Building, sustaining, and growing a business requires capital. Organizations need financial capital to invest in the facilities, resources, and employees they need to create and sell their products and services. They need human capital with the appropriate expertise and skills to make a business successful. Most companies recognize these needs, but they often overlook and undervalue a third type of capital: relationship capital. What is relationship capital, and why does it matter to your organization’s success?
What is Relationship Capital?
Simply put, relationship capital is all relationships within and between organizations. It is an element of your company’s intellectual capital and can include partners, vendors, former employers, personal relationships, and more. The “capital” comes from the value of the connection between these people or companies. Having the right relationships helps organizations secure funding, close key deals, recruit well-qualified employees, and propel their businesses forward.
The old adage that “it’s not only what you know, but who you know” rings true whatever line of business you are in. Relationship capital is often intangible and notoriously difficult for companies to measure, yet it is universally agreed to be critical to the success and growth of any venture.
Why Relationship Capital Is Your Company’s Most Crucial Asset
Because relationship capital is intangible and can be difficult to measure, it has become the most under-utilized asset in organizations. Quite simply, most companies don’t know how to leverage their relationships in an effective way. They don’t know who their employees and board members know and how those relationships can help their business. Yet virtually no dollar is spent without a relationship behind it – all successful deals, investments, and sales are based on relationship capital. It is the single best way to open doors and get introductions.
Standard of Trust founder Rob Peters, a vocal advocate for investment in relationship capital who frequently shares his insights on social media, writes that business is “Not B2B or B2B, it is P2P. People buy from people they know, like, & trust. It’s about building relationships today! #RelationshipCapital ”
Relationship capital is particularly valuable in industries like professional services, financial services, and B2B sales, where people buy products and choose services based on trust. In these industries, it’s particularly critical to build strong relationships with your clients and prospects.
Studies About Relationship Management & Capital
Successful entrepreneurs and business professionals intuitively understand the importance of relationship capital and recognize it as critical to their success. Analyzing the importance of relationships has also long been a fascination of scientists. In the modern era of Big Data and innovative technology, scientists have conducted countless studies analyzing relationship data and its impact on business success. A few recent studies that focus on relationship capital include:
- The Importance of the First Relationship: The Ongoing Influence of Initial Network on Future Status
Analyzing a panel of 272 U.S. venture capital firms from 1980 to 2004, a study by Hana Milov and Dean Shepherd tested whether the “reputation of newcomers’ first partners exerts a positive influence on their future status.” In other words, would the very first partner these venture capital firms chose to work with impact their future partners, and subsequent network? The study found a long-term positive influence for newcomer firms whose first partners formed a “cohesive network.” The study reveals not only that partner relationships are critical to success in venture capital, but also that early relationships are particularly important. When you’re building a new business, it’s crucial to choose the right partners from the start.
- The Key to a Better Board: Team Dynamics
In a study focused on boardroom dynamics, Solange Charas at Case Western Reserve University surveyed 182 directors of boards for companies with market values of $2 million to $78 million. Directors rated their interactions with fellow board members based on several factors, including engagement, active listening, openness, and influence. They also indicated their ideal board dynamics along the same dimensions. The study found that the most profitable companies were those were current board dynamics best matched the ideals. When a company’s board worked well as a team, the company tended to be more successful. These results further reinforce the importance of relationship capital within an organization. The takeaway? Assembling an effective board is just as much about balancing the relationships and creating a collaborative dynamic as it is about assembling a wealth of experience.
- Nurturing interpersonal trust in knowledge-sharing networks
Solid relationships are based on trust. A study by A study by Lisa Abrams, Rob Cross, Eric Lesser, and Daniel Levin examined how interpersonal trust develops within organizations. Working from the premise that informal networks (relationship capital) are the “primary means by which employees find information, solve complex problems, and learn how to do their work,” the authors interviewed 20 organizations to discuss “ways in which interpersonal trust in a knowledge-sharing context develops.” They identified specific behaviors and practices that managers interesting in promoting trust should implement within their own organizations.
Each of the above studies explores a different aspect of relationship capital. They each highlight immediate, tangible benefits to maximizing your organization’s relationship capital, as well as longer-term, less tangible benefits.
The Technology of Relationship Science
If relationship capital is so valuable, what’s the solution for companies looking to better leverage it to achieve their business goals? It’s a sharp mental shift, but companies looking to maximize the value of their relationship capital should treat it the same way they would any other type of capital and recognize it as a resource worthy of continued investment. Once that mental shift has been made, a company can seek out technology that will modernize its approach to relationship building. Relationship Science is the embodiment of relationship capital technology.
Relationship Science (RelSci) works with corporations, financial institutions, and nonprofits to “bring science to the art of business relationships.” In its most basic form, RelSci helps organizations gain a deeper understanding of their relationships to influential decision makers. More specifically, it is a sophisticated online platform that uses complex algorithms to help companies find, build, and cultivate connections.
