Positive Structures

How big a deal is "the relationship economy"?

There’s been a lot of writing about the relationship economy.  I have been wrestling with some of the fundamental issues/ questions and would love to have an engaged dialogue with people about it.

What I get, and deeply believe

• People working together with new electronic tools can create immense economic value. Many  tools (social networks, etc.) are are inexpensive or free. Leveraging these tools and the relationships they facilitate (new relationships, stronger relationships) are central benefits of “the relationship economy”
• Relationships in themselves are valuable to people. There is a social value to being connected to other people ; for example, people who have lots of friends live longer. Relationships are also the major (maybe sole) mechanism for personal growth, and people want to grow personally (become wiser).
• Many people understand that establishing rewarding relationships begins with giving, and creating trust begins with trusting

What I’d like to think more about and talk with people about is the bigger “so what”

The relationship economy is a big deal for sure; I’m wondering if it’s a giant deal.

• Is the “relationship economy” just a new front in the old self-interested free enterprise economy? It certainly is that: it gives brands a new way to connect with people and can change the way companies innovate. It definitely provides some power shifting within the economy. But it would only be a fundamental change economically if it changed economics so much as to alter the world in a meaningful way. For example, if better innovation could cut the cost of what we buy by 50%, effectively doubling our income – then that would be a fundamental change (where a quantitative shift leads to qualitative difference).
• Is the “relationship economy” most important because it lets people start to value relationship and the experience of relationships as extremely valuable in themselves? People are starved for attention from other people – real attention, real understanding. They want the social benefits of connecting, for the experience itself. I had this "social benefits of connecting" experience while posting my first LinkedIn question. It was about software and I got 20 responses. I engaged in dialogue with about half the people, and feel like I found a new friend or two – because I asked for help and they responded effectively.
• Is the “relationship economy” a critical phase in the explosion of the Internet, creating a “new nervous system for the planet” and making it much easier for people to think about the whole?  If this leads to more interest in the “whole” and less in “my share of the whole” then it is transformational. I think by analogy of this picture of the Earth taken from space. Seeing the planet shows us a whole and makes it harder to disregard it.  Will we start thinking about the “whole” (whatever that is) and focus on making that healthy? To repeat, that would be transformational.

Which is it? Or is it all? Or is it up to us to make of it what we do?  Comments are most  welcome.

 

The Growth Cycle - a positive structure that lets great salespeople sell

A positive structure, as I said in our first post:

• Advances the content it addresses (e.g., the issue at hand),
• Strengthens participants commitment to being thoughtful about process (because their experience of good process shows them the value of this thoughtfulness) and
• Builds constructive relationships between participants that they can rely on for other processes
• Makes people feel good about themselves and their capabilities

One of the archetypal examples of this is what my partner Rula Moradi and I call the growth cycle. It is what an outstanding salesperson does what they are selling. The result is a win-win transaction as well as a a win-win relationship. Here's a picture of it:

Enacting the growth cycle requires focusing on the critical question: What can our two organizations do together that we cannot do separately? The goal is to find something to do that is win/win for both. This is a much more productive question than the narrower question salespeople usually ask: how can I sell something more to you -- either by leveraging our friendly relationship or by helping you solve your problems?" Nothing wrong with consultative selling, but even it is much less effective than using the same skills (listening, business acumen, creativity) to actually collaborate on joint goals. 

The focus on joint goals makes people much more willing to share vital information . In fact, if the salesperson is doing his/her job right, the customer will be discovering vital information and not just revealing it. Then, with the important information mutually available, the two parties can figure out a jointly developed solution that works for both. The results, in quick order, are optimized efforts (everyone doing the right thing to lead to the desired result), a satisfied customer (who got what he/she wanted through a process that engaged him/her), and profitable revenue for the selling company. 

Going through this cycle leads to a strengthening of a trusted relationship, which in turn makes it easier to have a win-win mindset, since it has been reinforced by both a positive human experience and visible good business results. So the parties can dive in together and make another circuit together around the cycle.

A very welcome byproduct of this process is that each party has become more capable. The selling company, having solved a particular problem for a particular company in a new way, is now more able to solve the same or similar problems for others. The particularities of the situation give rise to new generalizable skills. And the buying company has also increased its capabilities by having addressed a challenge that it could not handle on its own and probably built its collaboration skills. The collaboration of the two parties --and their willingness to think and act together -- has not only solved their problem but increased their capabilities.

Does conversation scale (and implications for networks) - "Divide so you can multiply"

There is a very interesting post about this topic from Wired magazine here.  It suggests that there is an optimal size for an online conversation, where people feel that they are in fact contributing to a conversation. When the community around a topic (e.g., a blog and a specific post) is small, conversation is fairly slow. As the community grows (say the blog grows so now more people are reading each post), the pace of the conversation picks up.  But at a certain size, the conversation flags, as people begin to feel anonymous and unknown in the community.

I wonder if it's that people feel anonymous and disempowered to make a difference, or is it:

1. Too many comments going in too many directions -- so people can no longer really follow what's happening
2. A decrease in the frequency with which a person's comments are responded to by one of the people whose opinions they actually value (which might include the person who started the blog or network)
3. No more interest in actually knowing any more people -- because the human capacity for managing relationships is allegedly limited (see Dunbar's number).

I don't fully understand the causes of the phenomenon, but it does suggest that groups that actually want to achieve something need to limit their numbers. There appears a real trade-off based on interpersonal factors; scale brings diversity and breadth of experience and insight and connection to other networks, but it also brings (at some point) a decrease in engagement.

Organizations have of course wrestled with scale before, because scale brings an increase in complexity. Some organizations get bureaucratic. Others define a maximum size of their organization and then split the organization when it gets too big.  Examples of this are W.L. Gore (the Gore-Tex people) and at one time in the past, Dell Computers. Gore splits business units when they grow to 150-200 people working together. In this article, the current CEO of Gore quotes the founder's idea that it was necessary "to divide so that you can multiply."

Dell would split existing units of its salesforce into pieces.It would giving each of the new "child" units a portion of the target markets that the "parent" had had, and told the leaders of the "children" units to each fill out their teams and then achieve the revenue (in just a few years) of the former "parent". As I was told, this splitting process could be repeated over and over again.

Maybe as collaborative networks grow they reach a point where they need to split in order to remain effective. Something to think about.

What's your own personal experience with this in networks?  What have you seen? How do you feel as a network grows? Does your behavior match what you say/think you believe in or are trying to do?