by Adam Grant
Before a heated negotiation with a merciless French hotelier who demanded a discount, I thought about how the revenue could support job creation, which gave me the resolve to dig in my heels. I added a relational account: if I gave him a discount, it would only be fair to offer the same to our other clients, and I had a responsibility to be consistent. He ended up paying the full price.
After four months, I had set company records by bringing in more than $600,000 in revenue, nearly doubling my predecessor’s tally, and landing more than $230,000 from cold calls to new prospects. I sold the largest advertising package in company history, and our president announced at a banquet that I was “one of the finest advertising associates ever to come through” the company. At age nineteen, I was promoted to director of advertising sales, which put me in charge of a budget above $1 million and tasked me with hiring, training, and motivating my own staff.
Right after I was promoted, the Internet bubble collapsed. More than a dozen clients went out of business before our advertising season even started, and six of our ten biggest clients informed me that their advertising budgets had been slashed, so they wouldn’t be able to renew. When all was said and done, Let’s Go lost twenty-two loyal clients and 43 percent of the total budget from the previous year. The worst blow came when our largest client called. It was Michael, the vice president of the student travel agency that had purchased the record-setting package the previous year. “I’m very sorry to tell you this, because we love your product and value this relationship.” Michael took a deep breath. “But due to budget constraints and a declining travel market, I’m not sure if we can afford to advertise this year at all. To even consider it, we’ll need a major discount.”
Knowing that many jobs depended on revenue from Michael’s company, I became an advocate and pushed back. Because his rivals were pulling their ads, I told Michael, it was an opportunity to gain a leg up on the competition—and what better time to invest than during a recession? He said he would check with his boss and get back to me. The following week, he called with bad news: he had authorization to advertise in our books only if he could have the same package as the prior year, and only with a 70 percent discount. This would slash his expenditure of just under $120,000 to below $40,000.
While I was trying to figure out how much of a discount we could afford, I went to coach a diving practice. Sitting on the pool deck, it dawned on me that there was a major difference between diving and Let’s Go. Individual sports involved zero-sum contests where helping competitors win meant that I would be more likely to lose. In business, though, win-win was possible; my clients’ interests didn’t have to be at odds with my own. When I began to contemplate Michael’s interests, I realized that he might value products to give away for free in his store. I learned from colleagues that our publishing contract gave Let’s Go the rights to sell or license any content that didn’t exceed twenty pages, so I offered him sponsorship of a new product: twenty-page Let’s Go travel booklets that he could hand out to customers. Customers would appreciate the free travel tips and might stay longer in the store or be more likely to return. Since the funds would come from his distribution budget rather than his advertising budget, he was able to consider the possibility. When I gave further thought to Michael’s interests, I realized that the booklets would be more valuable to him if he could sponsor them exclusively, rather than featuring other companies’ ads. We agreed on a mutually beneficial deal for exclusive sponsorship, and he ended up spending more than $140,000, topping my own previous record for the largest ad package in company history.
Whereas advocacy and relational accounts enabled me to become more assertive in win-lose negotiations, it was perspective taking that helped me expand the pie and succeed in win-win negotiations. Ultimately, despite the dot-com bust, this approach led more than half of our renewal clients to increase their ad packages. Our team brought in more than $550,000 in profits, making it possible to increase the size of our staff and introduce new marketing initiatives. After months of hounding delinquent clients to send their payments, I became the only manager in recent history to bring in 100 percent of accounts receivable, leaving no bad debt. I was elected to the company’s board of directors and earned the manager of the year award for leadership, commitment, and business acumen. The lessons I learned at Let’s Go stuck with me, and I decided to spend the rest of my career teaching other givers what I had discovered about overcoming the doormat effect.
For a number of years, researchers have known that successful negotiators tend to operate in an otherish fashion. In a comprehensive analysis of twenty-eight different studies led by Dutch psychologist Carsten De Dreu, the best negotiators weren’t takers or selfless givers. The takers focused on claiming value: they saw negotiations as zero-sum, win-lose contests and didn’t trust their opponents, so they bargained aggressively, overlooking opportunities to create value through developing an understanding of their counterparts’ interests. The selfless givers made too many concessions, benefiting their counterparts at a personal cost. The most effective negotiators were otherish: they reported high concern for their own interests and high concern for their counterparts’ interests. By looking for opportunities to benefit others and themselves, otherish givers are able to think in more complex ways and identify win-win solutions that both takers and selfless givers miss. Instead of just giving away value like selfless givers, otherish givers create value first. By the time they give slices of pie away, the entire pie is big enough that there’s plenty left to claim for themselves: they can give more and take more.
This notion of expanding the pie captures a turning point in Lillian Bauer’s career. Although she had learned to push back with clients and place boundaries on the time she spent mentoring and helping takers, she wasn’t willing to let go of helping givers and matchers. When junior associates who didn’t seem like takers needed help, she still gave in a selfless manner, sacrificing inordinate amounts of her time regardless of her own schedule and demands.
