21st Century Business Networking

Thursday 19 March, 2009

by Lisa Harris, Alan Rae and Ivan Misner

How entrepreneurs are networking and collaborating in the Internet age.

We recently conducted research asking businesses how networking integrates with the rest of their sales and marketing activities, and what drives some companies to spend a lot of time online playing with the tools of Web 2.0 - and what causes others to avoid them completely?

Networking in the Internet age

The growth of a small business depends on how its relationship with the marketplace evolves under the leadership of its management, and how successful they are at building the infrastructure to support their future growth. In practice, this means identifying a coherent relevant market segment to target, communicating effectively with that target audience and then efficiently satisfying the need that has been created. However, there is a long ‘tail' of very small businesses that only ever employ the owner, while the vast majority of companies have not grown beyond 4 employees.
Our research showed that the use of online tools, Web 2.0 and social networking sites, means that companies can be effective players in the world of business while remaining quite small. They can do this by systematically building and maintaining relationships with their peers and working together to develop know-how and products as required by their customers. These traits of networking, collaboration and online promotion and delivery will be the toolset for the next iteration of the business cycle.

Why do people network?

We found that people network because:

1. Entrepreneurs like networking
   
2. They see the network as the best ‘fit' for the desired purpose
   
3. A network provides the lowest cost option to market a service or product when there are limited resources available

Businesspeople need to work with others, formally or informally to obtain enquiries and fulfil contracts. In particular, they help the entrepreneur obtain information on new technologies and processes, on what products to offer and on what prices are achievable. Members of an individual's network range from casual acquaintance to close family. This network plays an often critical role in determining how problems are solved, organisations are run, and how far individuals succeed in achieving their goals.

What networking options are there?

Social networks are structured around hubs. Many of these remain quite small but some become larger. The creation of large hubs allows ideas and methods to spread rapidly through the network. It also makes the network robust - the removal of any one hub can be replaced by others - this is the basis of the extreme fault tolerance and resilience of the Internet as we know it. One effective model of networking behaviour is that there are numerous small ‘cells' of locally connected people with a few ‘super-connectors' who provide the links between them.
There are effectively 2 polar positions:

1. Face-to-face networking
   
   In this approach you have meetings every week with 20-30 people and leverage your network from there. You can either build a small network of people and develop very strong relationships with one another, or the more connections you have the better. To caricature this position, you should connect with everyone in the world once - and see what happens.
   
   What's unique about the second option, is that it effectively supports both online and off-line networking. Connections are basically random. An issue with networking is how to strike the right balance between focused and random networking, and the second option is good at delivering measured amounts of randomness.
   
2. Online networking
   
   Online business networking by contrast is completely purposeful. It maps your circles of connectedness and lets you plan a route of introductions to whomever you are trying to reach / sell to. Then you can ask your network for introductions and you will be passed on or not, according to the strength of your reputation.

Making use of a network, small or large, involves aligning with and getting to know the most connected members - and getting them to trust you so that they will pass your ideas or opportunities on. However, there is taxonomy of these individuals. Some are essentially salesmen, some just like connecting people, and some are subject experts.
So you need to be clear what you're doing in the network - are you selling, looking for advocates, employees or finance - or are you just trying to get ideas spread? The individuals chosen to work with will be different in each case. In this regard, reputation is behaving as a personal brand. It brings you a dividend over and above the number of connections you can make through your own efforts.

The key skills of networking

According to our respondents, the key skills of networking were thought to be:

• Listening skills
  
• Communication skills
  
• An attitude of ‘givers gain'

Givers  Gain®  (also sometimes called ‘paying it forward') means doing favours and passing referrals on first, while waiting for the ‘law of karma' to work on your behalf later when you have enough good ‘karma points' in the bank. This is in line with the principle of reciprocation as one of the cornerstones of building strong human relationships. Spamming everyone with business cards and the ‘always be closing' sales approach seems not to work in this environment.
If you can build and maintain a good reputation for competence in a sought after area, and are generally pleasant to deal with, networking is a great way of leveraging your ability to reach more customers. Above all you have to be clear about what you want from networking - be it collaborators, referrals, employees or introductions to finance. If you are helpful and you let other people know clearly what you do and what you want, consistently - then the magic will start to occur.

