As is fitting for a visionary leader of a hugely influential industry, Bill Gates recently sat down to ask a simple question: “What should computing look like in ten to 15 years time?” His answers, outlined in a White Paper called Trustworthy Computing, are relevant to all of us, for the simple reason that the future of computing and the future of business are in many ways one and the same.
One of his core conditions for successful business runs as follows: “Contracts between businesses are framed as win-win arrangements, not an opportunity to extract the maximum possible revenue for one party in the short term.”
You could argue that marketing and branding have lived and breathed win-win since the year dot: there is nothing new here. When a marketer finds out what his customer wants and gives it to him, he’s creating a win for both sides. As beacons of trusted forms of value, brands simplify choice and reduce risk for consumers, while generating the repeat buys that producers need for commercial survival.
In fact, you could say that the win-win dynamic lies at the very heart of the last century’s explosion of wealth creation. Only by making what people wanted and creating trusted brands could producers secure the financial returns that comprised their investment in research and development, and infrastructure possible. This investment, in turn, generated better value through greater economies of scale, which encouraged repeat buys, which generated the returns necessary to keep the whole virtuous spiral happily ratcheting upwards. Win-win all the way, in other words.
But there’s another side to “win-win” and its dynamics can be equally important – win-win relationships are often unfair, conflicting and devoid of trust.
Win-win doesn’t mean that both parties share the spoils 50-50. Even if the split is 99-1, it’s still a win-win. Back in feudal times, when the lord of the manor lorded it in his manor house, while the peasants slaved on his land, it certainly wasn’t a 50-50 relationship. But it was a win-win nevertheless. The lord organised the administration of justice and public works, and the defence of the community from brigands and marauding bands – without which any wealth that was produced would simply be plundered. So the peasants did benefit from the system.
Nevertheless, uneven shares – and jostling to maximise your own particular share – means that, even when the relationship is rooted securely on win-win foundations, the daily dynamics can become highly adversarial. Just look at relationships between retailers and their suppliers, and their negotiations about price. Both sides need each other to prosper. But the reality of their fight over share of spoils means that they are continually at each other’s throats.
That’s why so many win-win relationships are actually devoid of, rather than brimming over with, trust. Both sides spend all their time eyeing each other up for the latest trick to “get one over”.
So, far from creating happy, cosy, trusting relationships, win-wins often generate the exact opposite. This is important because trust is also a hugely powerful economic force. If two parties don’t trust each other, costs of mutual suspicion soon mount: the cost of negotiating water-tight contracts, of inspecting and policing enforcement and so on.
If two parties do trust each other, on the other hand, many benefits can flow. Both sides accept a certain amount of give and take, and are prepared to give the other side the benefit of the doubt. Instead of keeping secrets they are more willing to share, sometimes, valuable information. They invest in understanding, rather than revelling in misunderstanding. They are more likely to make an effort to help the other party out.
In short, trusting relationships are, economically speaking, far more efficient. Yes, win-win outcomes from low-trust transactions are hugely powerful. But if, and when, win-win outcomes go head on against high-trust, win-win relationships they don’t compare. There’s an extra win-win to be had in consciously forging such a relationship, where both sides see the point of investing in the relationship to make it work.
Here’s a suggestion: this realisation has already started to transform marketing, especially in business-to-business arenas. And this transformation is set to accelerate, reaching ever deeper into consumer marketing too. Consumer loyalty, information sharing, mistake forgiveness, word-of-mouth recommendation, and a willingness to invest time, attention and energy in the relationship are all parts of the prize.
How to build such relationships? That’s the question scores of companies in financial services, retailing, telecommunications, airlines, utilities and categories like motoring, are now addressing, to varying degrees of success.
It is difficult, because it subtly changes the art of brand building. In a world where product trust rules, we look at the reputation of the maker so that we don’t have to invest time, energy and expertise checking to see what lies “underneath the bonnet”. When “relationship trust” moves centre stage, peering under the bonnet becomes part of the process.
The brand appeal evolves, to go beyond a “buy me” to a “join us” message (Note the “help us to help you” nature of many current customer information gathering exercises). A demonstrable commitment to “fairness” is crucial (even if actually defining or measuring fairness is very difficult). So is a certain degree of transparency – a willingness to explain how the win-win works, and to give some evidence of fairness.
The challenge for many companies is that the “relationship trust” approach to marketing – as opposed to traditional “product trust” approach – runs counter to current understanding and culture (some people within the company “get it”, but others don’t). Staff incentives and perhaps even short-term financial goals might clash with necessary relationship-building activities. And the benefits are often frighteningly difficult to quantify.
Notwithstanding these obstacles, competitive pressures are driving companies in this direction. Increasingly, winning brands win by encapsulating and expressing superior win-win relationships. I hate to say it, but Microsoft is right. Trustworthy computing can only be come from trustworthy companies. And “win-win framing” is becoming a key new marketing art.