Trust and Transactions, Numbers and Strength

Ross Mayfield writes:

At dinner tonight I had an interesting conversation about the difference between Americans and Europeans. One theory put forth is that Americans focus on transaction volume and efficiency while Europeans focus on the strength of relationships. With enough transactions you gain economies. With trust underpinning transactions, you gain similar economies. Its hard to say which system is “better.”

This reminds me of what we wrote in Balancing strength of relationships and number of relationships:

You can spend all of your time with your close friends and family (Strong ties with those people, but a low Number of relationships), or spread yourself thin across a wide number of people (high Number, low Strength). However, maintaining both high Strength and high Number is physically impossible.

How do you optimize the value of your network? How can you find the proper balance between Strength and Number?

The way to optimize the value of your network is to determine the necessary level of Strength required to accomplish your goals, and then maximize Number at that level. For example, if you are selling investment banking or strategic consulting services, you need a high Strength level for someone to buy your services. These are big-ticket items which require a high level of trust in their provider. Your Number will likely be small. Ideally, you have a small Number of close relationships with senior executives who are in a position to buy these services.

You may be tempted to try to meet everyone in your golf club. In most cases, it is unproductive and even impossible to build relationships with everyone there. Instead, develop a substantial relationship with the top 30 most Relevant to you.

However: if you are trying to sell books or food, your Strength can be much lower but your Number has to be much higher. Movie stars mainly make money by selling people the chance to watch a movie for $5 – $10 per view. They try to have ties with as many fans as possible. Spending an hour with just one fan is unnecessary and inefficient for them; they want weak ties. Similarly, a restaurant owner should build a large number of weak ties and encourage those weak ties to try her restaurant. Once the weak ties try the restaurant, the quality of the restaurant itself will probably drive any repeat business.

There is no one right solution overall; your needs will likely be different from one context to another. For example, the movie star will want to develop Strong ties with producers and directors. Also, you may be able to leverage the weak connections of your Strong ties. The restaurant owner should build closer relationships with high-profile customers, party planners, and group or association leaders. They could bring in significant groups of people, as well as referring people from within their own large networks.

This tension is why it is so important to develop strategies that allow you to increase either Strength or Number without more demands on your time. Building a large mailing list allows you to increase the Number without spending significant additional time. Learning to write more effective emails will help you increase the Strength of your ties without spending too much time on those relationships, beyond the initial cost of learning the new skill.

The ideal network has a large Number of heterogeneous people who think highly of you and with whom you are well bonded. That is the power of university and corporate alumni communities. Using the online member databases, you can easily access people in any industry and region of the world. Once you approach a fellow member, who may be from a totally different background than you, you have an immediate bond by virtue of the common background. In addition, this principle explains the value of “Outward Bound” expeditions, Ropes Courses, and other similar programs. These retreats all promote quick bonding between participants (immediate Strength).