EVERYTHING YOU WANT TO KNOW IN A NUTSHELL
‘I’ll give you my opinion of the human race in a nutshell … their heart’s in the right place, but their head is a thoroughly inefficient organ.’
W. Somerset Maugham (British playwright and novelist; 1874–1965)
Getting your head around all the information and concepts in this book may seem difficult. Once you have worked through them a few times, they become much easier to grasp and apply. If you practise them regularly, they become like the skills you need to drive a car – you automatically use them without thinking about it.
This is your life we are talking about here – your financial well-being. You owe it to yourself, your family, your legacy to do the best you can to protect and increase your personal income.
To make the dealonomics principles as simple and accessible as possible, here is a summary of the 100 key points from the book. Reading just the summary is not going to give you anywhere near enough knowledge to really get what you want. It is merely a prompt to make your life that bit easier.
1.Learning The Laws of More will teach you how far you can push for a salary increase or contract price, and help you to understand your unique value in the open market.
2.Even in a bad economy, not all is doom and gloom. Understanding dealonomics gives you the tools to get the most money you can for the value you are able to offer – it is how ‘Salaryman’ can hit back.
3.In the supply and demand of people, companies have funds with which to buy people, and people sell their sweat equity to the companies for money. It is a simple trade – quid pro quo. In bad times, companies need the best people, not the cheapest people.
4.The ‘Wolves of Wall Street’ want us to believe we are disposable commodities that can easily be replaced. The reality is that to replace you with someone from outside your company costs the Wolves around 150 per cent of your annual salary. This cost to them gives you power.
5.Not all of us have the desire or wherewithal to be captains of industry. What we have, though, is the opportunity to believe in ourselves and perform to the very best of our abilities. Being the best you can be counts for a huge amount when someone is making the decision to hire you, promote you, increase your earnings or give you a contract.
6.Hard work ≠ money. Believing that you deserve the best – your attitude, in other words – plays a major role in whether you get what you want in life or not. If you don’t believe you are worthy or deserving, you will not be successful.
(OR FIRST STEPS FIRST)
7.Dealonomics is the collective word for the laws, rules, guidelines, skills and expertise that individuals need to use to get the income they want, regardless of the state of an economy.
8.Sutton’s Law says that if you want to increase your income, or win the promotion or contract, you need to approach the most obvious source of the money to get the decision you want.
9.Supporting Sutton’s Law, The Golden Rule points you in the direction of the person who holds the money and makes the rules – the Highlander. The Highlander has the power to overturn a decision that does not go your way, but there are consequences to going over someone’s head to see the Highlander.
10.When you see the Highlander, you must present your case in the form of a ‘valid business reason’ – or Value Proposition – which shows the unique value you add to his or her company at a high level. If you can’t do this, you waste the Highlander’s time and stand no chance of getting a positive decision.
11.The Law of Fair Play dictates that life is not fair. You can, however, gain an advantage by refusing to be a victim and getting a grip on the factors you can control – and ‘first impressions’ is one of those controllable factors.
12.The Law of First Impressions says people can and will judge you as they do the cover of a book. To manage first impressions, follow a five-step process:
13.Ford’s Rule teaches that if you believe you can or you can’t, you are right. But Ford’s Anti-Rule suggests that you were born with skills, and you have them whether you acknowledge them or not. Everyone is a born dealmaker, and every dealmaker has selling and negotiating skills, which means you have these skills too.
14.As a born dealmaker, you are able to negotiate, sell, communicate and leverage power – but you may have lost sight of these skills along the way. Find them, especially your negotiating and selling skills, and your inner dealmaker will be resurrected.
15.The differences between negotiation and selling skills:
16.To get what you want in business, you will usually have to sell and negotiate, but because of the costs associated with selling and negotiating, you need to consider other possibilities. Rational Choice Theory encourages you to choose the options that are most advantageous to you.
17.Dealonomics decrees that everyone can break out of the cycle of becoming progressively poorer just because they depend on someone else for their income. By leveraging your dealonomics tools, you can improve your personal wealth and financial future.
