Like most of our staffing company clients, I’ve read a lot of business books on negotiation, and along the way I’ve collected quite a few techniques – don’t be needy, exist in the world of the adversary, prepare well – and so on. But there is one technique – tabula-rasa - that gets too little attention that has always delivered disproportionately good results for me.
Tabula-rasa means simply that you don’t make assumptions - literally you keep a blank-slate. You don’t assume that the prospect won’t buy. You don’t assume that your teenager will stay out late. You don’t assume that the bill rate is the driving factor in winning a deal. You keep your mind open.
Here’s an assumption from my airline software company that cost me dearly for several years. After I started the business in 1982, I assumed that the best path to increased profit was an increased hourly rate. That makes sense on the surface doesn’t it? After all, one of my top competitors liked to preen himself by bragging about how high his bill rate was. The higher the rate – the thinking went – the more you were a top dog.
The top dogs knocked each other out going for that top consulting rate. Back then airlines made gobs of money and would pay seemingly anything for something they needed or wanted. Software development cost paled in comparison with the price of a jet plane, so the demand curve for our services was price inelastic to the point of being a Griffin good. A Griffin good is a product whose demand increases as the price goes up. An unusual economic phenomenon. Nice if staffing worked that way, no?
But the assumption that a higher hourly rate was the best path to increased profit was wrong. The problem with an hourly rate is that you have to work that hour to get that rate. You have no leverage. And as my bill rate went up, the more I got locked into that model, a slippery-slope into stagnation and complacency. Like the frog that slowly lets itself get boiled, I didn't want to jump out. [Note: the boiling frog analogy seems to have lost credibility recently. Nevertheless, the story fits.]
In looking at growth possibilities, I went yet another typical route, hiring consultants and billing them out as well. This helped me leverage my time, but my forte was operating systems, not management. And it still kept me locked into the billable rate syndrome, and all kinds of tech consulting and staffing companies were biting at my ankles.
In a subsequent post, we'll look at how tabula-rasa helped me find a better approach.