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).

Strategically managing your network, vs. damaging your network

“If people like you they’ll listen to you, but if they trust you they’ll do business with you.”- Zig Ziglar

We are providing a tool kit on this site to manage your network strategically. However, we acknowledge there is a clear tension between managing your network strategically, and managing your network successfully.

Let us say you meet someone at a conference:

You: “Hi! I’m Fran Greensmith with SFA Software. How are you?”
Wai: “I’m fine. I’m Wai Ching, with ENC Corp.”
You: “I sell sales force analysis software. I noticed that you’re a salesperson. Are you in a position at ENC to make buying decisions about software?”
Wai: “Go away.”

When you make it crystal clear that you are only interested in someone because they can help you, you damage the relationship. You first have to take some basic steps to build a relationship with that person.

This is why the best relationship building does not take place at “networking” functions; it happens at meetings, conferences, online communities, and other venues where the people are united by a common goal other than meeting one another. A common problem with self-described “networking functions” is that most attendees are explicitly focused on meeting new people to achieve immediate professional goals: a sales lead, a new job, an executive to hire, and so on. When people are primarily focused on, “What’s in it for me?”, and “How can you help me?”, they are usually so self-centered that it is difficult to build a strong relationship with them. They are so busy listening to radio station WII-FM (“What’s In It For Me?”) that they cannot hear you.

By contrast, an event or online venue that brings together people with an altruistic goal and a common interest other than themselves may be more effective. Conversations tend to focus initially on the common charitable endeavor, rather than “What do you do for a living?” Once you make the bond—you both care about raising money for orphans in Africa—the conversation will naturally evolve towards other topics that are of business interest.

How can you resolve this tension between strategically managing your network, and not being perceived as exploitive? We think that the resolution is first, having the right goals, and second, sincerity.

For example, you are a car salesman, and you meet Nina, a new college graduate who just moved to town. You will be a much more effective salesperson if you sincerely like and want to help Nina. We suggest: offer to help Nina find a good deal on an apartment, mention in passing that you are a car salesman, and say that you would be happy to give her a loaner for 2 days while she looks for an apartment.

If you are insincere, Nina will sense it. But if you are sincerely looking out for her best interests, you can be explicit about your (legitimate) business goals, and you have a shot at selling her a car.

The best way to avoid the smell of insincerity: build your genuine desire to help people. Aristotle wrote, “We are what we repeatedly do. Excellence, then, is not an act, but a habit.” If you lack the character trait of lovingkindness, the sincere desire to be of service to others, then the best way to overcome it is simply to do it. Be kinder to people, and you will be a kinder person.

As Stephen Covey observed in Seven Habits of Highly Successful People, much of modern success literature is focused on the superficial, e.g., how to appear friendly. You will do better to focus on building your character.

What do you think? How can you manage the tension between strategically and pro-actively managing your network, while at the same time not making people feel “used”? We would very much like to hear your feedback.

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).

What distinguishes a strong tie from a weak tie?

In analyzing relationships between people: What distinguishes a strong tie from a weak tie?

- Age of the relationship. Have you known the person for a long time?
– Frequency of contact. The amount of time you two spend together.
– Emotional attachment. Do you care about the other person?
– Reciprocity. Do you regularly do random acts of kindness for your tie, and do they regularly do random acts of kindness for you?
– Kinship. Even if you do not see your cousin very often, you still likely have a strong tie to him because of your family bond.

Weak ties are usually only activated for a specific purpose, rather than being part of a multi-layered emotional relationship. The manager of your corporate mail room is likely a weak tie to you. You interact with her because you need something from her; you need your package weighed. You usually do not interact with her except for that purpose.

Although your weak ties can produce great value, it is typically the strong ties that provide you with a sense of companionship, comfort, and security. Stronger does not mean more valuable or “better” . Strong and weak, in this context, simply imply different types of relationships.

We recommend building a portfolio of both strong and weak ties. Strong ties require that you invest significant amounts of time. We recommend making that investment with your family, boss, immediate colleagues, and a few selected other people. That sturdy infrastructure is critical, particularly when you are under stress.

