With Whom Should You Trade? Three Steps To Win-Win – Forbes

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This column is the fourth in a five-part series on creating purposeful lives using the same business principles that guide decisions in corporate boardrooms. The target audience is you, the CEO of My Enterprise (ME) Inc.

Serving as a PhD supervisor is one of my favorite aspects of working in higher education. But when new students come to my office seeking a mentorship, I never say yes until they agree to one ground rule: They must think of themselves as my equal.

This does not mean they need the same level of education or experience as a tenured faculty member. Equality of status or rank is not required for two people to work together in a mutually beneficial way.

Instead, when a student and I commit to collaborate on knowledge creation, we are both on equal ground about the unknown. We must agree up front to exchange effort for effort and value for value, so both sides come out ahead.

Similar principles apply in all types of personal and professional exchanges, from long-term relationships to one-time interactions. Thats how the Trader Principle works.

A trader does not treat men as masters or slaves, but as independent equals, author Ayn Rand says. He deals with men by means of a free, voluntary, unforced, uncoerced exchange an exchange which benefits both parties by their own independent judgment.

As CEO of ME Inc., you must consider carefully: With whom should I trade?

Rajshree Agarwal

Framework

The question flows naturally from your work in the first three installments of this series. When put together, a new framework emerges for measuring the power of trade in a 2x2 grid.

The vertical axis represents the degree of benefit to others, an outgrowth of the value proposition you developed in the third installment.

The horizontal axis represents the degree of benefit to yourself when you exchange your time, talents and resources with others. It represents the alignment of your aspirations and abilities, as discussed in the second installment of the series.

Together, the two axes represent the twin elements of your purpose, bringing you back to this important touchstone, as discussed in the first installment.

Win-lose scenarios in the upper-left quadrant happen when someone else benefits more than you from an exchange.

The reverse scenario in the lower-right quadrant happens when you get what you want, but at the expense of your trading counterparts.

Relationships tend to break down in either case, pushing you toward lose-lose scenarios in the lower-left quadrant.

Productive, rewarding, sustainable relationships happen in the upper-right quadrant, where the miracle of trade occurs.

Both sides amplify the value proposition of the other, producing win-win results that cannot be achieved when individuals act alone. As Aristotle says, The whole is greater than the sum of its parts.

Fallacies

Many people reject the possibility of win-win outcomes. They think of trade as something adversarial, pitting one person against another.

They view markets as places of competition, rather than collaboration first and foremost.

Cynics who buy into this fallacy believe they must be selfish or selfless in their interactions with others.

If they want to make the world a better place, they assume they must sacrifice their own interests to help others. But if the one constant in your world is you, and you are not better off, how is your world a better place?

Shel Silverstein shows the long-term risks of the false dichotomy in his book, The Giving Tree, a cautionary tale of trade imbalances that persist over time.

The tree in the story plays the role of the martyr and enabler. It willingly sacrifices itself to aid another, until it eventually dies.

Unfortunately, the intended beneficiary is not better off in the long run. Taking what is offered, the boy grows into a man weakened by years of dependency.

The alternative does not work either. People who take more than they give through fraud or exploitation have a short-sighted notion of self-interest. As the above framework illustrates, such an approach rarely lasts in voluntary relationships.

A second fallacy is the notion that trade is about economics alone. Such a transactional perspective discounts the power of voluntary trade to promote human dignity, as I write about in a previous column.

People who collaborate without coercion have the satisfaction of knowing that others appreciate their contributions. They are neither beggars nor thieves. They are independent equals.

Underlying each win-win transaction is the assurance that individuals can fulfill their aspirations through a matching of complementary abilities offering value in return for value.

This enables each to thrive, not just economically, but psychologically and intellectually.

A third fallacy is the idea that trade partners must receive equal rewards or give in equal measure.

Win-win outcomes are not measured by equality in every aspect. The key is whether each party independently believes the other offers something of worth.

I learned this lesson early in my career. When working with my PhD adviser on joint projects, I probably put in 90% of the time invested. But his 10% created far more value in terms of insights and impact, resulting in a balanced exchange.

Formulation

When building trade alliances as CEO of ME Inc., the first step is to identify people who share your purpose, values and vision. These are your mirrors.

Then look for people who complement your aspirations and abilities. They love what you hate and have skills that you lack. These are your duals, providing you a value proposition by enabling you to focus on optimizing your abilities and aspirations.

The best trade partners fit both descriptions. Once you identify them, the next step is to recruit them.

When somebody else has something you want, you have three options. You can beg for it, take it by force or earn it.

Traders have little appetite for the first approach. They neither seek nor want a handout.

They have an even stronger aversion for the second option. Only cronies and criminals resort to coercion. They either use the law as a weapon to impose their terms on unwilling partners or they step outside the law.

Only the third option produces win-win solutions that preserve the dignity of all involved. Each side trades something they want for something they want even more.

I see the payoffs with my PhD students. They push me to improve as an academic, the same as I push them. When questions emerge about study methods or conclusions, neither side stays silent.

We will focus on what is right, not who is right, I tell them. When we disagree, we will let facts be the final arbiter.

Anything less would cheat me, the students and the research, which is why we trade as independent equals in the marketplace for ideas.

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With Whom Should You Trade? Three Steps To Win-Win - Forbes