A friend and colleague, Jeff Kalmanson who I met when I spoke for the Alumni of The University of Chicago Business School several years ago sent me a wonderful article after we had discussed some thoughts and revelations on our networks.
His terrific article offers specific evidence to directly address the issue of quality in our networks. As social networks grow and more people use the Internet tools to connect to others, the issue of quality in a network is now front and center.
Read it and feedback is welcome.
On the quality of your social network-written by Jeff Kalmanson
Great companies such as BP, Toyota, Goldman Sachs, and others are enduring crises at the present. This has led to a lack of investor confidence in the management teams of these corporations and their stock prices have been pummeled. Yet, in the case of Goldman Sachs, the voice of one man, Warren Buffet, relieved investor’s fears overnight and Goldman's stock price jumped the day after Mr. Buffet vouched for the company and it’s CEO. This remarkable event demonstrates the quality of Goldman's and its CEO's network.
The author's thesis is that the quality of your social network is determined by the number of people who will stand up and vouch for you in times of crises, and quality matters more than quantity in a social network.
The number of people in your network extends your reach. While this is important, merely trying to increase the number of your connections rapidly loses its value as your incremental connections tend towards casual acquaintances. Rather than through volume, the value of your network rises disproportionately higher with the quality of your connections.
Quantity alone is not indicative of the strength of your network. Neither is the number of recommendations made during good or stable times. During good or stable times, it's easy to garner support — everybody likes to be associated with a winner or someone making reasonable progress. However, when the tables turn, most people will flee for fear of being dragged down — but that's exactly when your social network matters most. While advertising your recommendations to others and trying to increase their number is helpful, it simply does not carry the value of an endorsement made during a time of crisis even if the number of such endorsements is small. The vital measure of your network’s quality only manifests during a crisis and is based on the support your connections are willing to commit to you during such difficulties.
We know from our personal relationship experiences the timeless truth of “a friend in need is a friend indeed”. This concept directly transfers to the value of your network quality.
The quality of your social connections matters much more than the number of people to whom you are connected. Without doubt BP, Toyota, and others would love to have just a single voice like Warren Buffet to publicly vouch for them, yet not one key person in their vast networks has stepped forward, and it is costing their shareholders dearly.
The author wishes to point out that Warren Buffet (through Berkshire Hathaway) currently has a substantial deal in place with Goldman Sachs that has been well reported by the press. The deal is effectively a low risk loan to Goldman and therefore Mr. Buffet has no financial incentive to artificially favor the firm (not that he would do it given his legendary principles and reputation) and hence we believe his intentions are genuine. This case is used to illustrate the value of quality in your network and how it becomes immediately apparent when you need it most — unfortunately at that point it’s too late in the day unless you have it established.