18.Planning is the life force of your deal for two reasons. Firstly, it sets your road map for how to get to where you want to go. Secondly, it shows you where to find the power to get what you want.
19.Salaryman can find and use power in much the same way as a six-year-old. Junior tells you what he wants, he is creative and flexible, he uses trading instead of logic, and he doesn’t care about ego or losing face. Salaryman needs to rediscover his junior self.
20.There are eight key concepts from which anyone can draw power:
21.The ability to transform information into knowledge creates power. The magic is in getting the right information from the start.
22.The Information Equation summary is:
[what you need to know] – [what you know] = [the questions to ask].
To use the equation effectively, you need to prepare your questions in advance.
23.Three ways in which to use questions to increase your power:
24.When you really listen to someone, you pick up clues as to what they are thinking, how they are feeling, and what they are not saying. Use silence to elicit additional information.
25.Networking is extremely valuable for getting information and introductions, but you must have the right people in your network, and you must be prepared to leverage the relationships.
26.If you believe that your personal value is high, then others will believe this too. Projecting the wrong message about yourself is devastating to your worth and wealth. The four main value-destroyers are:
27.The six best ways to improve your self-worth are:
28.Establishing your value in the marketplace is essential. You need to know what the skills, expertise, knowledge and services you have to offer are worth in the open market, and how to push this value to its limits.
29.To establish what You are worth, you must be able to:
30.Dealmakers talk in terms of value-value, not win-win. Value for value is sustainable and measurable, promotes long-term relationships and helps you get the deals you want.
31.The secret to understanding the difference between cost and value enables you to give the other person something they see as hugely valuable but that doesn’t cost you much, in exchange for something that you value highly but doesn’t cost them the earth.
32.Value Propositions are king when it comes to selling and persuading. If you can show the other person how what you have to offer will benefit them, you give yourself a vital tactical advantage. Tailor your Value Propositions for each person with whom you meet.
33.To get what you want, you have to plan what you want. Start by determining your strategy. Follow these four steps to set you on the right path:
34.Once you have a clear strategy, decide exactly what you want from the deal. This process has three specific steps:
35.Distinguish between what people Need in a deal, from what they Want. Needs are business-related and are linked to Key Issues (big carrots), and Wants are personal hot buttons connected to Secondary Issues (smaller carrots). In a competitive situation, this distinction can win you the deal.
36.A Need must exist for someone to be interested in doing a deal with you. The more urgent the Need, the better for you. If a Need does not exist, you need to create one or walk away from the deal.
37.Business decisions are rarely made for reasons of logic alone. If you are able to understand an individual’s personal Wants, build these into your Value Propositions to differentiate yourself from the competition.
38.To get what you want in the face-to-face engagement, you need to tell the other party what you want, and what they can expect in return. Listen to their counter-proposals, find flexibility in your Ball Park to maintain the value of your deal, and look for signs to close the transaction.
39.When you start the conversation that will probably to lead to a negotiation, there is a protocol that should be observed. Set the scene to your best advantage.
40.You must make the first proposal whenever you can. If the other person goes first, they are going to put the proposal that suits them on the table. This is highly unlikely to be the best proposal for you.
41.When you present your first proposal, pitch it as close to the Opening position in your Ball Park as possible, but take care that it is still realistic. The Opening positions for all your Key Issues as a package could be overwhelming for the other person.
42.Sometimes you need to present your Opening proposal as a package, sometimes in chunks, and other times line by line. Decide which is most appropriate for each situation and deal.
43.There are three guidelines for when you are making a proposal:
44.There are three guidelines for receiving a proposal:
45.The judicial use of information gives you power. To exploit how you use information in the face-to-face encounter, follow these four guidelines:
46.If you are able to understand someone else’s patterns of behaviour, you are better able to understand what motivates them at a business and a personal level. You can then modify your own behaviour, as well as the proposals you present, to address their motivators.
