In the process, the project was going along ok until one day they needed to turn off some electrical circuits to replace the water heater. In doing so, several subcontractors along with the contractor "inadvertently" turned on my Hot Tub, which did not have any water in it. We did not discover this until it was too late - 3 days of running with no water = one blown control panel and motor. They all looked at each other, and pointed fingers - such that it could not be determined who was truly at fault.
Now, there were 2 ways to approach the situation from the contractor's point of view.
- Short Term Thinking - This is going to cost me money, so how do I spread the risk, and maybe even shuffle blame, such that I am unaccountable and get to keep 100% of my margin thus far? How do I deflect? How do I cause fear and doubt?
- Long Term Thinking - This is going to cost me money, so how do I mitigate and minimize damage within this ongoing project? Is there some third-party accountability on our part, and if we dodge it, how will we look? Is this project worth more than the issue at hand? What does the customer want to happen? What can I offer in return? Can it be more of a discussion than a right-or-wrong?
While it may seem obvious which approach to take, often it is far too simple to focus on the short term when issues arise with clients and projects. The short term reward for the contractor here might have been about $1,000 in margin - the cost of the damages to the hot tub. But in doing so, he burnt his credibility and integrity with the client, who fired him (yes, that was me!). In total, for the long-term, he might have missed out on another $10,000 - $15,000 in margin because I now have a new contractor to finish the job.
I am definitely not saying that short-term thinking is more desirable every time. There are times as a business where you simply cannot risk long-term vision due to that particular clients past engagement history (maybe they are a difficult client, or never pay on time, or has unrealistic expectations after the sale - the list goes on and on). But make sure you have the long-short in your mind during every situation, so you are ready to present your best case, and best possible outcome. This contractor did not - he was shocked that I fired him. So in the end, I lost $1,000, and he lost $15,000. Nobody won - all because of short-term thinking.
For more reading on the topic, see BATNA on Wikipedia -