can be very, very hard. This is the story of how putting yourself in their shoes could make a better negotiation strategy.

Trying to negotiate a good deal with the owner of a club you like can be very, very hard for a rock band. This is how to create a better negotiation strategy.

Since 2003 I have been part of Anonima Armonisti, an a cappella band: no instruments, voices only. After the first few years setting up our repertoire and fine-tuning our live show, in 2007 our popularity had a boost. While the band was still in a niche, a few TV appearances, a few performances in some important theaters, and a couple of published records made us quite known across Italy, to the point of being featured in the Italian edition of Rolling Stone magazine in 2012.

Despite this success, though, the majority of our concerts were still taking place in clubs. In 2009 alone, we were on stage 44 times and the relationship with the club owners had become critical for the survival of our band. The sustainability of our activity was totally dependent on their decisions: they were the ones who paid us, who gave us a stage, who provided the sound system and the right structure to make our concerts possible and enjoyable for an audience that sometimes reached a thousand people.

The relationship with the club owners had become critical for the survival of our band.

The negotiation with them usually happened along a fixed sequence of steps. We had to find, and introduce ourselves to the owners of the clubs where we wanted to perform. 

The club owners—no matter how loyal our growing audience had become over the years—insisted on us providing a guaranteed minimum number of attendees. Worse: reaching those minimum audience numbers usually became a condition to get paid after the show, as the club owner wanted to keep the freedom to cut or suspend our fee in case of a turnout below their expectations. 

At that point, after the fee was set, we started trying to schedule the concert, looking for a date that was suitable for the seven band members and the club itself. From then on, it was all about promoting the gig and hoping we could bring a big-enough audience to enjoy the performance, otherwise we would have to perform and wouldn’t get paid!

Their problem is a part of our problem

The negotiation process felt like pushing a rock uphill with the constant threat of having it roll over us. It was the opposite of a lean process!

  1. Finding the right place, taking into account space, the stage, the sound system, and the geographical position according to our goals and how easy it was to get to the venue.
  2. Actually begging to schedule a date, giving the club owners many guarantees and not getting any from them. I often wondered about this: wasn’t having people attend the gig a shared interest between us and the club owner?
  3. Negotiating a fair fee, that matched the true value generated by our performance, both for the audience and for the club owner.
  4. A cumbersome process to find a good date among us singers and then negotiate that date into the club’s schedule.
  5. Struggling to gather an audience for that date, now become a Damocles Spade hanging over our heads. An important football match could be enough to spoil our party and leave us with an empty club.
  6. Performing.
  7. (Struggling to) Be paid.

I was then looking for a different negotiation process that may be more streamlined, less prone to failure, more linear, in one word I wanted to negotiate Anonima Armonisti’s gigs in a way that would allow us to delay commitment until we were sure the most important risk was covered, for us, and the club owner. In short, the lean way.

I was looking for a lean negotiation process

I wanted the agreement to guarantee us:

  • More options about the club, according to many variables, especially size.
  • A fee correlated to our music and how much our fans liked it, not to the amount of people collected. We are a band, not a PR agency!
  • A compensation proportional to the audience size, for better or worse, through thick and thin.
  • The chance to schedule the date with less friction.
  • Zero risks of singing in front of an empty room.
  • Certainty to be paid, with no exposure to last-minute surprises and the owner’s attempts to shave the price down a bit.

At that point, I realized that it made no sense to pursue only our needs without acknowledging the club owners’ needs. I thought that maybe I could use their needs as a True North towards my own goals. As someone said before me, I had to find a way to help them to help me. So I started making assumptions on… their assumptions.

Probably these were their needs:

  • Zero risk of losing money by having us perform to an empty room. A club only has a fixed amount of available dates per year. It is crucial for them to maximize the generated value per single day and the audience is the main driver for them to reach this goal.
  • Making sure that their revenue—basically selling drinks and maybe food—stayed independent from the quality of our show. They usually want people to be entertained while they spend money eating and drinking so the owners perceive the artist’s fee just as a cost to be capped as low as possible. Given that, our interests were not aligned until we were able to separate their revenue from our revenue.
  • The opportunity to schedule the gigs on a date that suits the club’s calendar, with enough time notice. Concerts have to be scheduled way ahead of the actual date, to increase the chance to build a substantial audience, and club owners were looking for peace of mind by literally building an inventory of gigs further into the future. 
  • No revenue share for the artist. Their bar-generated money stays theirs, while the artists get a fixed fee agreed upfront or, if the money is linked to the size of the audience, its amount is capped to a maximum. There has to be no open upside for the artists, they are a commodity because running a club is far riskier.

All these needs are legitimate. Dismissing them would not lead to a successful agreement in which they only care about setting up a nice venue and serving good drinks and food, we only focus on music and the performance, and everybody cares about the number of people attending the concert. How could we design and set up an agreement to take care of all this?

