How A Relationship-First Approach Drives Profitability

Traditional leadership focuses primarily on the transaction (sale, pitch, hire, stock price, vote). Collaborative leadership focuses on the relationship. People with traditional leadership mindsets are confused by collaborative leadership – because they want the pitch, not the question.

But a pitch is a transaction – it can only be accepted or rejected. Questions draw you in and force you to declare yourself. They force you to get involved and be part of the solution.

I often confuse people when I meet them. They expect a pitch. Instead, I ask questions, particularly about what matters to them. I talk about kids, weather or vacations. I can be self-deprecating. It can be easy to dismiss me as just another nice 40-something woman who is talking about kids. If you leap to assumptions and ask no questions, that is all you will see.

Some might think this is horrible branding. It can be frustrating when I am dismissed but it tells me so much about how comfortable, confident, inquisitive and collaborative the other person is. I am always assessing collaboration – how adaptable and curious someone is. For me, that is an important signal as to how successful we can be together, regardless of what we are doing – but it doesn’t fit well with traditional leadership expectations and it feels very different.

Frankly, I don’t have the time for a transaction-first approach. My time is precious. I do not want to spend it justifying myself, writing extensive contracts that itemise every potential scenario, arguing with colleagues about who is responsible for what, mollifying angry clients and scrambling to provide more value because clients don’t want to pay me.

And because I take a relationship-first approach, I never do all that. I can count on one hand the number of tense relationships I’ve had in seven years of running a business. I have very little stress and my time is spent on value-added activities.

At an organisational level, if you have a transaction-first leadership approach and culture, you will pay more to manage every transaction. The other party will always make sure they are getting as much as they can from the transaction. They will ensure they get things delivered the way they want it – even if that wasn’t clarified at the start. They refer to the contract to ensure compliance. It’s hardball. It’s expensive and exhausting because everyone is trying to maximise the value of the transaction.

Photo source: The Community Roundtable

When you take a relationship-first leadership approach, it takes time. It is less predictable. You need to learn more about each other. You need to be committed to deepening the relationship, not just the outcome. You are constantly getting and giving feedback and adjusting as you go. Not everyone will like you and not everyone needs something from you – or doesn’t need something right now – so it can feel like wasted time.

However, when you have developed a trusted relationship, the cost of managing any transaction within it is minimal, as is the cost of supporting that relationship, because both parties have a vested interest in maintaining the relationship versus maximising any one transaction.

Organisations are struggling mightily with this in an age where customers and employees are harder to keep because they have more options readily available. Organisations are working to improve the customer and employee experience, retooling processes and infrastructure to create relationships and trust. Even when those efforts are successful, they struggle to prove value.

Dennis Howlett wrote a brilliant piece on why the vary architecture of analytics is not set up to see the value of a relationship or an experience. It too, is architected around the transaction – making it all but impossible to see or manage the relationships and experiences.

As computer power increases and takes over much of the transactional work of our organisations, people will be left to connect with others and build relationships – things that humans are uniquely qualified to do and that have a direct impact on profitability.

Our leadership, culture, processes, and metrics all need an overhaul.

Retooling organisations for relationships will be the work of the next decade.