Friday, September 16, 2005

Altruism

Brief post from Heather's "Marketing and Finance at Microsoft" blog about the value of altruism ("the more you give, the more you get"). This struck a chord, as it echoes a debate I've had with colleagues over the years - what role does altruism play in doing corp dev work? My view is that altruism can be a powerful factor in both business and career success.

By "altruism" in this sense I mean doing things that you technically don't have to that benefit others. While I don't think there's any debate about the value of doing this internally in your company (you should absolutely help out your colleagues), the controversy arises over being altruistic with your trading partners - who are often your competitors. At AT&T Wireless, I dealt with other wireless carriers, large and small. At Clearwire, the cast of trading partners is even larger. At a certain level of abstraction, these trading partners are all competitors, and the instinct can be to do nothing that advantages one's competitors.

I think this attitude is tremendously short-sighted. While you are obviously not going to transfer material shareholder value to your competitors, there are opportunities every day to do things for your trading partners that cost your company little or nothing. For example, in wireless there are always requests to coordinate frequencies at the edges of licenses, do minor frequency swaps, or even just expedite a request for information. While these "favors" may theoretically benefit your competitor, they are firmly in the margins - things that make life easier for your counterparts on the other side; little wins they can establish internally. It's a quid without the pro quo, but it pays off in a major way over time as you establish relationships with your trading partners.

Besides establishing trust and greatly increasing the chances that you will be graced with return altruism when you need it, you get something that can prove even more valuable: A reputation as someone who is practical-minded and can reliably get things done. That can easily be the deciding factor in getting huge deals done down the road. Case in point: Several years ago I did a large deal to acquire cellular operations. Another large carrier was also bidding for these assets. I learned after the fact that the seller had gone with our offer - despite it having a value 5-10% lower than the other carrier - because of our good relations.

Why should good relations matter? We're in a cold-blooded business; shouldn't it just be about the money? Well, in a way it is. If you have good relations with your trading partners and a reputation for reliability, your proposals will be valued more highly than those of your competitors because of the perceived greater likelihood that the deal will actually get done. A lot can happen between initial proposal and closing a deal. If you are perceived as difficult, slow or unreliable, your offers will be discounted accordingly. Altruism (along with being cordial and keeping your word) is a great way to make yourself - and your company - someone your trading partners look forward to dealing with.

1 comment:

zach coelius said...

I agree with you wholeheartedly that in a business world that is not the competition of rational machines designed to maximize shareholder value as many business “theorists” would like to assume, but rather the interaction of far more complex and often irrational human beings, that it makes sense to always try to gain social capital with those you do business with when it costs you little or nothing. When nothing gets you something -even if it is an intangible and potential something- your always ahead. But I have always wondered about the genesis of the motivation behind these actions and its effect on the way people perceive the reasons why you help them and how they respond as a result.

You use the word “altruism”, which has always to me connoted doing something with no expectation of return and without any incentive for the action. Webster describes it in its second definition as “behavior by an animal that is not beneficial to or may be harmful to itself but that benefits others of its species”. In the word there is a removal of any expectation of return. Yet that does not mean that there is not a return on investment when you do good things for other people. And I do not think there is any doubt that those people who are the saints of our species, the Mother Theresas of our world, are esteemed by those around use and find their efforts paid back many times over. For instance, if Mother Theresa had ever asked for anything for herself (this obviously does provoke a slight problem in that in order to be truly altruistic you can never ask for anything in return) the world would have run to give her anything she asked. So we go around doing good things because we think it is the right thing to do and there may be a pay off in the end.

When we enter a business paradigm this gets really complicated as you so rightly pointed out. Business is in my eyes (highly simplified) a game with an explicit goal. We seek to achieve outcomes that are beneficial to ourselves first, then those we work for, and those we work with. We design our actions as rationally as possible that we might maximize those outcomes-at least we think we do. So whenever we do anything in business it is with the expectation that our input will be exceeded by the outcome. And supposedly we all know this and we expect everyone to play his or her Smithian role to the best of their abilities.

But when we get back to what you said my real question arises. Do we help our competitors out of true altruism? I would say no. In my understanding of business true altruism does not seem to work to well, otherwise we would give our products to all who need them rather then all who purchase them. Do we help them out of a desire for a return? From what you said in your post with its description of gains as a result of these actions, yes. But the question I have is if there is a conscious understanding of this in the business world, the quid pro quo of all actions in an Anne Randian understanding of human interactions, or if others think we give to them because we are good people and give back to us because its right to help good people. I am not even sure if it matters whether we get a return on our investment as a result of cold hearted relationship calculus or the (emotional?) need to give back to those who give but it does cause me to wonder.
My two cents..

Zachcoelius at yahoo.com