Seeing The Way

Companies are fearful of change. Which drives them to places they would never willingly go if they could see where they were headed. 

This week’s fiasco on Lakeshore Drive in Chicago is a pretty good example of what happens when fear of change makes you do the same thing you always do, even in the face of growing evidence that this will not turn out well. 

On Tuesday night, the people who ended up trapped in their cars were those who believed that so wide a road and so many companions would provide safe passage. 

In fact, it took only one gently sliding bus to block the way and create a situation in which many people became convinced that they would die where they sat. Frozen and alone. Fifty yards from one of the most affluent neighborhoods in the world. On a piece of road that has provided a reliable and predictable way home to hundreds of millions of travelers over the last 100 years.

From habit to hell in three hours. It rarely happens that fast. But it can.

Those that took the side streets found the roads difficult, but passable. It took longer than usual, but they made it safely to their destinations.

Taking the less traveled path requires two steps:

• Recognizing that external forces are creating the need for change
• Working knowledge of possible alternatives

As a business this requires combining a strategic view of where you’re headed, and constant exploration of the best way to get there. 

Which is not always the most direct. Or the most familiar.

How To Rule The World - 2

Some lessons from today.

1. Don't build a business on all or nothing bets. Coming second in a football match means you lost. Coming second in business means you're Bill Gates.

2. Be precise in your vision for the future. Only then can you hold yourself accountable. The first step to improvement.

3. Learn from your mistakes. When something doesn't happen the way you forecast it, analyze why and what you can do to improve the outcome next time.

4. Don't expect limitless growth from a group without some mistakes along the way.

5. If you're an Englishman, never ever expect Germans to do what you want.

A Week’s Worth of Mistakes: # 4 - Lost Leverage

When we built our first office in the mid 90s, we knew nothing. About construction. About negotiation. And especially about leverage.

In any commercial space build-out there are usually three participants. The renter, the landlord and the general contractor.

The landlord will often press to have “his people” do the work. Doing so is death by a thousand cuts. Usually of your standards. Followed by your will to live. Rent rebates being no substitute for functioning air conditioning in the dog days of summer.

We had avoided this fate and had brought in our own GC. The work took six months, twenty percent longer than promised and cost twenty percent more. Typical in all regards. We know now.

Towards the end of the project things started to get tense, and disagreements between the GC and the landlord’s electrician had become hourly events.

There are twenty three steps between deciding you want an outlet in a room and being able to plug in a toaster that toasts. They are all required if the biggest issue you face each morning is to be bagel or muffin.

Our nascent business depended on technology. A million dollars worth, give or take. And having the right kind of power in the right kind of places was a fundamental assumption of our business plan. A poor assumption we discovered. In the end, we withheld payment from the GC, who placed a lien on the building for the landlord’s failure to comply with the contracted scope of work.

The landlord, rattled from arrogance for the first time in a year-long negotiation and construction process, came cap in hand to us and agreed to correct everything they had previously denied responsibility for. In return we agreed to settle with the GC.

We accepted the deal, signed the revised agreement, and went to the GC with the happy news.

Did I mention we signed the agreement? An act also known as giving away your leverage.

Because now, instead of sitting on the top of the pyramid of power in which the chain of non-compliance sat beneath us, we had unwittingly made ourselves the fulcrum. We were now responsible for settling with the GC. We were now responsible for getting the work finished.

The GC, rather than lifting the lien, decided that he now had issues with various other aspects of the scope of work, and demanded payment for areas we had assumed were settled.

Never assume. Particularly during construction.

The GC refused to complete the project or remove the lien until his issues were resolved. The landlord reminded us of the agreement requiring us to settle with the GC and have the lien removed. Our lawyer reminded us of the terms of the lease and the first day rent was due. Our newly hired staff reminded us their paychecks were due. And our clients. Actually, we didn’t have any clients. Because there was nowhere for them to be clients.

Between a rock and a hard place choose the rock. It hurts more. But is over faster. And time is your greatest asset.

We paid the GC, who finished the work and we opened our office.

The cost of signing the Agreement with the landlord before we had used our leverage with the GC? About $200,000.

You have leverage in every negotiation. Exercising it requires two things.

Recognizing what it is.

And understanding when to use it.

Philosophical Friday: Paid To Do vs Paid To Learn

If we agree that we get paid because of what we do.

And if we believe that we can do more when we know more.

Shouldn't we work where the emphasis is to teach.

And then use that to increase what they can afford to pay.