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Strategic Networking for Entrepreneurs

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Workshop held at Global Entrepreneurship Week 2010.

  • Thanks Clint - I agree about having to be motivated to use your network to achieve the benefits it could bring to you.

    But http://www.slideshare.net/sachac/the-shy-connector provides a great idea how to network efficiently without being too extroverted. The challenge of ’Strategic Networking’ is mostly defining your needs (in terms of information, knowledge, resources and contacts/reach) and then identifying people who could help you solving these issues.

    The next logical step is to monitor if these relationships are actually up to the standard you want them to be, which is what Handy Elephant is doing - so another way for the individual to reach the stage of networking strategically.

    But you’re right, it can be way more efficient to just have a few other people in a venture who have an additional few hundred contacts - hopefully with a good amount of diversity to my own network.

    Best regards
    Benjamin F. Wirtz
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Strategic Networking for Entrepreneurs

  1. 1. Do you have the right contacts? Strategic Networking for Entrepreneurs
  2. 2.  BSc Information Systems  Research project on social networks  MSc E-Business & Innovation  Business Idea: around supporting networkers  Dissertation: Strategic Networking for Entrepreneurs  Distinction + best dissertation – while starting up  Now: Benjamin F. Wirtz
  3. 3. Meeting 2-3 people at an event and learning more about their needs and challenges is far more valuable than collecting (or giving away) 20 business cards. Many sales people get 80-90% of their business through networking organizations. About 70% of all jobs are found through networking A referral generates 80% more results than a cold call Socially embedded employees are 40% less likely to quit their job. 74% of all buying decisions are made on a friend’s recommendation
  4. 4.  What to take away  Networking important for venture success  How to “plan” your social capital  How to put the plan into practice  Workshop (hands on!)  Analyse your goals and needs  Check if/how your network can help you  Plan to align your network towards success Overview
  5. 5. The lecture bit
  6. 6.  Talking to people  Swapping business cards  Selling yourself  The art of making and maintaining relationships  It’s all about exchange !  Giving and taking Strategic Networking for Entrepreneurs What is Networking ? 7
  7. 7.  Strong ties are less diverse – but more efficient  Networks in opposition to hierarchies and markets Strategic Networking for Entrepreneurs Diversity in Networks 8
  8. 8.  Crucial for exchange in networks:  Trust (comes from positive experiences over time)  Perceived value of further cooperation by others  Social Capital = value, which is embedded in relationships  Potential access to information, knowledge, resources, contacts Strategic Networking for Entrepreneurs What is Social Capital ? 9
  9. 9.  Social Capital not valuable by itself  Nor measurable  But allows Strategic Networking for Entrepreneurs Value of Social Capital Getting Information Spreading Information Access to Resources Transfer of Knowledge 10
  10. 10.  Important throughout venture lifetime...  ... but especially at the beginning  Market insights, startup ecosystem  Feedback and new ideas  Examples  Bank Loan vs. Hearing about public grants  Comparing offers vs. Getting recommendations  Stealth startup fail vs. Idea evaluation & pivoting Strategic Networking for Entrepreneurs 12 Benefits (I): Getting Information
  11. 11.  Important whenever you start something new...  ...and you have to do it yourself  Tacit Knowledge  based on experiences, culture  Hard to transfer  Examples  Trial&Error vs. Learning from other’s experience  Paying an accountant vs. Learn how do accounts  Accept given deals vs. Learning how to negotiate Strategic Networking for Entrepreneurs 13 Benefits (II): Transfer of Knowledge
  12. 12.  Before you start to buy new things...  ... salvage, beg, borrow, bargain  Or get time commitments  Examples  Paying a web designer vs. Asking a friend to do it  Hiring a part-time employee vs. Family Member  Renting an office vs. Using a friend’s spare space Strategic Networking for Entrepreneurs 14 Benefits (III): Resources
  13. 13.  “Ideas that spread, win” (Seth Godin)  Visibility  Credibility  Crowdsource network search  Examples  Advertising vs. Viral marketing  Cold calls vs. Getting introduced  Complex recruiting vs. Friend of a friend employee Strategic Networking for Entrepreneurs Benefits (IV): Spreading Information 15
  14. 14.  Contacts do not come for free  And Relationships need to be maintained  Set targets...  ...and check your performance  If not on target, analyse why  Or switch to plan B Strategic Networking for Entrepreneurs Effort vs. Value 16
  15. 15.  Networking by itself has no value at all  It’s what you can give and get through relationships  Efficiency through diversity  You can’t have everything yourself  Dunbar’s number: You can’t have more than (roughly) 150 friends  Cognitive constraint Strategic Networking for Entrepreneurs Why a strategic approach? 17
  16. 16. Strategic Networking for Entrepreneurs What is Strategic Networking?  Aligning your network towards achieving your goals  Strategic  Analysing your needs and haves  Planning your relationship portfolio  Tactical  Planning networking events  Juggling socialising and working  Operational  The talking & shake hands part (exchange) 18
  17. 17.  Dunbar’s Number  For every new relationship, you will drop another one  Give before you take  Make introductions yourself  Sustainability  People are connected  Good/bad reputations spread Strategic Networking for Entrepreneurs Ethics of Networking 19
  18. 18. The workshop bit
  19. 19. Strategic Networking for Entrepreneurs Strategic Networking Framework 21 Analysis Process Planning Process Networking Process
  20. 20. 1. Define a goal (e.g. succeed with a business idea) 1. And make a rough plan how to achieve it 2. Define your needs 1. Information Input (e.g. competitors, market situation) 2. Tacit Knowledge (e.g. how to run a start-up) 3. Resources (e.g. funding) 4. Information Output (e.g. to get a strong partner on board) Strategic Networking for Entrepreneurs Analyse 23
  21. 21. 3. Analyse what you have and whom you know 1. Match to needs 2. Plan A (easy) and plan B (backups or ideal) 3. Is your relationship at the right level? 4. Create your Relationship Portfolio 1. Know your “hubs” (people with lots of contacts) 2. Ensure diversity Strategic Networking for Entrepreneurs Plan 24
  22. 22.  Use tools to support networking  LinkedIn (find suitable contacts)  Foursquare (meet them “on the fly”)  Twitter (find out what they are up to)  Trust serendipity  Reflect if you are on target  HandyElephant Strategic Networking for Entrepreneurs It’s all planned – what now? 25
  23. 23. Strategic Networking for Entrepreneurs Networking Cycle Prepare Interact Post- Process 26
  24. 24.  For shy/introverted people:  http://www.slideshare.net/sachac/the-shy-connector  Ground breaking paper:  Granovetter (1973) – The Strength of Weak Ties  For short breaks:  TED.com (e.g. Daniel Kahneman)  Wikipedia: Expected Utility Theory, Prospect Theory Strategic Networking for Entrepreneurs Further Reading 27
  25. 25. Benjamin F. Wirtz Twitter: benfwirtz Feedback and recommendations highly appreciated ! Find the slides at http://bit.ly/StratNetEntre

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