The favour bank

I have just been reading Tom Wolfe’s 1980s classic, The Bonfire of the Vanities, all about the tawdry reality of New York high society and the Machiavellian machinations of the court system at that time. The rough plot line is that a bond-trader gets prosecuted for a hit and run accident for which he is publicly villified and then falls into the grip of the shady world of the legal system. He has a very streetwise lawyer who knows how to work the courts and one of the recurring themes is the “favor bank”.

The favor bank is the lubricant that keeps the court system ticking over – so the prosecuting and defense lawyers do deals behind the scenes and generally help each other out, so that both sides can come out with an outcome they think is reasonable, with scant regard for due process. So all the lawyers have to pay in to the favor bank by scratching each others’ backs, or they will be frozen out of the backroom deal making which is the main way in which the court system functions.

The truth is that business often functions at its best as a favour bank too. So the kind of business person who is prepared to be cooperative and help out others will eventually be rewarded for their goodwill. The favour bank should not really work as a direct quid pro quo, that is you should not help someone out because you expect an immediate return. Rather paying in to the favour bank buys you club membership. Unfortunately in Portugal, the favour bank tends not to work so well, because there is so often a fear that someone is trying to get something for nothing or that business is about looking after number one, rather than being part of a community and actively contributing to it.

Seth Godin talks a lot about how social media can be used to build a mutually supportive community (or tribe as he calls it) and that by facilitating the growth of this community and gaining their trust, a business can eventually benefit by selling into that community. The trick is to build a strong community first and this is another example of the favour bank. The real trick is to pay in with favors and not worry about what you are going to get back – the rewards will come in ways you least expect.