You only have time and attention to handle a few strong ties. According to anthropologist Robin Dunbar , and popularized in Malcolm Gladwell’s The Tipping Point, the human brain is hard-wired to handle a maximum of about 150 active social connections. In addition to the time requirements to maintain those relationships, they occupy space in our mind even when we are not in contact with them. Even with electronic tools, it is extremely difficult to sustain more than about 150 strong ties. Fortunately, electronic tools such as contact managers and online social networks allow us to develop a much larger network of weak ties. They relieve our brains of some of the workload of maintaining all those relationships.

Feedback welcome.

Quantity vs. Quality, or why everyone really shouldn't be your friend

Following his musings on Quality or Quantity?, Palo Alto VC Jeffrey Nolan ran an experiment on LinkedIn, in which he created a fake account and invited some people who, by definition, could not possibly know this “person”. Never mind that this is probably a violation of their User Agreement (LinkedIn’s offline for upgrades today), it’s still good information that supports a point I’ve been really trying to make in several circles recently: If “friend” or “contact” is the only designation you have for people, then everyone who asks is not your friend.

For his experiment, Nolan sent out over 1,500 invitations from this fake account. As of Day 1, this fake person already had 16 connections! Only 4 people replied back that they did not know this person well enough to accept the connection. There were a couple of more people who asked for more information first. Now, certainly some large number of people have opted to just use LinkedIn’s new “Ignore” feature, but still, 16 people accepting a connection not only from someone they don’t know, but someone who they don’t validate through other channels (a little web research would have easily demonstrated this person to be fictitious), is pretty horrendous.

This problem, of course, is not exclusive to LinkedIn. And the problem is not so much of people being total fakes, like this, but of simply misrepresenting themselves, or having a poor reputation, and you connect with them anyway just on the basis of what you see in their profile page. I have at least three people who have requested to be my friend on Ryze who, after observing their behavior, I would have been horribly embarassed to ever have been associated with.

This should NOT scare anyone away from social networking sites—the dozens of success stories we’ve collected far outweigh risks like this. It DOES mean, though, that you really need to be selective about who your “friends” are, even online. People will use you for referrals, whether they involve you or not, and the quality of the people that you connect to WILL reflect on you. Choose your friends carefully, not indiscriminately.

"Lovingkindness"

“Networking” has a bad name among some, in large part because it is perceived as being centered on how you can exploit others. On the contrary: true networking is all about you finding out how you can help others. In Donna Fisher’s book Professional Networking For Dummies®, she defines networking as “people sharing and caring for one another.”

This is equally true when you are building relationships online for business purposes. It is critical to keep in mind that the true spirit of networking is based on the age-old premise that people most like doing business with people they like. With the internet, you simply now have access to more people with which to develop business relationships.

Keeping an attitude of service and kindness present in your networking interactions will attract more people to you. Networking without heart and kindness is cold, calculating, ultimately unfulfilling, and typically unproductive. Networking with heart and kindness leads to opportunities to be of service and create mutually beneficial business relationships.
Networking is not just about taking certain actions and creating certain results. It is the process of building quality relationships and experiencing the satisfaction that comes from contributing to someone else’s success.

An attitude of lovingkindness will affect the way you respond to people online and in person. Here are some ways to support others in your online business interactions, regardless of the industry of your counterparty:

  • Mentor someone who is just starting in business, or newly entering your field.
  • Help other people prepare for a major presentation by coaching them.
  • Make sure to contact people when they are in difficulty (just had a baby, just lost a job, etc.), not just when they are flying high. They will be eternally grateful, and you will prove that you are not a mere fair weather friend.
  • Give industry colleagues a “heads-up” about a news item that affects them, or co-workers a tip off about a surprise visit by upper management.
  • Do someone else’s dirty work for them, particularly when the dirty work is thankless drudgery and the person is overwhelmed.

Remember, what you put out into the world is typically what you receive back from it.