June 13, 2020
Hard vs Complex
In the movie Good Will Hunting, Matt Damon plays a janitor with a genius IQ. One night while mopping the floors in a classroom at Harvard, he comes across a math problem that is so complex that it takes up four black boards. Our hero (of course) solves it easily before being chased off by a professor who thinks he’s defacing the board with graffiti. (video)
This scene is a great example of a case where something can be both complex and easy at the same time. The problem is complex, and for most of the students it would be hard to solve. But for a genius, it’s easy.
In general, a problem can be said to be more or less complex than other problems. And the complexity may correlate to the difficulty, but not necessarily. Consider a standardized test like the SATs. It is the same complexity for everyone who takes it, but some students will leave thinking it was hard, and others will think it was easy.
Here’s the thing...
In a service business, it’s pretty common to encounter complex problems that are hard for your client to solve, but easy for you to solve. This “difficulty arbitrage” is basically the reason we have a service business at all.
For example, a prospective client might want to migrate their mission critical business application from their on-premise servers to a cloud computing provider like AWS. This is not the kind of thing a business would normally have much experience with, but it might be something you do all the time. It’s undeniably a complex undertaking, but your experience and expertise and tools and process will make it relatively easy for you. The more experience you gain doing these sorts of migrations, the faster and safer you can do them for clients.
Where this can get weird is when it comes to money.
If you bill by the hour, you’ll make less money the better you get. As the solution delivery gets easier, your checks will get smaller.
When faced with this eventuality, people tell themselves all sorts of things to avoid facing the problem head on. For example:
- “I’ll raise my hourly rate.”—Really? How often? How significantly? Most people I talk to loath informing their clients of a rate increase and therefore don’t do it often enough or significantly enough to actually get ahead.
- “I’ll land more business.”—The thinking here is that if you are faster than all your competitors, then your estimates will be the lowest of the bunch, and therefore you’ll land more clients. (If it’s not head-slappingly obvious how misguided this thinking is, please hit reply and I’ll do a follow-up email on it.)
- “(I’ll keep solving new problems)”—I put this one in parenthesis because it’s not typically a conscious thought most people would connect with solving the “hourly billing punishes expertise” problem, but I suspect that that is exactly where this thought comes from. Somewhere deep down, your subconscious recognizes that if you get good at solving a given problem quickly, you’ll be penalized financially. So your survival mechanism unconsciously tells you to keep jumping from learning curve to learning curve with every new client so you never get really good at solving any particular thing. And then your coping mechanism whispers in your ear, “...you’d get bored if you kept solving the same problem...” But you know what’s not boring? A feeling of mastery. And you know what else is not boring? Getting paid $15,000 for a solution you rattled off in 45 minutes.
There’s no way around it... hourly billing is nuts. The solution is to stop billing and start pricing.
Once you do, you’ll start to see an actual business emerge from what was previously just a job without benefits.
Yours,
—J