A Fair Exchange of Value — by Dan Lynn
By Dan Lynn
In my advisory work, I say this all of the time: "It has to be a fair exchange of value." It's one of the basic concepts I've learned throughout my business career — an unfair deal will eventually come to an end.
I've been involved with large contracts where the customer was paying us a lot of money but ended up barely using our services. On paper, that looks really profitable. High revenue. Low effort. But, it always comes to an end. Why? Because eventually the customer does the math too. They realize they're paying far more than the value they're receiving. And when that happens, the relationship ends.
The same thing happens with employees. Someone can be paid significantly more than the value they're contributing. For a while, everything may seem fine. But eventually someone notices the imbalance, does the math, and makes a change. It works the other way too. If an employee isn't being paid fairly, they will leave.
If the exchange of value is fundamentally unfair, eventually the relationship ends.
That's why when a deal looks too good for either side, I get nervous.
I'd rather leave a little money on the table and still have that customer, employee, or partnership for many years.
The best business relationships aren't built on one side winning.
They're built on both sides continuing to believe that it's a fair exchange of value.
Questions this Key Learning answers
Why do profitable customer contracts still fail to renew?
The author warns that high revenue can hide an unfair exchange. If a customer pays heavily but barely uses the service, the contract may look profitable while the customer receives little value. Our analysis notes that weak adoption builds evidence against renewal. Eventually, the customer does the math and ends the relationship.
What happens when an employee is paid more than they contribute?
The author says the imbalance may appear acceptable for a while, but eventually someone notices, reassesses the exchange, and makes a change. The reverse is also true: employees who are not paid fairly will leave. In either direction, a fundamentally unfair exchange makes the employment relationship unlikely to last.
How can I tell if a business relationship will last?
The author judges durability by whether both sides continue to believe they receive a fair exchange of value. A deal that looks too good for either side creates concern because the imbalance will eventually be noticed. Our analysis suggests asking whether both parties would still choose the relationship after reassessing what they contribute and receive.