Relationships not transactions
We must rethink how we work with customers and team members.
Different cultures work in different ways. Several cultures focus on relationships in the conduct of business. For many cultures, contracts are often not required as long there is a deep relationship and trust is high. However, with globalization we have seen many western ideas of rule of law and of contracts becoming increasingly important in the conduct of business. Whilst clear contracts create transparency and engender good working relationships, they often go too far. Often how we deal with customers and employees is based on strict interpretation of contracts. Often comprehensive contracts are demanded by customers and employees because they want to protect themselves. When trust is low, one needs a clearly written contract to ensure that we do not get cheated.
Can we move beyond this narrow view? And more importantly, should we? I believe we should, as we can create powerful leverage to our business when we move from transaction driven conduct to relationship driven conduct.
We should work hard to earn the trust of our customers by delivering value. By never promising what we cannot deliver. By ensuring that the price we charge is a fair one and always correlates to the value that we deliver. The long term view would require that we never take advantage of our customers, regardless of what the contract says. I have often ignored written contracts if conditions and situations have changed. In one example, one of our customers had a change in their leadership and the new leader was not aware of a multiyear contract that the company had signed, The program was cancelled and there was no budget for it. I could easily have demanded payment and we would have gotten paid for no value delivered. Because the contract said so. I decided to forgo that payment and continued our long term relationship with the customer. After a year, we were able to relaunch the program and our simple act of forgoing short term revenue, enabled us to win the trust of our customer and we ended up having a larger business relationship. In another example, a taxi driver in Tokyo refused to accept fare from me because he had taken me to the wrong address initially. In his view, he had not done his job, so he did not deserve to get paid. Honor and integrity are long term business drivers. Legal contracts are just irrelevant in this context.
And with team members we can apply the same concepts. Yes we do have legal employment agreements that define the terms of employment. But our conduct should be one of fairness and equity. We should build deep relationships with our team members by providing a shared vision of why we do what we do. We should care for our colleagues. For example, micromanaging employees and demanding to know what they have been doing with their time is a sure recipe for creating a toxic culture. Post-Covid many employers are asking employees to come in to the office. In low trust organizations, often it is because employers do not trust that their employees will put in a fair day’s work. This is absurd. If you can move beyond this narrow view there will be a huge boost in productivity. If team members are trusted and are inspired by the mission of the organization, they will do wonders. I believe each team member is driven by a desire to do great work, by a desire to be proud of what they do. Our job is to enable this to happen by creating a deep and meaningful relationship with our teams. Where we care about each other, where we move beyond what is in a job description.
Many people will think that what I have said is naïve. That we will be taken advantage of by customers and team members. I do acknowledge that there will be a few of those. But overall we will be fine. The damage that those few will cause us will be dwarfed by the immense leverage we will create in our business. I have a simple rule, treat others like how you would want to be treated. I am convinced that if we conduct ourselves with innocence and honor, we will reap immense rewards.