A new approach to selling our live performances

At the end of 2014, building on top of my experience with a few start-ups trying to validate their business models and strongly influenced by Steve Blank, I had an idea that returned interesting results.

Without even alerting my fellow bandmates about my intentions, I asked them whether they were all free on some date in the following months. Then, I chose the first date that suited all of us and asked them all to keep it free. At this point, I started assuming we would have a concert in Milan on that day. Milan was perfect for the experiment because it is a big enough city. We had many fans there, having already been primed by two or three concerts in local clubs. And I was also attracted by a few fans who had been requesting us to play in their town for a long time.

I chose a popular ticket platform that I had experience with, from selling tickets to more or less nerd-ish conferences and meetups I had helped to organize. Not even knowing what club we would be performing in, I started pre-selling 100 tickets at a very low price, on the set date. I promised the buyers that in case we had missed a given goal within the first few weeks, I would give the money back, no questions asked.

Not even knowing what club we would be performing in, I started pre-selling 100 tickets at a very low price.

After having sold the first 100 tickets two months ahead of the scheduled date and with a 50-person waiting list, I started scouting for a good club in Milan with the following pitch for the owners of the most interesting clubs: “I’ve got 100 people who already bought the ticket for our show on this date. Fifty more people asked me for tickets and are waiting for us to confirm the event. We still have three months to go and I don’t want a dime from you. If you let us perform on your stage, we bring them all to drink at your bar”.

I still remember how loud the high-five was! In no time, we had a scheduled gig and now we also had a deal with a very nice club with a very nice stage.

I still remember how loud the high-five was! In no time, we had a scheduled gig and now we also had a deal with a very nice club with a very nice stage. We opened the box office again and we ended up selling hundreds of tickets! Win (for us), win (for the club owners), win (for the audience)! This was what my Extreme Contracts approach delivered: a triple win! No pain, no upfront risks (for anyone!), and a scheduled date for a top club in Milan.

By changing the order of the steps in the process we had changed the result. Our new process for setting up a concert in a top club looked like this:

  1. An exhausting internal negotiation to find a suitable date was not needed anymore. Picking up the first free date at the intersection of our calendars was enough.
  2. The search for an audience was not on the critical path anymore. Damocles was freed from his spade and not finding an audience just started meaning canceling a tentative date and refunding the initial buyers.
  3. We were earning money without begging. Those buying a ticket from us in advance were doing so because they really wanted to attend our show and, not a small thing, they were sure they would get their money back in case of a cancellation.
  4. We were getting paid in advance (the tickets were pre-sold), with no loss exposure for us even for expenses and rehearsals, and we were no longer afraid of being paid less or nothing in the end.
  5. We were performing in the right clubs, from all points of view, no room wasted nor the risk to invite too many people. Finally, we were able to introduce ourselves to the club owners having the upper hand in the negotiation: “hey man, I’ve got some value in the vault and it’s my vault. Do you want a share?”

Once we found the club, we were left with the pleasure of performing in front of an audience that was there for us and deserved to be entertained.

What about the owners’ needs? Were we taking care of them this way? Or not? 

Our solution is their solution

This process puts the owners’ needs at the center of the solution. Each of their needs was addressed because we tried to think how they thought and we tried to feel what they felt: we walked in their shoes.

This process puts the owners’ needs at the center of the solution. Each of their needs was addressed because we tried to think how they thought and we tried to feel what they felt: we walked in their shoes.

Let’s see this in detail:

  1. They took no risks of an empty club. A club only had to commit for a date which all the audience—or at least a minimum number of people—had already shown commitment for. This was much better than hoping to see people attending a concert.
  2. They could decouple their drinks-and-food business from the quality of our show. We might even have proved to be unable to perform live and the maximum impact for the club owner would be the decision not to let us perform again. But the single date, that single first date was secured. No exposure for them, an audience that would drink and eat no matter the quality of the show, and the free option to renew the partnership with us or let us go.
  3. The gigs were scheduled on a set date, with no ambiguity and no need to wait for its confirmation: it was all set! The show was only scheduled when there was already a “minimum viable audience” for it. We had the audience that had committed to attend by paying in advance, and we had a clear date in the calendar. No room was left for fluctuations. The owners could rely on a filled slot in their schedule.
  4. No interference with their revenues. We were not asking for shared revenues, we were not linking our finance to theirs. We had our money, coming from our fans’ love for our music, they had theirs, coming from the quality of their service, drinks, and food.

All of a sudden, everything had turned for the better, the negotiation had become frictionless. This is the keyword: frictionless. You don’t want to feel like pushing a rock uphill every time you meet a new customer or a new supplier. You don’t want to spend an enormous amount of time, energy, and enthusiasm for every single negotiation. You want it to flow naturally, easily. As Ury and Fisher state in their bestseller “Getting to Yes”, the best negotiation process is the one that takes care of the substance of the agreement, sure, but still preserving efficiency and a good relationship between the parties. In one word, keeping it frictionless. 

