Are you a transactional or relational person?

Whenever we have to deal with anyone around us, in the different circles we spend our energy, time and resources with, be it family, friends, social, sports, professional, work, etc., we will certainly engage in some kind of transaction.

The Merriam-Webster dictionary defines transaction as:

1 a : something transacted
especially : an exchange or transfer of goods, services, or funds

2 b : a communicative action or activity involving two parties or things that reciprocally affect or influence each other

It comes from the Latin transigere, formed by trans- “across, beyond; through” and - agere “to set in motion, drive, drive forward”.

It seems unavoidable when engaging with others other than in a transactional way, because we are exchanging something with them, like money, goods, favors, information, care, even love! This leads to the conclusion that we are all transactional people.

At the same time, we are relational people. The same dictionary defines relation as:

2 : an aspect or quality (such as resemblance) that connects two or more things or parts as being or belonging or working together or as being of the same kind

7 a : the state of being mutually or reciprocally interested (as in social or commercial matters)

And how do we build relationships? Through a series of transactions over time. For example, if you buy your groceries at the same shop or dine at a restaurant for a long time, you have certainly developed a relationship with the staff.

Why is that? Well, at each transaction each side evaluates the result, and a mental and emotional note is attached to that event. If the perception is that it was somehow profitable (in any sense), we would probably want to repeat it in the future. But if it was perceived as a loss, then we would most likely want to avoid it.

Therefore, transactions are a double-edged sword. They can nurture or damage relationships. It takes many good transactions for both sides to construct a solid, healthy relationship, but only a few bad transactions (usually just one) to destroy even long-term relationships.

So how being a more transactional person could go wrong? It depends on your goal and intention.

If your goal is to obtain the maximum profit out of each transaction at the present time, without much regard for future transactions, then you are threatening the relationship. In other words, you are not being a relational person, who will always value the relationship above the transactions.

Trading on the Mediterranean Sea

Let’s examine an example to practice these concepts. Imagine you are the owner of a company with a fleet of merchant ships trading goods in the Mediterranean Sea, many centuries ago.

What could be the goal of your company? Let’s assume it is to make the most profit in every trip. How would that influence the behavior of your staff?

A trip through the coast involves several stops at different ports, where goods will be sold and bought. To maximize the total profit, the rational thing to do is to maximize the profit of each transaction, so the crew will do anything they can think of to persuade their buyers to pay the highest price when they are selling, or to pay the lowest price to sellers when they are buying. That seems obvious, and we all do it today when we are shopping or selling.

Typical behaviors could include lying about the products’ characteristics or properties, making them look better than they really are. Or taking advantage of information asymmetry about prices, demand, supply, or other market data that could influence the balance of power between buyers and sellers.

That could even work, if you are doing only one trip. And many people do it today. They are the opportunists that extract the maximum out of a situation with no intention to build relationships. Forget about honor and ethics, of course. I believe we are sick and tired of such scams.

But if your company is in business for the long-term, you would be doing many trips and very likely dealing with the same people, which are keeping their history of transactions with you. If their perception of transacting with you is not good, you may not even be allowed to trade at their port! How would that affect your profit?

What if we revise your company’s goal to make profit now and in the future? It seems plausible, because we need to feed our bellies today, but also tomorrow. How would your actions and behavior be from now on?

Most certainly you will advise your staff to nurture relationships as well, while doing their transactions. The focus now is to ensure that each transaction has a healthy perception of value for both parties, not only the maximum profit. You would even allow some losses, if that would improve the relationship somehow. For the business, the important now is to have a profitable trip overall, not only profitable individual transactions. The company wants to secure future sales.

System Thinking and Acting

We are but a part in a bigger system, and we need to think and act in a systemic, holistic way. In a system, each part must contribute to the system’s goal, so our intention must be aligned to that goal at all times.

In a system, the parts are obviously important because they make the structure of the system. But if the parts are not relating to each other, we only have a collection of things, not a system. What makes a system is when the parts interact with each other, in other words, when they are transacting.

However, when any part of the system tries to maximize its own performance or status, without seeking to improve the relationship with other parts as well, the entire system might suffer. Without healthy relationships, any system will malfunction and eventually collapse.

If we apply these concepts to our everyday transactions, with the goal of having healthy relationships now and in the future, with all beings and our home Earth, the result will be a better place and experience for all of us.

So, let’s be transactional and relational people!

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Thank you for this @adail. I think it is a really good metaphor with merchants in the Mediterranean Sea. Naturally we have exactly the same things going on today - as trading of products and services is probably something human beings will always engage in.

Simon Sinek has written - in my view - an interesting book on this topic. He talks about infinite games where we want to stay in the game for infinity (even spanning our life times in the case of an organization) and finite games where the objective is to win.

I see a connection between when you say “be both transactional and relational” as mapping to “infinite games” - where behaving in a purely short terms profit transactional manor maps to “finite games”.

The Infinite Game (by Simon Sinek)

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“transactions are a double-edged sword. They can nurture or damage relationships.”
@adail Yes, good one. Relationships triumph over the transaction. Business is not about making money; though necessary, it is about creating an ecosystem where diverse interests thrive, prosper, and create a more extensive ecosystem.

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I love how you unpack this argument to resolve the dilemma, Adail. Beautiful.

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