Saturday, December 24, 2011

TRUST – It Comes and Goes at Unknown Places


The thought of this blog came after a few messages that got exchanged between a friend and me on Twitter. It made me thinking and I thought that the word/feeling/emotion called ‘TRUST’ needs a more detailed probing and thinking, and rightly so, as this small but powerful word plays a critical and crucial role in relationships, businesses, partnerships, negotiations, and any other human transaction one can think of.

For the purview of this blog, I would like to keep relationships out of this deep dwelling as presence of trust in that is a given and is a mandatory. It would be interesting to explore the dimensions of Trust and how it acts up in non-personal situations.

Let me start with an incident that happened a few days back and which further strengthened the idea of putting this blog: I had gone to the petrol pump to get fuel filled in my car and the attendant asked me to check the zero sign before he started filling the tank. Since I could not see the digits while sitting in the car, I got off the car to check the zero. What struck me there and then is that trust is the first thing that goes out of the window as soon as you enter a petrol pump. You will perpetually go and check the zero sign every single time even though it may be the petrol pump where you go regularly to get fuel filled.

This made me sit up and start thinking about places where trust is at the lowest level and then there are also places where trust is the highest. Let us talk of another example where trust is high.

Ever tried opening a new email account or signing up for a new account online. Chances are that as part of the registration process, you are asked to accept the terms and conditions which run into a few pages. No one and I repeat no one ever bothers to go through the fine print and immediately presses the ‘Accept’ button.  This happens despite the person on the other side being a stranger and an unknown face and the risk being higher that what you are accepting may not exactly be what you agree with. So how is it that trust in such a situation tends to go up significantly? Is it lack of time, the hurry to get the registration done with or difficulty in understanding the legal language? If you sit back and ask yourself, the answer is none of these and it is our inherent trust that stems from the fact that if a site is online, it has to be reputed and hence can be trusted. Not necessarily true but the reality.

No matter how good a human being and truthful a real estate agent may be, the trust that you put on him while doing a property deal is never rock solid and it is always wavering. You are always hoping that you get what you have been promised at a rate that does not make you feel that you have been fleeced or cheated. In this case, trust gets governed not by the individual but by the perceptions that have been formed.

The word SALE often used to conjure doubt in the minds of shoppers, atleast till a few years back. One would often hear comments like “This must be their rejected goods” or “They must have increased the prices first and now they are showing it as discount”. Thankfully, due to the presence of more and more organized players, such perceptions have changed for the better and people trust Sales and Discounts to be genuine nowadays.

Every time you hand over your car keys to a valet, whether in a 5 star hotel or a small restaurant or a wedding venue where valets have been hired, you are not only handing over the keys but you are also placing implicit trust in the valet with the assumption that not only will he park your car safely, but you will also get your car back the way you gave it.  

I think the above-mentioned situations should give you a drift of what I am trying to say. I am sure there would be many more such incidents in each one’s life where trust tends to go up or down depending on our experiences, our perceptions and our own approach to life.

Tuesday, December 6, 2011

Are you the fourth in line?


Imagine this situation happening on the road in Bengaluru: 

Girl on road at Koramangala: Will you go to Old Airport Road?
Auto 1: Yes, but I will charge Rs. 90/-
Girl: But the fare till that place is only Rs. 50/-
Auto 1: Your call. I will charge Rs. 90/-
Girl lets go of the auto and stops the next one.
Auto 2: I will charge Rs. 90/-
Girl tries to haggle but with no result, she lets go of the auto and stops the next one.
Auto 3: I will charge Rs. 90/-
Girl tries to haggle but with no result, she lets go of the auto and stops the next one.
Auto 4: I will charge Rs. 90/-
Without any discussion, girl sits in the auto and ends up paying Rs. 90/-

Now you can imagine the situation by assuming any city that you want/where you live. Instead of the girl, you can imagine yourself. And instead of the auto, you can imagine a cab, a street vendor or any other person you can think of.

Chances are that you would have also experienced a similar situation and by the time you reached the fourth guy, you would be so tired and frustrated that you would just give in and end up paying the same amount that the first guy was asking for.

Now sit back and reflect at this situation and you will see a few insightful things emerging out from this:
1) There was no fault of the first guy to ask what he asked for (ignore the overcharging part). He was simply unlucky to be the first in line but he set the context for the amount that you would pay.

2) You obviously knew that you are paying the fourth guy the same amount of money that the first guy was asking for but you are frustrated enough now to go back to the first guy nor is there any need for you to do so.

3) The fourth guy probably does not know that he is the fourth guy that you are encountering and that you have already crossed the limit of your patience and your negotiation skills. Had he known that, he would have probably quoted Rs. 100 instead of Rs. 90 and chances are that you would have even agreed to pay that much. So that is an opportunity loss for him due to lack of information (Though he is still earning/charging more than what he should).

4)  Had you known that you would still end up paying the same amount of money that the first guy was asking for, chances are that you would not have wasted so much time and energy and negotiating and waiting for a better/reasonable deal.

5) If you had the energy and time to negotiate one more time, who knows, the auto guy would have reduced the price by Rs. 10 or 20

So what emerges from the points mentioned above is a classic case of economics where other than two critical factors – demand and supply, there are two more dimensions that come into play. These two dimensions are: Time and Energy

Often we tend to ignore these two critical dimensions when it comes to striking a deal – small or big, but they play a critical role in the sub-conscious minds of ours.

It is not the question of an auto guy or a question of Rs. 50 vs. Rs. 90. These two dimensions play an important role across all deals and the best negotiators will tell you this that one of the tricks to get the deal in your favour is to stall it till the end, knowing fully well that the other party will give in when either he is short on time or short on energy.

So if you are the auto guy (to be read as the guy wanting to strike the deal), try and be the fourth in line and chances of getting a good price and the deal will increase significantly. If you are the victim (to be read as the guy who has already negotiated earlier and is in a hurry to close the deal now), then either try and increase the energy and time you have to negotiate the deal or just close the deal with the first guy and move on as it will give you lesser heart burn.