Jason Geller adopted a more otherish approach: he found a way to expand the amount of giving that he could accomplish without increasing the demands on his time. Geller engaged others in sharing the workload, creating opportunities for them to become givers, while keeping himself from becoming overloaded. As a senior manager, when junior analysts asked him for help, Geller would suggest a lunch, and invite a couple newer managers to come along. This opened the door for the managers to have access to him, and for them to provide mentoring to the junior analysts. “It’s a great way for them to build the support of folks more junior to them,” he says. Instead of doing all of the giving himself, he was able to connect junior analysts with multiple mentors, who provided a broader base of knowledge and advice.
After being told she was too generous, Bauer adopted an approach that resembled Geller’s. She started doing group mentoring sessions instead of only one-on-ones:
I asked myself, “Am I really the only person who can help in this particular instance?” I tried not to think about myself as the only resource I was optimizing, and started connecting people to help each other. Now, I’m quite explicit with my mentees. I tell them, “People did this for me, and you need to do this for other people. There is an expectation that when you receive that kind of generosity from people, you need to pay it forward.”
By deciding not to carry the burden alone, Bauer expanded the pie, enabling her giving to have a broader impact while protecting her own time. “If you have a natural mix of givers, takers, and matchers in your company,” Bauer says, “you can do a lot to magnify the giver tendency, suppress the more aggressive taker tendencies, and shift the matchers toward giving. There’s an energy and a satisfaction that you get out of it. In its own way, it’s addictive.”
Instead of assuming that they’re doomed to become doormats, successful givers recognize that their everyday choices shape the results they achieve in competitive, confrontational situations. The
dangers lie less in giving itself, and more in the rigidity of sticking with a single reciprocity style across all interactions and relationships. As the psychologist Brian Little puts it, even if a style like giving is our first nature, our ability to prosper depends on developing enough comfort with a matching approach that it becomes second nature. Although many successful givers start from the default of trusting others’ intentions, they’re also careful to scan their environments to screen for potential takers, always ready to shift from feeling a taker’s emotions to analyzing a taker’s thoughts, and flex from giving unconditionally to a more measured approach of generous tit for tat. And when they feel inclined to back down, successful givers are prepared to draw reserves of assertiveness from their commitments to the people who matter to them.
For Lillian Bauer, these shifts in strategy catalyzed a chump change. As Bauer learned to leverage her natural strengths in advocating for others and reading other people’s motives, she adapted her behavior to invest in those on whom she could have the greatest influence and encouraged them to give as well. The cumulative effect was that she transformed from a doormat into a successful giver. Even though her generosity initially slowed her rise to partner, she ended up getting there ahead of schedule. Lillian Bauer was one of the first members of her consulting class to make partner.
8
The Scrooge Shift
Why a Soccer Team, a Fingerprint, and a Name Can Tilt Us in the Other Direction
How selfish soever man may be supposed, there are evidently some principles in his nature which interest him in the fortunes of others, and render their happiness necessary to him, although he derives nothing from it except the pleasure of seeing it.
—Adam Smith, father of economics
In 1993, a man named Craig Newmark left IBM after seventeen years to take a computer security position at Charles Schwab in San Francisco. As a single guy new to the Bay Area, he was looking for ways to spice up his social life. In early 1995, he started e-mailing friends to share information about local arts and technology events. Word of mouth spread, and people began to expand the postings beyond events to feature job openings, apartments, and miscellaneous items for sale. By June, the e-mail list had grown to 240 people. It was too large for direct e-mail, so Craig moved it to a listserv. In 1996, a website was born, and it was called Craigslist. By the end of 2011, there were Craigslist sites in more than seven hundred locations around the world. In the United States alone, roughly fifty million people visit Craigslist each month, making Craigslist one of the ten most popular websites in the country—and one of the forty most visited in the world.
Craigslist flourished by appealing to our basic matcher instincts. It facilitates transactions in which buyers and sellers can agree on a fair price, exchanging goods and services for what they’re worth. Fundamentally, Craigslist is about trading value in direct exchanges between people, creating a matcher’s preferred even balance of give and take. “We’re not altruistic,” Newmark writes. “From one perspective, we’re like a flea market.”
Could a system like this function based entirely on giving, instead of matching?
In 2003, an Ohio native by the name of Deron Beal decided to find out. Just like Craig Newmark, Beal was in a new city where he lacked information, so he started an e-mail list of friends. Following the lead from Craigslist, Beal was aiming to create Internet-based local communities of exchange for anyone to access, connecting people who wanted goods with people who were ready to part with them. But in a radical departure from the typical Craigslist exchange, Beal set an unusual ground rule: no currency or trading allowed. The network was called Freecycle, and all goods had to be given away for free.
