The Three Universal Currencies
Whilst reading the book “The Personal MBA” by Joshua Kaufman, I came across the three universal currencies in every negotiation: resources, time and flexibility. Only thing is that it doesn’t just apply to business negotiations but can essentially be used in every action we take.
The Trade Offs
When going into a negotiation, you are there to gain at least one of three things:
- Resources – Items of a tangible nature: money, oil, a computer, etc.
- Time – The thing we all need more of
- Flexibility – The cost of not doing something. It’s what you could have done instead of whatever it is that you are doing. Also known as opportunity cost.
Each one of these currencies you use to trade for another.
Which one does what?
If I wanted to buy a new camera, a resource, then I would need to spend money, trading one resource for another. Simple enough!
In the case that I wanted to earn money, I’d need to find some work, taking up the second major currency, time. I will have to trade a certain amount of my time for a certain amount of resource.
Then comes the third universal currency, flexibility. Say for example, you chose to work a 9-5 job, meaning you have entered into an agreement to work during those hours. You have given up your flexibility to do something else whilst at work, in exchange for money.
Thinking about these three currencies when going into negotiations can provide you with a good standing. Knowing what you are going into the negotiation with and what you are willing to trade off with is vital. You’ll find yourself more confident and be able to more easily come to options that work for all parties.
Now applying this to all areas of life, I believe is not very far a leap. Asking your employer for time off might involve trading more of your time now for time off later. Perhaps, you want to run your own business but that will mean spending a lot of time and losing flexibility in exchange for financial gain.
We would love to have all three in abundance, but it’s just not going to happen. Which would you prefer to have most of: Time, Resources or Flexibility?