T.A. Cook
IN THE OIL AND GAS INDUSTRY, over recent decades, modes of working together have been established incrementally - via alliances, framework agreements, co-operations - and yet working together is rarely based on partnerships. It's time to recognize that business companions with different interests can profit from one another.
Imagine you're flying across the Atlantic. Do you trust the pilot and his crew? Or you're buying something - do you trust the website when you enter your payment information? Of course you do. Without trust we wouldn't be able to keep living our lives in the way to which we have become accustomed. Trust is a vital mechanism: it reduces complexity and accelerates the functioning of everyday processes. If we weren't able to make such judgments, we would be incapable of doing anything in our personal or professional lives. When we only see the risk and negative side of things, our happiness pays the price.
Be that as it may, the older and more experienced we become, the more we question how much we can trust others. As a result, we prefer to take matters into our own hands. Taking charge completely may seem preferable but doing everything without help from others is impossible. Absolute control is time intensive, expensive, and creates more insecurity than its counterpart: trust in others.
BUILDING TRUST
Initially, a relationship may be based on mutual need or the knowledge that another party is fundamentally reliable. However, this basis often appears less as trust itself than the absence of mistrust. It is the expectation that others can be relied upon in critical situations, ideally without too much control on either side. That in turn would make trust indispensable for all types of behavior and activities, especially those which are difficult to monitor, such as how efficiently employees use their time. Especially where business relationships are concerned, genuine trust comes after a period of successful cooperation and collaboration.
There is, however, a notable contradiction to this: nearly every one of us would prefer a working environment characterized by trust and openness over one of resentment and tactical game playing. But despite how many people want that, it is rarely seen in real working life, which is usually the result of the fact that we have all had negative experiences. As much as we all desire positive experiences, we still typically approach new people or business partners with a degree of mistrust and caution.
When it comes to partnerships, it's helpful to look to the classic game theory experiment referred to as the "Prisoner's Dilemma." The fictional situation presents the following: If one suspect confesses and the other denies the crime, the suspect who confesses will go unpunished for acting as the chief witness while the other will receive a more severe punishment. If both suspects confess, they will both receive a moderate punishment. The question is: should I act in my own self-interest or should I consider the interests of my accomplice?
These questions form the starting point of what has become a diverse field of research. It also poses the following question regarding trust in business: should I take advantage of my business partners or treat them fairly? The logical result of the dilemma contains a basic pattern that is characteristic of many real-life situations: cooperation is the most effective strategy from a long-term perspective. Although one party can improve their position by acting in their own self-interests while the second cooperates, the second will have to face more severe consequences, which they are unlikely to accept. Ultimately, if both parties act selfishly, the result is worse for both of them than if they had cooperated.
A CHANGE OF PERSPECTIVE
Is it possible to achieve the right balance of trust and mistrust? Contemporary research suggests that people are inherently egotistical, even though it is in their interests to cooperate with others. From the family unit to businesses, from political parties to nation states, our entire social order is based upon the advantages of cooperation. In many oil and gas production companies, the viewpoint 'we are in charge of the whole process; our associates are just carrying out orders' tends to dominate.
In general, self-centered behavior is only successful in the short term. The optimal resulting strategy is "tit for tat" and is defined by one key principle: always behave in a friendly manner to others and never be the first who causes harm in a relationship. Business inherently depends on trust, which means that if we don't place enough confidence in those we work with, they will fail.
Creating partnerships does not mean that competing interests need to be denied. Instead, it marks an opportunity to satisfy those interests together. A shift in attitude is essential to make the effort to build more confidence and cooperation in an organization for long-term success. To do that, companies need to move away from a "control is good" to a "trust is better" perspective. Think instead: "control is good, but too short-term."
Be brave: trust is better! Focusing on long-term relationships based on trust will yield better and more sustainable results for both partners.
Frank Uwe Hess is chairman and co-founder of T.A. Cook. He has nearly 30 years of international experience working with clients in asset-intensive industries. Currently, he leads T.A. Cook's North American team in providing expert advice to those in the oil and gas sector.