47.Modifying your behaviour is not ‘selling out’. You do not change your character or personality. You adapt the way you behave in order to interact more meaningfully with the other person. You can only change your own behaviour, not theirs.
48.There are four major categories into which behaviours can be sorted:
49.When presenting a proposal to an Expressive, be animated, show enthusiasm and talk about the big picture.
50.When you present a proposal to an Amiable, be friendly, warm, and show them how your proposal emphasises relationships and harmony.
51.A proposal presentation to a Driver needs to be formal and to the point. Focus on outcomes, deliverables and results.
52.Your presentation of a proposal to an Analytical needs to offer facts and figures, but be careful that they don’t disappear into the detail.
53.Being able to respond to the person with whom you are dealing by modifying your style will serve you well in business, and in life in general. Practise this with your family and friends, but keep it fun.
54.How do you know when it is time to close the deal? Once your Key Issues have been addressed and you spot Marbles coming onto the table, it is time to finalise and close the transaction.
55.There are four steps you can follow to make closing as smooth as possible.
56.There will be times when the other party simply says ‘no’ to your proposal or the deal. Your first step is to find out why they have said ‘no’. Five questions you can ask to find out why your proposal or deal is being rejected are:
57.Deadlock does not have to mean the end of your deal. There are times when deadlock can be useful, but consider the cost of the deadlock (from financial, personal, social, political, etc. perspectives) compared to conceding whatever it is that the other party wants from you to break the deadlock.
58.When should you walk away from a deal? Only when:
59.There are seven different scenarios for which you can use dealonomics described in this book. Don’t read only the part that relates to you. There are tips and techniques that apply to everyone in all seven sections.
60.Four absolute rules to follow when using dealonomics in your world:
61.When you are looking for a new job, it is the best opportunity you will have to get a substantial increase in your existing salary and benefits, or the terms of your contract. Don’t waste it.
62.Establishing your worth in the market is your number-one priority when you go job hunting. Make sure you:
63.To stand out from the crowd, there are two areas on which you must focus:
64.When you have the opportunity to sell yourself to the prospective employer, concentrate on two areas:
65.When you start negotiating, again two pointers:
66.An important ally for you when you are looking for a job is the recruitment company. To get the most out of your interaction:
67.Entering the world of work for the first time is exciting. The problem is that unless you have a set of unique skills, which is unlikely for a first-time job-seeker, your first salary is not going to come anywhere near your expectations.
68.Research shows that if a job-seeker does not negotiate their first salary, they stand to lose US$500 000 by the time they are 60 years old. The consequences of being too timid or nervous to negotiate your first salary are severe.
69.Meeting businesspeople, especially executives, can be intimidating. Most of them are pretty decent, but you still need to prepare very well for your interviews. Everything from your introduction to how you will address the other person needs to be thought through.
70.Your CV must be world-class. There are seven ideas for you to use in the book. Spend as much time as you can getting this right, as this is your first point of contact with the company that you hope will hire you.
71.Recognise your network as a differentiator. If you have no unique skills or experience to offer, leverage your network to show how you will add value to the company through these relationships.
72.Be sure to read the section on ‘Looking for a new position’, as many of the same rules apply to the first-time job hunter.
73.If is far more difficult to get a decent salary increase or a promotion with your existing company – unless your current employer sees you as Salaryman, superhero – than it is going into the open job market.
74.Companies will play any number of games to maintain the status quo around your earnings. Watch for being given the responsibilities but not the title, or, if you are the willing horse, being flogged to death. Use carrots and sticks to break this cycle.
75.Companies find a multitude of reasons to block your requests for more money or a promotion. The most common excuses a company will use are pay grades, salary ranges and precedent.
76.There are different ways in which to counter these games and tactics, but the most valuable one is for you not to buy into their fallacious arguments, and persist with persuading, using Value Propositions, or negotiating with carrots and sticks.
77.Do not use the ‘I will resign’ stick unless you are prepared to execute on the threat. Not only can it irreparably damage your relationship with your organisation, but you could find yourself without a job.