One of the best ways to get there is to focus on the negotiation process on the needs of the other party so that we design and make them accept an effective solution while we serve our needs. Extreme Contracts practitioners call this principle In Their Shoes.

Here’s Jacopo and the band with the amazing a capella cover for Disturbia

Attract the right customers with another #ExtremeContracts principle: Customer Channel

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.

We all know how easy it is to leave Netflix after having subscribed to their service.

Whenever you want to cancel the subscription, you just click a button and you are free, no questions, no tricks, no cheating.

You are free to use the service until the date you had paid for and you will be free to rejoin again, whenever you want. This feeling of freedom is a crucial part of Netflix branding, and was a key attractor for their first users. You read it on their homepage, clear and bold: “Watch anywhere. Cancel anytime.” It is a promise, second only to the one about the chance to see your favorite movies in full mobility on any device.

Now, imagine for a minute, what would happen if Netflix were to not keep their promises. Imagine that Netflix would ask for extra documentation before the user was allowed to leave, perhaps even setting a mandatory notice period, preventing users from quitting when too close to the subscription expiry date.

Imagine what would happen if Netflix wouldn’t actually allow you to “cancel anytime.” If this nightmare scenario was a reality, tons of disappointed friends would tell you that Netflix is not up to expectations, they would abandon the service with no intention to return, and they would actively discourage other people from subscribing in the first place! In the end, Netflix would see fewer users and less engagement.

The Anti-Netflix contract

The plot thickens…

Continue reading Attract the right customers with another #ExtremeContracts principle: Customer Channel

Building trust in negotiations – Talk to the Grinder, an #ExtremeContracts principle

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…

Continue reading Building trust in negotiations – Talk to the Grinder, an #ExtremeContracts principle

Generating options to change lose-lose contracts to win-win contracts and relationships, an #ExtremeContracts blog post

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.

Contracts are usually designed around a unique way to deliver some effort, assuming there will only be one solution to the problem at issue.

This is wrong.

Not only conceiving more than one solution will enhance the chances to create a better one, but if we take into account some basic risk management principles, we may even help to shape a prosperous collaboration between us and our customers. In Extreme Contracts, we call this principle Optionality, and this is a story about how to see options where none seem to exist.

One problem, many solutions

Continue reading Generating options to change lose-lose contracts to win-win contracts and relationships, an #ExtremeContracts blog post

Ethics over rules – An agile retrospective gone wrong, an #ExtremeContracts blog post

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.

Simple rules frequently assessed are at the core of Extreme Contracts. In my experience, I observed that a contract filled up with rules won’t necessarily be fairer than a simpler agreement in which we pragmatically and iteratively assess the actual behavior of all the parts. Even more crucial: I am not interested in partners respecting the rules in a dull way as much as I want them to act ethically. In this article, I am going to show a key principle of Extreme Contracts, and a core aspect of Agile in general: Ethics over Rules.

It’s not about the law, it’s about trust

Have you ever thought about the difference between “legal” and “ethical”? To help you a bit, I will honor my Italian roots with an example based on football (some call it soccer ;).

When a football player gets seriously injured during a match, football rules don’t force the opponents to stop from exploiting the temporary one player advantage. Despite this, usually at that point, the ball gets kicked over the sideline to allow for the player to be cared for and give the injured player’s team time to re-organize. Football rules alone then dictate that the game is resumed with a throw-in, but again, despite this, usually the favor is returned, the ball is kicked out on the side one more time and the throw-in is reversed. They call it “fair play” and it’s a set of rules narrower and blurrier at the same time.

As Extreme Contracts practitioners, we care more about those unwritten rules than the rules we can capture in a contract. We reject a collaboration style which starts from nasty negotiations and ends up focusing on enforcing a set of rules instead of addressing the real ever-changing needs of all the parties involved.

There may be many ways to follow the rules and still take advantage of a weaker partner, customer or supplier. Especially in knowledge work, where requirements and the value to deliver can be so hard to grasp, it is very easy to end in a bad collaboration even when playing by the rules.

Let me give you an example in the following story.

A (not so) agile retrospective

I was standing in the meeting room. In front of me ten people: six non-developer employees of a bank and four outsourced IT consultants—three developers and a project manager. The developers and the project manager were from the same supplier. We were deep into an agile retrospective, held after the latest release. We had already listed and clustered all the good and bad things that had happened in the previous iteration, and we were about to dot vote those clusters to select and prioritize the following actions.

