What is the Favor Bank, and Why Should You Care

Establishing a reputation as a value-emitter is one of the most important habits to cultivate. To enjoy an above-average life, you need to put in an above-average effort to add value to others.

Excerpt from the book The Favor Bank

What is the Favor Bank?

Consider the extent to which each individual in your life would do things for your benefit (block out time in their schedule for a meeting with you, offering you actionable advice drawn from their domain expertise (heath experts, lawyers, investment professionals etc), or staking their reputations in their respective worlds to make introductions/endorsements on your behalf to their mutual-trust networks, or committing their own money in your startup/venture/nonprofit, or offerings you their time, energy or social/professional resources). 

Let’s label this “C” - for Cooperation.

Someone who barely knows you, or someone with whom you have a strained relationship, will almost certainly have a low “C” rating. Contrawise, someone who is very fond of you, thinks highly of you, or feels a strong debt of honor to you will have a very high “C,” as it relates to you.

On the other hand, someone who dislikes you (for whatever reason) may very well have a negative “C” score; they will use their energy, network and resources to actively sabotage anything they know you are pursuing.

That’s one part of the equation.

The second part of the equation relates to the magnitude of their power/influence.

For each person in your life, consider their individual level of influence and power as a result of their station in life. For some of these individuals, their power/influence is substantial - a Managing Partner at a Venture Capital fund who is entrusted to direct millions of dollars of investable capital on their judgment, a senior executive at a government agency or NGO with signing authority to approve or deny desirable licenses/ permits/ grants, or a popular social-media personality who operates an account with millions of engaged followers, or an individually-wealth investor/philanthropist. 

Let’s label their power levels as “P.” Clearly those above-described individuals would have a high “P” score. With modest effort on their part, they can move financial markets, make or break medium-sized businesses, or steer millions of views/impressions/clicks toward any social-media content with a simple retweet/endorsement. Their high “P” scores are a result of decades of hard work as well as skillful management of their own reputation within their world in relation to other high-P players in both their own domain and adjacent circles.

They are in the position where even a modest level of effort on their part can result in life-changing positive outcomes for those who are beneficiaries of those decisions.

By this metric, the struggling artists, the unemployed or the chronically-dysfunctional would have a low “P.” Even if they are highly-motivated to do things for your benefit, the extent of their help are constrained by their lack of social or financial resources.

Whether you acknowledge it or not, your Favor Bank exists and has a value which fluctuates based on “P” and the “C” scores, summed across everyone who knows you 

If one were to view it in numerical terms, take every individual in your life’s “C” (as they relate to you) multiplied by tier “P” (which exists as a stand-alone value, independent of you) and sum it across your entire social map.

N = Everyone in your life

Σ Person N [ C * P ]

N =1

Your Favor Bank Balance, much like your financial ledger, is constantly in flux, growing and declining as a result of both your interpersonal decisions (which influences “C”) and factors which are mostly outside your sphere of influence (their P-scores), which is a function of their advancement in their respective domains.

And just as money can be intelligently-invested to grow, wisely-spent to improve the lives of those you love … or squandered by poor decisions, your interpersonal decisions will greatly influence the value of your Favor Bank.

For most people, the primary obstacle to growing a thriving Favor Bank is their emotions - they find the concept of the Favor Bank so disquieting (because of its association with transactional tit-for-tat, what’s-in-it-for-me archetypes) that they refuse to acknowledge its existence.

This reflexive resistance to consider assessing one’s relationships through this lens is a limiting belief.

Much like the person who has a dysfunctional relationship with money (which manifests itself by their refusal to look at their bills, credit reports and bank statements) often suffer preventable financial problems, so too those who refuse to thoughtfully evaluate one’s Favor Bank will almost certainly doom themselves to a suboptimal life of dissatisfying relationships and missed opportunities.

Often, the only time most people consciously think about their Favor Bank is in moments of need - you or someone you love suffers from an unusual health condition outside the scope of conventional medical care, experience a complex legal situation, or some other time-sensitive conundrum.

In these moments, almost everyone probably know an individual in their life who is capable of offering useful help/advice or point them to the appropriate resource, but also intuitively understand that their relationship with the person in question is so thin (in other words, a low or negligible “C” score) that the act of asking for help will likely be a socially-unacceptable imposition on their time, and unlikely to produce a desirable response/outcome.

It doesn’t have to be this way.

But to do so, one must consciously and intentionally deepen relationships on a regular basis, earning a reputation as a value-emitter during the 99% of your life when you aren’t in dire need.

How?

(To be continued)