78.To get the increase or promotion you want, the carrot or incentive route is far more constructive than that of a stick. Make proposals that focus on giving to get – quid pro quo.
79.The guidelines for ‘Looking for a new position’ are equally relevant when you want an increase or a promotion. Have another look at that particular section.
80.Being an entrepreneur is difficult, and not everyone is cut out to be self-employed. There is no shame in being Salaryman if being an entrepreneur is not for you. Follow the path that sits most comfortably with your character.
81.Setting the correct Ball Park is essential for entrepreneurs. If the value of every product and service an entrepreneur offers is not defined to the smallest detail (including the Marbles), your finances will derail the business. Get someone to help you if numeracy is not your strong suit.
82.One of the biggest challenges entrepreneurs face is having to interact with procurement and buying professionals. Buyers do not care about value – their aim is to drive down price. To manage this thorny relationship:
83.Although it may feel like it, the customer or decision-maker does not hold all the power. To wrest power your way, though, you must have something the other person wants or needs. The more your product or service meets their Need or Want, the stronger your position. Demonstrate this using Value Proposition.
84.Globally, women earn an average of 25 per cent less than men. The obvious assumption is that women are merely paid less for the same work. This is not necessarily the case. The way in which women are remunerated often differs from that of men.
85.Although many women are poor negotiators, there are three other factors as to why women earn less than men, but, essentially, women value themselves differently to men. This works on three levels:
86.When a woman’s total package is compared to that of a man, she is not necessarily worse off. She may have benefits, quantitative and qualitative, in her package in which she sees huge value. It’s not just about the money, which is different from how men tend to think.
87.Women do, however, need to overcome discrimination and prejudice in the workplace. This not going to change overnight, but women can drive this change by demonstrating their value. There are 12 ideas in the book that demonstrate how you can show your worth.
88.The number of women, and a few men, who stay at home to run a household but receive no compensation for this work is scary. Homemakers should be getting far more than a housekeeping allowance.
89.A tough wake-up call. If you are not receiving a formal salary for staying at home, you will suffer severely if your relationship with the breadwinner breaks down for any reason.
90.If you think earning a salary for being a homemaker is ridiculous, consider what will happen if you are left destitute through divorce, death or for whatever other reason.
91.As the house spouse, you have a responsibility to know exactly what it costs to run your household. Detailed information will also support your proposals for increases in your housekeeping allowance, while showing you how much it would cost to run a household on your own income.
92.These housekeeping financials form a vital part of the ‘Value Balance Sheet’, which you can use to calculate the income – yes, salary – you should receive for performing your house-spouse duties.
93.The Value Balance Sheet indicates the financial cost to you personally to be the homemaker. Unfortunately, it paints a frightening picture of the real price to you of being the house spouse.
94.If the work is worth doing, your self-worth should be insisting that you be paid or compensated in some way for this. If your work goes unrewarded, the person for whom you perform the duties will never value your contribution. Value Lesson 101.
95.Being in civil service does not mean there is nothing you can do to increase your earnings. Opportunities to get what you want are plentiful, but you have to leverage the system available to you.
96.While pay grades and salary ranges are a reality in government, the breaks to earn more lie in the array of fringe benefits and perks that are available to government employees. This is where your focus as a civil servant needs to be to increase your income.
97.Contractors and consultants to government do not have access to these benefits, and as contracting to government can be immensely problematic and expensive for small businesses, they need to ensure that their pricing structures reflect the associated risks.
98.Be cautious moving from civil service to the corporate world just because you think you will earn more in the private sector. Before you make a change, you must understand the total value of your salary package in government.
99.Although job security is less enshrined in government than it once was, civil servants still enjoy relative safety in their positions compared to corporate employees. Take this into account before you move sectors.
100.Competition for jobs in the corporate world is tough. If you move from government to corporate, ensure that you can compete with corporate Salaryman, who is adept at playing rough and ready in this market.
And that, Salaryman, is dealonomics in a nutshell. You now have all the superhero powers you need to go out and get whatever it is that you want.