The Principle of Premium Generation

What actually drives the premium? It’s because people haven’t seen enough.

In our organizations, leaders always like to assign everyone to do things that don’t actually generate revenue—meaning they’re unrelated to profitability. This is even more common in non-private enterprises. Even though these aren’t particularly important matters, they treat them as if they’re major deals: with evaluations, rankings, and so on. They then grade them as excellent, good, average, or poor, as if it somehow puts someone half a rank above another person, as if year-end will bring extra strips of hairtail fish as a bonus.

Private companies run the same game, too. If you can climb into management, they’ll at least let you become a team leader. When meeting clients outside the office, they’ll even allow you to print “Director” on your business card. For those who can’t make it to management, they still offer various so-called “career progression paths.” Things like senior engineer, senior master engineer, and eventually, even internal scientists or chief scientists within the company. It’s the same vibe as chief analysts in financial institutions. What’s the purpose of all this?

It’s about inflating your sunk-cost expectations.

Human decision-making is, for the most part, driven by expectations. If you’re thinking about leaving but are hung up on your former title of “Chief [Something],” you’ll feel a sense of loss aversion. You’ll feel like you’re giving something up. This anticipated loss aversion makes the salary increase offered by a new employer seem less appealing. The current employer offers certainty—you know what the work experience will be like. The new employer brings uncertainty. The only thing you can be sure of is the higher pay, but you can’t guarantee whether you’ll still be “Chief” or retain that internal sense of “status.” This uncertainty subtly guides your decision. The current employer hasn’t spent an extra dime. They just used a tactic of promotion without real authority to trap you in place. That’s what we call expectation management.

So, what’s the best way to break free from expectation management?

It’s through experience. I’ve been through it all. I’ve seen it all. There’s nothing I don’t understand. When I make a choice, I’m clear about what I’m doing with my life. “Of the vast waters, I choose but one sip”—not because that one sip is managing my expectations.

Rather, I’ve seen it all, experienced it all, and ultimately, I alone know why I want that single sip.