The idea for Freecycle was sparked when Beal developed and ran a recycling program for businesses at a nonprofit organization called Rise in Tucson, Arizona. Local businesses began to give Beal used items that were still in good condition but weren’t recyclable, like computers and desks. In the hopes of giving the items away to people who needed them, Beal spent hours on the phone offering them to charities, but made little progress. At the same time, he had a bed that he wanted to give away, but thrift shops wouldn’t accept it. He realized that he might be able to solve both of these problems with an online community that matched givers and receivers more efficiently.
Beal sent an initial e-mail announcing Freecycle to about forty friends, inviting them to join and spread the word. When some of the earliest Freecycle members started posting items to give away, Beal was caught off guard. One woman offered to give away a partially used bottle of hair dye, which would expire in a matter of hours. “It needs to be used really soon,” she wrote, “so if anyone has an urge to go darker, tonight is the night.” A Texas man posted a more desirable item—fishing tackle—but had a string attached. He would only give it away to someone from whom fishing tackle had been stolen. “As a kid thirty-four years ago, I stole a tackle box. There’s no way I can find the person and make it right, so I’m trying to do the next best thing.” With some people finding matcher loopholes in the system, and others trying to give away junk, Freecycle seemed like a lost cause.
But Beal believed that “one person’s trash really is another’s treasure.” And some people gave away actual treasure on Freecycle that they could have easily sold on Craigslist. One person donated a camera in excellent condition worth at least $200; others gave away good computers, flat-screen TVs, baby car seats, pianos, vacuum cleaners, and exercise equipment. When Freecycle started in May 2003, there were thirty members. Within a year, Freecycle had grown at an astonishing rate: there were more than 100,000 members in 360 cities worldwide. By March 2005, Freecycle had increased tenfold in membership, reaching a million members.
Recently, social scientists Robb Willer, Frank Flynn, and Sonya Zak decided to study what drives people to participate in exchange systems. They were striving to get to the bottom of a vigorous debate among social scientists, many of whom believed that the types of direct exchanges that take place on Craigslist were the optimal way of exchanging resources. By allowing people to trade value back and forth, a system like Craigslist capitalizes on the fact that most people are matchers. But some experts anticipated the rapid growth of systems like Freecycle, where members give to one person and receive from another, never trading value back and forth with the same person. These researchers were convinced that although such a generalized reciprocity system relies on people to be givers and can be exploited by takers, it could be just as productive in facilitating the exchange of goods and services as direct matching.
The intuitive explanation is that the two types of systems attract different types of people. Perhaps matchers were drawn to Craigslist, whereas givers flocked to Freecycle.* As Deron Beal told me, “If there were only takers, there would be no Freecycle.” But Willer’s team found that this wasn’t the whole story.
Although Freecycle grew in part by attracting people who already leaned strongly in the giver direction, it accomplished something much more impressive. Somehow, Freecycle managed to encourage matchers and takers to act like givers. To figure out how Freecycle works, Willer’s team studied random samples of members at both Craigslist and Freecycle. They collected surveys from more than a thousand members of the two exchange organizations from dozens of communities around the United States, measuring reciprocity styles by asking members to answer a series of questions about whether they generally preferred to maximize their own gains or contribute to others. The givers had donated an average of twenty-one items on Freecycle. The takers could have given nothing, but they had given away an average of more than nine items each on Freecycle.
Interestingly, in fact, people often join Freecycle to take, not give. “People usually hear about Freecycle as a way to get free stuff. Your average person will join thinking, ‘I can get something for nothing,’” Beal says. “But a paradigm shift kicks in. We had a big wave of new parents who needed help in hard times. They rec
eived strollers, car seats, cribs, and high chairs. Later, instead of selling them on Craigslist, they started giving them away.”
What drives people to join a group with the intention of taking, but then end up giving?
The answer to this question opens up another way that givers avoid the bottom of the success ladder. When dealing with individuals, it’s sensible for givers to protect themselves by engaging in sincerity screening and acting primarily like matchers in exchanges with takers. But in group settings, there’s a different way for givers to make sure that they’re not being exploited: get everyone in the group to act more like givers. The strategy was foreshadowed by Jason Geller and Lillian Bauer, who directly asked their mentees to pay it forward in mentoring groups of more junior colleagues. Earlier, Adam Rifkin, the Silicon Valley giver who was named Fortune’s best networker, did the same thing in his entire network. He invited the people who benefited from his giving to help other people in his web of relationships, and a giving norm evolved. As I noted in the opening chapter, people rarely have a single reciprocity style that they apply uniformly to every domain of their lives. If a group develops a norm of giving, members will uphold the norm and give, even if they’re more inclined to be takers or matchers elsewhere. This reduces the risks of giving: when everyone contributes, the pie is larger, and givers are no longer stuck contributing far more than they get.