Every transaction carries a hidden tax: the cost of proving it's safe to make. In a transactional relationship, that tax never goes away as every exchange has to be checked, justified, verified from scratch, because there's no history of trust to lean on. Relational capitalism on the other hand is what happens when that burden gets paid down over time, and trust becomes the discount rate.

There's transactional capitalism, where you maximise for the individual transaction, and there's relational capitalism, where you optimise for the lifetime discounted value of the relationship over time. I think shrewd companies move people from feeling transactional to feeling relational. Metaphorically, your customer is looking for a marriage, and the CFO is running an escort agency. The fundamental problem is that they look at the relationship in a much more transactional, much more short-term way.

I think lots of things that are long-term valuable in indeterminate ways, and don't lead directly to a transaction, get deemed worthless and that's the verification burden showing up again: if it can't be priced and proven in the moment, it doesn't count. What do you think?

What are your intentions?

Relational refers to an approach or style that prioritises building and nurturing interpersonal connections and relationships. In relational interactions, individuals emphasise trust, empathy, and understanding. These relationships are often characterised by mutual respect, cooperation, and collaboration. On the other hand, transactional refers to an approach or style focused on exchanges or transactions between parties to achieve specific goals or outcomes. In transactional interactions, individuals typically emphasise efficiency, clarity of roles and responsibilities, and achieving objectives. And these interactions are often based on agreements, contracts, or defined parameters. 

I think when individuals lack a sense of care and support in their workplace, coupled with a lack of opportunities to utilise their strengths and grow, ambiguity regarding the mission or purpose, and unclear expectations, their behaviour may be affected. And given that we are all involved in dealing with people, it's fair to say we are essentially in the business of managing emotions.

The burden of verification

Relational vs. transactional