How trust is developed in networks

This brings us neatly to the issue of building trust and developing a reputation. We found that trust is built from 3 building blocks:

• Knowing your stuff
  
• Being able to deliver
  
• Being likeable - or at least easy to work with

In most cases, you trust people you've got to know and with whom you've worked on something that's not a life or death project. As time goes on, you work with them on progressively larger contracts until eventually you feel comfortable enough to ‘put them in to bat' on your behalf.
We asked some questions about how trust develops. For the most part it's a combination of early opinion and likeability, reinforced with recommendation, seeing them at work or experience of their deliverables. ‘Liking' and ‘experience' seemed to be the most influential components.
Most people seemed not to have a systematic process of developing trust. A few wanted to work on a project with them first, but several relied on randomness and the ‘right feel'. Many more however seem to use speed of response or degree of follow up as a surrogate for reliability, coupled with whether the individual already has a good reputation.
This means that for a neophyte networker, the key advice has to be to get back quickly to those you interact with - you only have one chance to make a first impression. To recommend someone they met networking, the more cautious souls would want to see their work before recommending. Some people are looking for advocates and some people are looking for people to collaborate with. So understanding how these processes operate in a networking environment is very important.
Trust is the most compelling form of motivation. Stephen M.R. Covey talks about this in his book The Speed of Trust. In the book he discusses the ‘three key ideas' to move at the speed of trust:

1. There is a compelling business rationale for trust. It affects cost. There are economic benefits. High trust is a dividend and low trust is a tax. When trust goes down, speed goes down with it. When trust goes up, speed goes up and costs go down. This is a dividend, a high-trust dividend. Trust is a qualitative and quantitative factor. Nothing is as fast as the speed of trust.
   
2. In today's new global economy, the ability to establish trust is key to every organisation. We are interdependent. In a cluttered world, trust helps you cut through the clutter. It is a performance multiplier. When people trust you, everything else you do is enhanced.
   
3. Trust is a competency. It is something we create and can get good at. It all starts with self-trust and personal credibility. Are we behaving in a way that builds trust and transparency? Are we keeping commitments and talking straight?

Once trust is developed and collaboration can start, the current state of the Internet has made life very easy. Most of the tools you need, both for online networking and for collaborative working, are either free or comparatively inexpensive. You can even share subscriptions to streams of leads.
Apart from email, the main tools you need are a tool to deliver voice over Internet protocol (VoIP) which will let you hold conference calls and run chats, plus a document repository where you can store documents, manage the email threads and generally work collaboratively. It's only about 8 years since that was effectively beyond the resources of even a 20-50 person company. So the power of broadband has effectively changed the balance of power for the individual worker. Effectively, all you need is a laptop with a wi-fi broadband connection and you can work anywhere. More to the point, you can project manage from anywhere too.
So the key issue is whether the small business owner perceives that they CAN effectively leverage their business position by using the tools of Web 2.0.

Author Credits

Lisa Harris, Alan Rae and Ivan Misner. Lisa Harris (l.j.harris@soton.ac.uk) is a Senior Lecturer in Marketing at Southampton University School of Management. She is a Chartered Marketer and a Director of the Chartered Institute of Marketing. Alan Rae (alan.rae@aiconsultants.co.uk) is Managing Partner of AI Consultants which researches how small companies use IT and the internet and develops training programmes for small companies themselves or those who need to work with or sell to them. Ivan Misner (misner@bni.com) is a New York Times best selling author. He is also the Founder and Chairman of BNI (http://www.bni.com/), the world's largest referral organisation with thousands of chapters in dozens of countries around the world. Ivan is also the Founder and Visionary behind the Referral Institute, a referral training company (http://www.referralintstitute.com/). 

 

 

 

Source:ceoonline.com