Most people in the world probably think they’ve been more often on the wrong side of leverage. I count myself in that category. The most painful was when I was pushed out of a company without my equity. I only let it happen because I had no leverage. But the thing about leverage is, while most people don’t have it, just a little bit has an outsized effect on other people. A friend of mine once told me he is always interviewing for other, better jobs. Not because he wants to leave his current job, which he loves, but because it gives him more leverage to get more money for his current job. How many people think like that? In other words, when a person is smart about building leverage, even if it is a little bit, they’re in a vastly stronger position than not.
Below are the key concepts of leverage.
1. Leverage is based on perceptions. If a party to a negotiation has an advantage and nobody perceives that the advantage exists…there is no leverage. This is especially true for the party with the disadvantage…Thus, it is perceived cost, real or imaginary that enables leverage.
… 2. Leverage is dynamic. Leverage can change as quickly as new information becomes available…These sorts of changes occur during formal business negotiations as well. If, for example, information central to an upcoming bidding process known only to one company becomes available to the other company, then leverage among companies has shifted.
…3. Leverage is situation specific…The aforementioned company with privileged information might have an advantage over another company, but in another situation, the advantage could be reversed (for example, the second company has just made a technical breakthrough the will revolutionize the industry.) Sometimes the situations that create leverage overlap or can be linked in some way.
…4. Leverage is a social or relational construct. Therefore, one has advantage over another individual only as long as the relationship exists. If one part leaves the relationship…leverage ceases to exist…Without another party, it is like being on a seesaw by yourself.
Go out and find yourself some leverage!