What do you think when someone offers you something for nothing? I suspect most of us say thank you very much, put it in our pocket or bag … and then often forget about it. The problem is, when we give nothing for it, we tend not to value what we received.
Many years ago I was involved with promoting amateur music events. Sometimes there were few costs to cover, and the main aim was to attract a reasonable audience, so an easy option was to make admission to a concert free. What happens if you do that? You often get a smaller audience than if you sell tickets at a low price!
Why should that be? Well, put yourself in the shoes of the punter. You see a poster advertising a free concert, which looks interesting, so you make a mental note. Come the day of the concert, chances are you have either forgotten about it, or something else more attractive has come along. Since you have invested nothing, you choose to do the more attractive option. Because the organisers have not made you put a value on the event, you may treat it as being worth nothing, unless something else gives it value for you (for example you know one of the performers). There is little difference between something for nothing and nothing for nothing.
On the other hand, if you have to buy a ticket, even for a nominal sum, you must give the event a positive value. In addition, if you have to buy the ticket beforehand, you have made an emotional investment. You are more likely to remember about it, and less likely to decide to do something else.
Luxury brands do something similar but in reverse. The product itself may not be objectively any better than something cheaper, but the value people put on it is higher, so they are willing to pay more.
Value has a significant emotional component, so pricing is always partly a decision about emotion. Never undervalue that!
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English: Terraced house façades, Montague Street See also 1608624 (Photo credit: Wikipedia)[/caption]
I’ll never forget my first serious experience of negotiation.
I was selling my first house, a small, terraced house in a cheap part of the city. I loved it, because it was the first house I had owned, and because I had put a lot of work – and a lot of myself – into it. I had decorated every room; I had refitted the kitchen; I had installed central heating to replace electric storage heaters. I was moving to a new area, where I knew housing was going to be a lot more expensive.
I had received an offer to buy my house from a junior colleague at work. Obviously that made things slightly awkward to start with. But I was unprepared for what happened when he asked if he could visit again, with a family friend.
They duly arrived, and I showed them around. The family friend, an older gentleman, was very appreciative, admiring everything I had done, complimenting me on my workmanship, and so on. And then, at the end of the visit, he pitched me a new price, substantially lower than the offer my colleague had previously made. I was caught off guard. Having refused the new price, I felt I had to respond to his questions, starting with what was the lowest price I would accept? He came back with requests to throw in this and that if they agreed to a higher price, and so on. We eventually agreed a deal – which actually was not such a bad deal from my point of view – but I was left feeling bruised.
Looking back, I have to admire the technique. All the praise, all the efforts to make me feel good first, worked a treat, and there was nothing in the negotiation itself that I could criticise. He did a good job for my colleague. So why did I feel bruised?
The one thing that was missing in the exchange was creating an honest expectation. I had been led to believe that the friend was there to give a second opinion. It was my colleague’s first house purchase, just as it had been mine, so understandably he wanted someone else to endorse his judgement. I had not expected that the friend was there to negotiate on his behalf – after all, an offer had already been made. Perhaps I was a bit naïve, but I was caught unprepared; the negotiation had high financial and emotional value for me, and I had no experience of handling something like that. I felt that I was backed into a corner, and that personal trust had been breached.
So what is the lesson? Don’t just play fair – make sure everyone knows what game you are going to be playing beforehand, especially if personal relationships are involved. Trust is too important, and too hard to rebuild, to risk losing.
English: Terraced house façades, Montague Street See also 1608624 (Photo credit: Wikipedia)[/caption]
I’ll never forget my first serious experience of negotiation.
I was selling my first house, a small, terraced house in a cheap part of the city. I loved it, because it was the first house I had owned, and because I had put a lot of work – and a lot of myself – into it. I had decorated every room; I had refitted the kitchen; I had installed central heating to replace electric storage heaters. I was moving to a new area, where I knew housing was going to be a lot more expensive.
I had received an offer to buy my house from a junior colleague at work. Obviously that made things slightly awkward to start with. But I was unprepared for what happened when he asked if he could visit again, with a family friend.
They duly arrived, and I showed them around. The family friend, an older gentleman, was very appreciative, admiring everything I had done, complimenting me on my workmanship, and so on. And then, at the end of the visit, he pitched me a new price, substantially lower than the offer my colleague had previously made. I was caught off guard. Having refused the new price, I felt I had to respond to his questions, starting with what was the lowest price I would accept? He came back with requests to throw in this and that if they agreed to a higher price, and so on. We eventually agreed a deal – which actually was not such a bad deal from my point of view – but I was left feeling bruised.
Looking back, I have to admire the technique. All the praise, all the efforts to make me feel good first, worked a treat, and there was nothing in the negotiation itself that I could criticise. He did a good job for my colleague. So why did I feel bruised?
The one thing that was missing in the exchange was creating an honest expectation. I had been led to believe that the friend was there to give a second opinion. It was my colleague’s first house purchase, just as it had been mine, so understandably he wanted someone else to endorse his judgement. I had not expected that the friend was there to negotiate on his behalf – after all, an offer had already been made. Perhaps I was a bit naïve, but I was caught unprepared; the negotiation had high financial and emotional value for me, and I had no experience of handling something like that. I felt that I was backed into a corner, and that personal trust had been breached.
So what is the lesson? Don’t just play fair – make sure everyone knows what game you are going to be playing beforehand, especially if personal relationships are involved. Trust is too important, and too hard to rebuild, to risk losing. 
What is leadership about? The very word implies movement. Leadership involves helping other people to find the way from A to B, so all leadership is change leadership of some kind. If we are sticking to A, the people may need managing, but there is not much leading involved. You don’t need a leader if you are not going anywhere.
How many times have you heard people say “if its not broken, why fix it?” Probably you have said it yourself at times. Or “I don’t want to upset the apple cart”? No-one likes change – everyone is more comfortable with the status quo. The trouble is, stability is an illusion, at least in the longer term. Everything grows - or it declines. The organisation that does not change positively is doomed eventually to change negatively.
Change is the whole point of leadership. The joke says “How many psychologists does it take to change a light bulb? One, but it has to want to change!” The job of the leader is to have the vision of where to go to, and then to get people to the point where they want to, or at least accept the need for, change.