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Skin in the game

Reading Time: 4 minutes

Under Hammurabi’s Code in ancient Mesopotamia, if a house caved in and killed its inhabitants, then the builder of that house would face the death penalty. 

It’s a pretty harsh thought, but you can’t deny that it probably did a good job of incentivizing home builders to not take shortcuts with their work. Nassim Nicholas Taleb would say that ancient Mesopotamian architects had skin in the game.

At Stories Inc., we’re not home builders or civil engineers—the quality of our work doesn’t mean life or death for people. And, to be clear, I’m not advocating for a return to Hammurabi’s Code. However, I do love the concept of skin in the game, and what it can mean for a business and its clients.

Skin in the game in a business relationship reduces risks and aligns incentives. Anyone researching vendors should look for ways in which the vendor puts themselves in a skin-in-the-game situation.

Let’s look at a real example from our own company:

Skin in the game at Stories Inc.

At Stories Inc., we offer our clients unlimited rounds of feedback on the content we create. We want our clients to be thrilled with what we produce, and that means that—prior to finalization of the content—clients can come back to us with changes as many times as they’d like.

Every change we make to a piece of content has very tangible costs associated with it—specifically the cost of the labor it takes to make that change. Taken to the extreme, unlimited rounds of feedback opens us up to potentially unlimited costs. And unlimited costs would put us out of business.

In other words, we’ve designed our company so that our company’s survival depends on us delivering great work to our clients in a timely manner. 

Aligned interests

The beautiful thing about the policy is that its mere existence makes it basically irrelevant. That’s right: our clients very rarely (if ever) need to exceed the number of feedback rounds that other vendors typically set as the limit.

By putting our own skin in the game with the policy, we align our interests with those of our customers (i.e., great content in a timely manner).

Our survival depends on us delivering great work in a timely manner, so we focus on ways to ensure that we’re always doing great work:

  • we obsess over crafting a great storyteller experience
  • we’re constantly learning what candidates, employees, and customers want to hear more about
  • we continually hone our methodology to uncover the most compelling stories

Clients want great content, and they don’t want it to take tons of back and forth. So, why would a vendor bother setting an arbitrary limit on feedback? Look for vendors who put their own skin in the game.

More by Scott Thompson

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