This article was written by Ken Leaver who comes from a product & commercial background. He has founded multiple companies and held senior product positions at SEA tech companies like Lazada and Pomelo Fashion.
Ken runs his own agency that helps early stage companies execute faster and cheaper. Check out his linkedin at: https://www.linkedin.com/in/kenleaver/
Guest Author: Ken Leaver
So not long ago I was a bit unsatisfied with an Upworker who was doing some BI tasks for me.
He’d set up a basic data flow that then got formatted into some charts that we were using to monitor part of the business.
The problem was that I wanted to move to more of a fixed cost model and he wanted to continue to charge us for time. But he was racking up lots of time on various tweaks and fixes and when I looked at the overall cost per chart, it was very high.
Whereas I had someone else doing something similar for another area of the biz and they were charging a flat cost and doing a solid job.
So I asked this person to move to a fixed cost model, which they balked at. Their attitude was… “I charge what I charge so you can take it or leave it.”
And I actually think this is fair enough. He was better than a few other people i’d tried and so he was charging a premium for his expertise and quality of his work.
However I also have the right to just part ways anytime i want. Which I essentially did.
And they were kind of surprised and disgruntled that i’d ended up doing this. Because they thought that they’d already built up significant switching costs, which would probably be accurate of many of their past clients.
But when you’re freelancing for me…you never build up very high switching costs. Because I’ve had you use my system, which is designed to keep switching costs low.
And so I can typically very easily pop in a different freelancer within 24-48 hrs and have them effective with very little time investment from me. Because everything was well documented and my onboarding is automated.
This is my topic for today.
It is important to have low switching costs when using freelancers
I rely on lots of freelancers in the various things I do. Mostly I use Upwork.
When you work with Upworkers you essentially know that you have very little leverage over them. They are usually doing other jobs and can part ways anytime they want.
Or they can decide anytime that they want to charge you a lot more.
So it would be unwise to have a freelancer work with you for an extended period of time and not document what they do. Because the minute they leave, all of that knowledge walks out the door with them.
To keep switching costs low, you need a solid system
How do you work with lots of freelancers effectively knowing that any of them can leave at a moment’s notice?
Simple. You use really good systems.
You need the system to be more important and more powerful than any individual using it.
This is where I apply my ‘Everything is a Task’ method that i have talked about many times. And essentially there are two rules:
- Absolutely anything that takes more than ~10 minutes is tracked with a task in Clickup
- Any work that you do is documented as an update to a task (eg. a comment, status update, etc.)
And so when a freelancer uses this system correctly I can be pretty confident that I know everything they did, why they did it, and how they did it. Because it is all captured in the Clickup cards, which are pretty easy to find and pull up.
And so I invest significant time in ensuring they utilize my system correctly. Because I know that if they do, it significantly reduces any potential leverage they have on me.
Sounds evil.. but in my view it’s not. Good performers will generally love working with me whereas bad ones will be shocked at just how fast I will figure it out and drop them.
These systems negate the ability to use information as power
The other thing that this does is it reduces the ability to use information as power.
And this applies not just to freelancers but to any company setting in my view.
When I think about pretty much any major conflict I had in the early part of my career, it almost always related to someone who was using information as power.
For example I remember one engineering partner I had years ago who was very hard to work with. He just did things his way all the time and I didn’t even think he was good.
But my success depended on our cooperation.
The problem was that almost all the systems were very poorly documented in this company. As it had been around for years and documentation was sparse and poorly organized.
So I was basically reliant on him telling me how the system worked so I could design how new features would fit in. He of course understood very well how much I relied on him.
And he leveraged to this to a great extent… dictating when we would meet, what he would tell me, etc. despite the fact that I was more senior to him in the organization.
But note that his reporting line was not to me as he was in engineering and I was leading product, which was separate.
After several experiences like this in my past career I devoted myself to building systems that make it impossible for people like him to get this type of leverage.
I would light a bonfire on their source of power and smile as I watched them now be exposed for how little value they actually added.
When information is no longer power, you can focus on performance
I’ve operated in this transparent, process-driven way for about four years now and absolutely love it.
I democratise information by making it well documented and organized.
There is no single person that understands how something works and can therefore put themselves in a position of power by telling everyone else they are wrong because they don’t understand it.
Rather now everyone has access to the same information and it is easy to challenge anyone.
This creates completely different rules of competition. One where logic and superior ideas win.
And this therefore creates different models of success. The people that have great logic and a great attitude typically become the successful ones.
And the ones that relied on information as leverage now have to compete using these new rules, and often get pushed out of the way if they don’t level up.
But the company…. pretty much always gets a shitload more done and has a much better culture for it.