Unsurprisingly, Neal Goldman, the founder of RelSci, explains it best. Speaking on a Goldman Sachs panel in 2015, Goldman observed, “RelSci maps the most active and influential people across multiple industries that your company would be doing business with. We then lift off an estimated social graph – who knows who, and how. This is not based on social network data — no one has to give us any info or “friend” anybody. We figure it out by aggregating and reverse engineering these relationships.”
RelSci’s institutional clients simply tell the system which of the 8.5 million profiled people they have relationships with. RelSci’s algorithms then combine this information with publicly-sourced profile data to show the company’s shortest connection path to any person or company. This is a live social graph of how your company links to the entire world. If you’re looking for a connection to a specific person, you see all possible introductions to that person in seconds. These relationship pathways normally take days, if not weeks, to track down – many are never discovered at all. RelSci enables organizations to dispense with the age-old “does anyone know someone at this company?” emails and efficiently manage their relationship capital.
How Relationships Science Strengthens Your Relationship Capital
RelSci strengthens your relationship capital by revealing its depth and reach. The platform surfaces insights about your relationships and uncovers connections you didn’t know you had. RelSci aggregates Big Data for you and presents it in a format that’s easy to understand and use to your advantage.
Organizations across industries and sectors use RelSci to maximize their relationship capital. Corporations use the platform to gain intelligence on their collective relationships and reach, identify warm access points to decision makers, and manage and maintain existing clients. Nonprofits use it to secure major gifts from qualified donors and to conduct prospect research by accessing giving history and biographical data. Financial institutions use it to help with new client acquisition, deal sourcing, and portfolio services.
At a high level, your organization can use RelSci to:
- Identify the right people and companies to target
- Access detailed and relevant on your targets
- Reveal relationship pathways and identify warm introductions to your targets
- “Wake up” your dormant connections
(What RelSci doesn’t do is make the introductions for you. The technology is the link to the relationship, not the relationship itself. RelSci gives you a detailed map, but you must follow the path yourself.)
In addition to revealing the power of your current relationship capital, RelSci strengthens it. The platform’s institution-grade person and company data is designed to help you make new connections and grow your network. Pulling from thousands of sources that are all publicly verifiable, RelSci’s data includes no spam, no ads, and no empty, inflatable data points like LinkedIn recommendations or Facebook likes. “We’ve chosen not to be user-generated,” Goldman says. “Users can fluff anything.”
RelSci’s database currently includes over 8 million people. RelSci profiles the most powerful players in the business world and then shows you clear, verifiable pathways to access them. The pathways between people or organizations are clear and solidly backed by verifiable facts, including everything from career and board memberships to donations and family relationships.
The multi-faced RelSci platform offers many tools to organize, digest, and leverage this data.
- Path Finder. This tool is aptly named. It plots out connection points like landmarks on a map as you travel to a specific destination. Path Finder reveals your shortest path to any person, organization, or person/company list. It reveals how your first-degree connections create new access points to the people and companies you’re trying to reach. If you don’t have a direct connection, use Path Finder to find colleague’s access points.
- Power Search. Smarten up your target list with Power Search. RelSci provides a limitless capability to query a proprietary database of over 8 million influential decision makers and 2 million organizations. Generate a target list by searching on any combination of RelSci profile fields, including industry, role, board participation, charitable giving, education, investments, and more. Then, with one click, filter the list to those individuals and companies within your extended network.
- Profiles. Access research-driven profiles on both companies and individuals, updated daily from hundreds of thousands of sources. These profiles show connections, relationships, education, career history, corporate boards, donations, public holdings, awards and honors, and more. Pull up a RelSci profile before a meeting or at a conference to get an immediate understanding of who you’re dealing with.
- Relationship Discovery The Relationship Discovery gives senior executives a dashboard view of their organization’s relationship capital. View direct relationships and extended networks across industries, locations, and roles. Discovery helps your organization make informed decisions about what markets to approach, areas to leverage expertise, and how to mitigate risk.
- 360 Alerts. It’s a constant challenge to track the activities of your prospects and customers. 360 Alerts provides customizable news pushed directly to you every day. Users can set alerts on their relationships, client or prospect lists, or other people and companies of interest. They can also track business topics like M&A, Board and Executive Moves, IPOs, and more. RelSci’s alerts combine news mentions with headlines based on RelSci data changes – they give you more than what’s covered in the media.
Conclusion
All organizations should prioritize investment in relationship capital. Although their impact can be difficult to quantify, relationships are one of your organization’s most valuable assets. By shifting your internal organizational focus and viewing relationship capital as an asset that must be fostered and developed, you’ll realize the need for tools to help you maximize its value.
RelSci is a technology platform that helps you leverage your current relationships and build new ones. Close a deal. Win a client. Raise capital. Get the inside track. Whatever your goal, RelSci gives you the information you need to be successful. It is a completely revolutionary way to approach merging the art and science of business relationships.