6. Rules


When the rules of the game prove unsuitable for
victory, the gentlemen of England change the rules.
---Harold Laski


When we talk about changing the game, the first thing people usually think of is changing the rules. But if we ask what rules you might change or how you might go about changing them, the question often seems perplexing. After all, most of the rules businesspeople play by are well-established laws and customs. They have evolved to help ensure that trading practices are fair, that markets keep operating, and that contracts are honored. To step outside these rules would be to risk legal penalties or exclusion from the market.

But there are other rules of the game that it can make sense to change. Many of these rules are the ones found in contracts. Your contracts with customers and suppliers shape your transactions with those players in ways that extend far into the future. A single clause can tilt the balance of power heavily toward you or against you. By shaping your relations with customers and suppliers, these same contracts will also shape your relations with competitors. To be sure you're in a game where you'll make money, you have to make sure you've got the right rules in your contracts.

What all these more negotiable rules have in common is that they involve "details." Compared with changes in players or in added values, the possible changes in rules can seem like a small-scale matter. This makes them easy to ignore:

I want to know God's thoughts; the rest are details.
---Albert Einstein

But there's another way of looking at it:

God is in the details.
---Ludwig Mies van der Rohe


As we'll show in this chapter, relatively small changes in the rules of business can produce enormous changes in the outcomes. In other words, where business rules are concerned, the details are everything.

To illustrate how this works, we'll look at a variety of rules and analyze how each one affects the game. This requires imagining that a given rule is in effect, putting yourself in the other players' shoes, and playing out the game from all the different perspectives. With a better understanding of the rule's consequences, you can then decide whether you want to employ that rule or, if it's a rule that's already there, whether you want to change it.

There is no mechanism, or algorithm, for generating rules. It's a creative act. Still, you can get ideas for new rules from a number of sources. One approach is to find a rule that works in one context and consider whether it would work in a different one. Take a rule used with your customers and bring it to negotiations with your suppliers. Or take a rule you see used to good effect in other businesses and apply it to your own business. The collection of rules discussed in this chapter should serve as a useful source of ideas.


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