There are four types of relationships with people.
- Win Win
- Win Lose
- Lose Win
- Lose Lose
Seneca says “Time discovers truth.”
Only one of those relationships is sustainable over the long-term. And longevity is the key to so many things.
Yet so many of us operate in the short term. Today. This week. This Month. This Quarter. We want to WIN even if that means the other person LOSES.
We rationalize this behavior, arguing that, while it might not be fair today, we’ll make it right in the future. But do you really think that someone who takes advantage of you today with a lopsided deal will make it up to you?
The most common strategy in life when you feel like someone is taking advantage of you is tit-for-tat. That is, return what you get. (Newton figured this out long ago.)
The person on the LOSING side of any relationship tends to coil like a spring, the latent energy building with time, frequency, and magnitude of slight. The more they perceive you taking advantage of them, the higher the odds they negatively become spring-loaded. This creates a negative leaping emergent effect. That’s human nature. Given the chance to punish someone that we feel wronged us, even at personal cost, we will often take it.
These outcomes are avoidable.
Biology has taught us that the key to evolving is to be sustainable over a long period of time. We must reproduce. A one-and-done species is not even a footnote in history.
“While others attempt to win every lap around the track, it is crucial to remember that to succeed at investing, you have to be around at the finish.”
— Seth Klarman
And yet so few of us design systems that incorporate duration as an element. We make them short term. Designed to maximize the short run while ensuring we never get on a path of sustainability.
- When you treat people badly they will respond (eventually) in kind.
- When you rip your customers off they will (eventually) go elsewhere.
- When you rip off your suppliers they will (eventually) stop doing business with you or return your behavior in kind.
Anyone can come into an organization and start throwing their title around to get things done. We’ve all met this person. This works for a while but eventually fails. And who is interested in a tactic that only works for a short time?
Ideally, we want something that works for a long time because most of the value in relationships that matter (whether customers, partners, friends) accumulates after the initial period of time.
If you’re offering a lopsided deal to someone, you’re signaling that you’re not in it for the long term. Similarly, if someone is offering you a lopsided deal, they’re signaling they’re not in it for the long term.
While taking advantage of another person or relationship may achieve the desired initial results, it comes at a high cost as it removes you from any path that involves time. And time is the key because most value comes in long-term relationships.
The best results in the world are a function of time. The key component to compounding, which Einstein claimed was the most powerful force in the world, is time.
Peter Kaufman, who published Poor Charlie’s Almanack, describes this as the the Reputational Cue Ball
Non-Win/Win tactics are akin to playing a billiards tournament with a focus on sinking only the first shot or two. Billiards—or life—is a multi-shot game. When we fail to consider the future consequences of mistreating our counter-parties in a current “deal”‘ or first phase, it can wind up leaving our “reputational cue ball” ill-positioned for the next shot—the next deal or phase to come down the pike.