Friday, November 18, 2005

Relationships as 'Assets'

On a broad level, relationships are about identifying & articulating common values & goals; allowing for requisite time and 'event' sharing to building trust, and allowing that relationship to evolve over time. Translating this to a business advantage: you can lower sales costs, shorten your sales cycle, and increase partner and channel effectiveness, by building trusted relationships. This follows a basic premise in developing a growth (and exit) strategy: You can't do it alone; you need an ecosystem of relationships (i.e. partners, advisors, potential employees, strategic clients) to acheive your goals.

Mark Granovetter (Stanford University) developed a concept called “The Strength of Weak Ties”: individuals can maintain a finite number of ‘strong’ ties or relationships, but they also have a much larger network of weaker ties with other contacts. In a large organization, the number of weak relationships identified can be substantial, and can yield significant insights into customers, sales, and market trends. These ‘weak’ relationships may include those that are associated with external contacts, such as prospects, influencers, and partners; but also may include internal relationships: a sales person relationship with product manager, or an internal recruiter’s relationship with an employee, for examples.

The organization that can identify and manage these strong and weak relationships may realize those relationships as assets, and leverage them in a way that increase sales and revenues. Therefore, from a revenue perspective, fully leveraging relationship assets over time may also increase company valuation as well.

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