Decisions of Consequence

I read a blog post today from David Maister that resonates with regard to slow adoption of value pricing (VP) practices. So many professionals—even those who “get” what value pricing and timesheet trashing will mean to their firm—have trouble with moving forward. They create their own barriers to progress.

Some will throw out a long string of “how” questions. (We—VeraSage—have told you precisely how.) Some just say it is too hard (Others are doing it…). Some say they cannot get their partners to agree. (Consider moving on..?)

David Maister’s post says:

Bob Sutton, co-author (with Jeff Pfeffer) of the terrific book Hard Facts, Dangerous Half-Truths & Total Nonsense, had a fascinating post a few days ago about “Lovaglia’s Law.”

Michael Lovaglia, (a professor at the University of Iowa) proposed Lovaglia’s Law: The more important the outcome of a decision, the more people will resist using evidence to make it.

…He offers the idea that it could be a clever strategy to “try to reframe big decisions as small ones—to fool yourself and others into believing that what seems big is really small!” If the decision seems less critical, logic and reason have a better chance of influencing the outcome.

About Lovaglia’s Law, Bob Sutton writes:

I can’t stop thinking about this law because, although it sounds like a joke, if I think about the basics of sociology, economics, and psychology, many signs are that Michael is right….The concept that drives much economic research is that people strive to do what is in their individual self-interest….Clearly, the more important the decision, the more people involved stand to lose and gain, and the more strongly they push for outcomes that enhance their self-interest rather than are best for everyone involved.

Fundamental to the VP model is removing the pricing risk from the customer. Ultimately this means a better outcome for the professional/firm, but in the short term, the professional/firm needs to let go of the “cushion” of billing by the hour—clearly only in their best interest, and not that of the customer.

The changes required to move to a VP model are not small.

And while the various components of implementation can be adopted incrementally, and we do recommend a phased approach to implementation for most firms, choosing “just” to apply a few of the practices will not bring about the full benefit for the customer or the firm. (The whole is far greater than the sum of its parts.)

VP IS a big decision. And the evidence of VP and the New Practice Equation’s superiority over the Old Practice Equation is solid. Resistance to this evidence is unfortunate for the customer and even more unfortunate for the professionals struggling to find meaning and joy in their professions.

Look at the evidence with open eyes and an open mind. Realize the impact of this big decision. And remember, VeraSage members are here to help you…for the mere price of watching you succeed.

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