On the whiteboard, among many other small clusters, a prominent group of post-its was labeled “deployment”. Seven post-its had been written to raise an issue about the broken deployment process used for the last few releases. The deployment process was labeled buggy, unstable, unreliable and slow. Considering the group in the room, despite the anonymous gathering of the post-its, we could say that at least one person from the supplier company had written a post-it about the quality of the deployment process: seven post-its and six bank employees were enough to tell at least one IT consultant raised the issue about the deployment process.

When an agile retrospective goes wrong…

When I asked all the people in the room to vote which cluster to focus on in the remainder of the retrospective, Elena, the IT project manager, burst out. “This retrospective is broken!”, she said.

“Why?” I asked.

“Because this dot voting is useless. It is biased!”

I exchanged a doubtful glance with the two product owners from the bank.

“We wrote all the post-its anonymously, now the dot voting will be very open, so what bias are you afraid of?”, I asked.

“How can you be sure that everybody will tell the truth?”

I was quite surprised. I hadn’t even considered the chance that someone could lie or might not be interested in investigating the flaws in our workflow. The other people listening to the conversation kept silent.

I tried to reboot the conversation from the basics. “We are using this agile retrospective to improve the way we work as a Whole Team, and I am sure everybody here…”

“It’s stupid!”, she interrupted me. I caught sight of interest on the product owners’ face. “We, from the IT (the outside supplier) will never vote for the deployment issues!”

I was concerned. “Why?”

“Because we will never admit that the most critical issue here is due to us!”

One of the two bank’s product owners looked at me with a smile of entertainment and (uttered) “Gotcha!”, apparently enjoying her win on my argument.

Ethicless is pointless

What had just happened? Let’s review the whole sequence:

  1. The team was made of 10 people: 4 business experts, 3 IT developers and an IT project manager.
  2. At least some of the outsourced IT people were aware there was some problem with a very technical deployment procedure which they were accountable for.
  3. All the team members were given space to let issues emerge and be discussed in a non-blaming atmosphere, focusing on the resolution of the problems and not on trying to pass sentence on someone.
  4. The project manager said that they would never propose to focus on improving the deployment procedure because that would mean showing their weakness.
  5. As if this was not enough, the bank’s product owner—which would be the first one to be harmed by any loss of quality in the process—somehow took her side, celebrating the “strength” of her argument, and obviously shooting himself in the foot when it came to delivering working software…

So we had a customer—the bank—which had hired a supplier—providing the developers—to have a problem solved and its solution automated via some software. The contract, as too often we observe in IT market, was based on a fixed scope of features. The main consequence for the supplier was that they could simply deliver a collection of features—probably planned months before—to claim their money. The main consequence for the customer was that they had no way to compel the supplier to care about improving the whole collaboration. There was no possibility for any of the parties to go “beyond the contract”, and establish a way of working that would ultimately generate more value!

On top of this, as it showed, the rule-based mindset was so entrenched in the customer’s culture—here represented by its product owner—that they could not see how they were being deceived by their supplier: “yeah, they could be performing less than their full potential, but… they can! Cheers!”

This was too absurd. At that point, I realized that it made no sense to talk about improvement with that team. We carried the retrospective on that day, one way or another, but I quit my collaboration with the bank after a few days, because, for me, it doesn’t make sense to work in a place where rules are more relevant than the most basic ethical principles.

Contracts destroy value in the relationship

The paradox of having a supplier admittedly choosing not to create value and a customer taking their side is possible because of the contract/agreement between those parts. The rules laid down by the contract did not help to improve the quality of the collaboration itself while being only focused on an easy-to-measure KPI—the number of implemented features or the number of person-days worked on the project. No clause in the contract would allow for the customer—the bank— to get rid of a supplier that was overtly trying not to contribute in the most honest way.

Most importantly: if an agreement allows the supplier to deliberately ignore improvements just because “I did my job”… well, how can we even think of working an agile way? If the flaws of the collaboration go unnoticed by the customer who seems even to appreciate how smart the supplier is in betraying their trust… well, how can we even think of pursuing the best possible result?

Agile contracts create value and include ethical principles

Instead of contracts like this, I prefer a frequent re-assessment of what’s right and what’s wrong, which is one of the core values of agile: “customer collaboration”. When it comes to contracts and vendor-buyer relationships, if we allow our collaboration to be re-assessed frequently enough, we can create an ad hoc and ever-changing rule set to address the dynamic and complex challenges that normally happen in business.

In the story above, I would have wanted to get rid of the supplier that was not interested in constantly and deliberately improve the ways we worked together. I would have wanted to make them accountable for their attitude in addition to being accountable for the features they were merely delivering, because at that moment, in that context, their attitude was hindering the chances of success of the project we were working on. The supplier was behaving according to the rules, but unethically!

Ethical behavior goes beyond what is legal. We should care a lot about abiding the law, but that’s not enough: we want collaborations to happen in the narrower space of ethics. We need to favor agreements that allow for continuous validation of the quality of the collaboration.

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.