#ExtremeContracts, an alternative to Fixed Projects and Time and Materials: The eight principles of #ExtremeContracts by Jacopo Romei

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.

When in 2010 I started experimenting with new ways to shape trust-oriented agreements with my customers, I started crafting very practical contracts, meant to tackle my specific pain points: I wanted more freedom to work the way I want and I wanted to increase the upper bound of my revenues. Along the years I started spotting a few principles in common among the most effective solutions, either created by other practitioners or by me. Here follows a brief list of the eight principles I distilled in nine years of practice and investigation with Extreme Contracts.

Skin in the game

If we care about negotiating that’s because we care about a result that we can’t reach alone. If we have to collaborate, then it will make sense to long for collaboration. If we want healthy collaborations, we can’t do without all parts’ skin in the game.

If even one person or organization involved in collaboration doesn’t feel the pain of failure or the benefit of success, the collaboration itself will be doomed and will rely on good faith only. If a project fails, everybody should suffer from that failure, not just one party. If a project is a success, everybody must get something out of it.

In their shoes

We are usually very good at envisioning the negative consequences and damages of the smallest concession offered to counterparts we see as our opponents, but we are also usually very bad at realizing what their fears and needs are. If we are to get even the smallest chance of understanding their point of view, we must get in their shoes.

All the parties’ expectations are an incredible resource. They are the true north of a negotiation. They provide clues on what to give and what to keep without hurting trust. We must understand and fix our counterpart’s problem while maximizing the value of the agreement for us.

Talk to the grinder, not the monkey

All negotiations happen among people, even when they represent entire organizations. Since trust is the key to a successful negotiation, it makes sense to negotiate only with true decision makers.

We must negotiate only with people in a position to make real final decisions. If negotiating is understanding each other’s needs, then every small error in how they will be perceived and communicated by a middle-person with no real authority will hinder your chances of success.

Value-driven

The value of an agreement is not the parties’ effort to create it, neither it’s the time spent working on it, and it’s not found in sweat and pain. A knowledge worker’s value is found in addressed needs and the end-to-end customer experience.

Our agreements should put needs and impact front center, address them and never focus on celebrating the sweat of our brows. We don’t sell & buy fatigue, but results and, often, repeatability.

Ethics over rules

Ethical behavior is more than what is legal. We care a lot about abiding the law, but that’s not enough: we care about collaborations happening in the narrower space of ethics.

In complex scenarios, a complicated and fixed set of rules will always fail. We need to favor agreements allowing to re-validate the quality of the collaboration, continuously.

Simple rules frequently assessed are at the core of Extreme Contracts. A rules-filled contract won’t necessarily be fairer than a more pragmatically iterative assessment of mutual respect.

Chaos in small doses

The maximum loss we can bear is the measure of what we can put at stake. If an agreement may kill us, we have to take a critical look at ourselves with no excuse: we let it happen. At the same time exposing our vulnerability is the way to grow trust.

In knowledge work we can rarely claim to have everything under control, even assuming that all the parties are acting in good faith. We are forced to explore our scenarios coping with chaos in small doses.

We cap our losses, and we relentlessly make them sustainable, even in the worst case. Exposing yourself to a potentially lethal failure is a choice, not fate.

Optionality

Our management mindset is strongly oriented to planning, and so are our agreements. We strive to foresee the future, with unsatisfying results in knowledge work.

An underrated substitute for smartness is optionality. If we always have a plan B or—even better—we manage to generate several plan B’s that may end up being even better than plan A, we don’t need the perfect plan anymore. We can enjoy our ignorance.

Creating alternative collaboration scenarios to create value and keeping them alive as long as possible is a valid alternative to understanding all the details of our collaboration in the future. Postpone all critical and irreversible decisions as long as possible.

Customer channel

Contracts are usually considered as a formal device, a necessary chore but not being part of our branding. Very few people realize that the agreements we propose are among the first touchpoints in our customers’ experience.

Our contracts are a compelling device to interact with our customer segments, delivering our culture and brand values.

All our future negotiations are strongly influenced by the way we negotiate today. If we are to attract the right customers and collaborators, we have to literally beam our values out to the world.  

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.