Keep your negotiation value-centered and finish them in a second! – 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.

A few years ago I managed to work less than a week for a 5-digit fee. The best part is that my customer was very happy to pay and didn’t even try to negotiate the price down: they just accepted my proposal as-is. Do you want to know how I did it? I just made my agreement value-centered. Read on for the details!

Continue reading Keep your negotiation value-centered and finish them in a second! – an #ExtremeContracts principle

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.

 

#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.

How to build trust with clients and stakeholders while getting what you deserve for your work: a story about trust

This is a guest blog post by Jacopo Romei. Author of Extreme Contracts, a book about how to build trust, and deliver value without traditional contracts.

How to build trust with clients and stakeholders while getting what you deserve for your work: a story about trust

Over the last ten years, I’ve experienced the direct impact of lack of trust in vendor-buyer and even colleague-colleague relationships. I’ve come to find that it is the main reason why collaborations in knowledge work fail.

I’ve tried to fix that in my own work as an independent consultant and when working with other colleagues. That’s why I ended up experimenting with a new type of agreements which are optimized for trust building. This experimentation resulted in a set of principles that I call Extreme Contracts. Now, all my customers and I use this approach to shape our collaboration and they have started using Extreme Contracts also with their customers.

Continue reading How to build trust with clients and stakeholders while getting what you deserve for your work: a story about trust