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Business Well Done™

On the challenges faced by leaders of established businesses.

Alignment

Altruism is not sustainable.

I would love to see humans acting more out of unselfish concern for others, no doubt.  But as a component of transactional relationships, whether a buyer/seller relationship or business partnership, altruism betrays us.  It is the ingredient that prevents the cake from rising.

It is productive to focus on self-interest for one simple reason: self-interest is the only reliable motivator in the long run.  So the objective in establishing a good business relationship - whether with a customer, a partner, or even a vendor - is the successful alignment of self-interest.

The alternative approach, and a common one, is to expect others to act partly from self-interest and partly from altruism, particularly when their altruism is required to satisfy our own interests.  This is the mindset that leads to whining about fickle customers ("I've been taking care of them for years and they're just going to drop us?!"), and it leads to doomed partnerships.

When establishing a new business relationship, I don't feel confident until it appears to have excellent potential under the assumption that each party is going to act ruthlessly from self-interest.  Any altruistic behavior is upside.  Much of negotiation therefore ought to be an attempt to understand each party's interests so we can align them.  And when we evaluate the market potential of a product or service, we're just fooling around until we get clear insight into how the offering satisfies a customer's most valued interests.

Working from this reality can lead to more opportunities than we would otherwise guess.  More than once I've seen a business profit substantially from a customer that "should" have bought a competing product from its sister division within their large corporation.  But the corporate parent hadn't gotten around to making it the interest of the division to support its peers.  And I've consistently seen buyers find additional value when they pay attention to the interests of the supplier (for important vendor relationships, my question is always, "What would it look like for us to become your best customer?").

In The Wealth of Nations, Adam Smith said it this way:

"It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest."

It's not cynical or soul-less.  To insist that we build relationships founded on self-interest is simply good business.

Paul SchwadaComment