The Economics of Networking

Thursday, 15 October 2015 12:50
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Making and enabling professional connections is a business. Here's a look at it.

Greetings!

Professionals attach value to having someone selectively connect them with another professional to explore collective benefit. What's this service worth?

Curious to learn more? Read on, dear friends...

The Economics of Networking

Ted is a business consultant. One afternoon, his phone rings and Joe, a sales professional from Acme Company is on the line. Joe asks Ted if he could introduce him to George, the CTO at Beta Corp to try to sell him on Acme's new CRM software. Ted has a longstanding professional relationship with George. Ted ponders the request.

Should Ted make the introduction, and if so, should he seek compensation for providing this service? That this question might have different answers depending upon the circumstances, and might also be answered differently by different individuals captures the essence of the often fuzzy space professional matchmaking occupies in our business world.

Most of us would readily agree that services which facilitate professional introductions and interactions have value. So, rather than debating this, the questions rapidly become: what are the details of the services desired, and what are these services worth?

In professional matchmaking, there are a few basic parameters that can help determine this value equation. For simplicity, let's define the principals as A (the one seeking to be connected), B (the one who can facilitate the connection), and C (the party to whom A wishes to be connected). Further, AB describes the closeness/strength of the A&B relationship, and BC describes the closeness/strength of the B&C relationship.

Here are a couple of common connection scenarios and my view on them.

Common Networking:
This generally involves connecting two professionals via an intermediary, where a business proposition isn't being discussed. An example of this might be facilitating an introduction to assist A in conducting his job search. If the AB and BC relationships are strong, and an intro requires B to only make a phone call or draft an email, it is common to treat such introductions as a professional courtesy with no costs attached. (It is also worth noting that this courtesy is typically reciprocated, as friends/colleagues will often do).

New Business Development:
There are a number of different possible variations on relationship dynamics here that may influence the details of any supporting business relationship, the most significant of which involve the strength of the BC relationship and the amount of effort and goodwill that B must be prepared to invest in A's behalf.

For instance, if a business proposition is involved (meaning, there is the potential for money to change hands between A and C), different business terms may be required to secure B's involvement depending upon whether he is being asked to make a simple introduction, or is expected to invest effort and or reputation/goodwill in A's behalf (meaning that B will advocate for A and/or A's value offering). The relative strength of the BC relationship often influences the value that A places on B's role as advocate (and the value that B places on it, as well) and the business terms attached to it.

In general, if the connection request will require B to invest substantial effort, time and or goodwill on the requester's behalf, regardless of the strength of the AB or BC relationships, and especially if there is the prospect of business being done and money being exchanged between A&C, then a business agreement will probably be appropriate in order to justify B's involvement. A history of, and or the prospect for reciprocity may influence the business terms for the engagement.

My point is that professional matchmaking and advocacy have tangible value. Remember...if they didn't, the parties seeking the connections would make them and wouldn't seek to involve an intermediary. If you doubt that for a moment, you're being naive. The type and extent of the value delivered by an intermediary will define the terms supporting any business agreement between the principals.

"Connecting You With The Right Solutions" BFS Innovations, Inc.

Since 2005, BFS Innovations has helped its Fortune 500 clients with technology scouting, new business creation and development services. Contact Michael today at This email address is being protected from spambots. You need JavaScript enabled to view it. or at 614 937-2408 to discuss your company's needs.

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