What Is It?Precommitment is a military strategy that can be applied to business scenarios.
The classic example of precommitment is the army that burns a bridge behind it so that it has no route of escape. This is the origin of the phrase "burning your bridges".
Precommitment is both a negotiation and motivation strategy.
In negotiations, it shows the other side that you're serious. As a motivational strategy, it gives you incentive to keep going because you're already committed.
Precommitment is a business strategy that makes an unnecessary commitment in order to gain negotiating position or to improve motivation.
So What?Precommitment shows your team and your opponents that you mean business. However, it's not for the faint of heart — it's a strategy that involves taking unnecessary risks.
A few examples of precommitment may illustrate both the advantages and the risks:
A professional quits her job to demonstrate commitment to a big career change. She finally gets the motivation she needed to go back to school.
A startup invests their own money to buy equipment before going for funding. The investment shows investors that they're serious. However, the equipment will be useless without additional funding.
- Labor Negotiations
Management cut their own bonuses before heading into contract negotiations with a union. This sends the clear message that the firm is serious about concessions.
A man invests in an expensive custom engagement ring (that's non-returnable) before proposing to his girlfriend. This sends the social signal that the proposal is serious.
- Premature Investment
A software company buys a data center to demonstrate commitment to software-as-a-service. They lack the capabilities to run such a facility.