Expanded Spheres Of Influence
When Simon Rabin, the co-founder of London-based mobile commerce business Txt2Buy, set up the company in 2008, he faced the same problem that confronts many aspiring entrepreneurs: how to obtain funding.
He and his partner, both recent graduates, set up shop in Mr Rabin's bedroom with a couple of computers and a broadband connection and set about building a network that would enable them to launch a start-up. "The only tool we had available to us was the internet," he says.
They focused on mining the professional networking site LinkedIn to target the type of funder they believed were most likely to favour a business such as theirs: "It was a bit like going to a networking event, holding up a megaphone and saying, 'Venture capital, London, tech start-up', and everyone comes over," Mr Rabin says.
But, he adds, for a pair of 23-year-olds just starting out, it offered a credible platform. "It gives you the opportunity to present yourself in a way that means people are willing to engage with you," he says, pointing out that LinkedIn enabled him to connect with relevant individuals without having to deal with "gatekeepers" such as PAs. He cites one prominent venture capitalist who was impossible to get hold of via the conventional channels. Yet five minutes after Mr Rabin sent him a personalised LinkedIn request, a face-to-face meeting was set up. "I would not have got in front of him otherwise," he says.
Mr Rabin's experience demonstrates how platforms such as LinkedIn, Facebook and Twitter are changing the ways in which communities are formed. But it also highlights the importance of making online and offline networking tools work in sync rather than have one replace the other.
Networking, of course, is not new. In an article published by Harvard Business Review in January 2007, Insead professors Herminia Ibarra and Mark Hunter described how successful leaders used three types of network. Operational networks, which could include key colleagues, suppliers or customers, enable you to get your job done more efficiently. Personal networks build on professional links with "kindred spirits" outside your operational network. Such contacts might not be essential to accomplishing day-to-day tasks but they provide the types of links, through professional associations, personal interest groups or alumni groups, that can provide important outside information. And strategic networks are about building contacts among those beyond your immediate control who will be able to help you reach strategic, long-term professional goals.
Prof Ibarra says that the effect of technology is to bring the "six degrees of separation down to three so it is now easier to see your network and figure out where you want to go with the contacts you have".
Profs Ibarra and Hunter say that too many managers fail to carve out enough time for networking, usually because they believe they have insufficient time to do so, think it unimportant, or find it "unsavoury". But failure to engage with networking makes it harder for managers to do their job effectively and can be damaging to their personal long-term prospects.
The key is not to view any of these forms of networking in isolation. Ariel Eckstein, head of LinkedIn for Europe, the Middle East and Africa, says that while online networking services are not a replacement for face-to-face contact, they can help users have a "more effective conversation". So in his own case, if he has a meeting he will check the counterparty's profile beforehand to see if there are any shared links or background. And he only accepts invitations to link with individuals he has already spoken to.
Big recruiters increasingly see the ability to leverage such networks as an essential skill. Gemma Lines, head of graduate marketing, recruitment and development for Europe, the Middle East and Africa at Citigroup, says networking is a competency it expects of its new graduate recruits. "We receive 50,000 applications each year and those with the ability to establish links have a huge advantage," she says.
Such individuals are seen as being better equipped for dealing with clients, better able to get to grips with an organisational culture, and more likely to thrive in a globally minded organisation.
To appraise their networking qualities, candidates who make it to the final rounds of recruitment are tested on their ability to build relationships. They are put into working groups and observed to see how quickly they can establish a rapport with colleagues. The groups are then mixed up and the candidates' ability to forge links with their new team assessed.
Once hired, graduates join the company a year after selection. To facilitate networking beforehand, new recruits are encouraged to connect with each other on Facebook and to form communities. Once they start at the company, they are not allowed to use sites such as Facebook or LinkedIn on work computers and are instead directed to Citi 2.0, the company's internal networking platform â€“ although they are allowed to access external networks via smartphones.
While some western executives might recoil from high levels of networking, in fast-growing markets such as China it is second nature. Younger workers in particular are using sites such as Renren, Facekoo, Kaixin001 and Zhanzou, Chinese rivals of Facebook and LinkedIn, alongside traditional face-to-face methods, such as business school, university and school alumni networks or professional clubs.
Nandani Lynton, management professor at Ceibs in Shanghai, says: "For Chinese, networking is at the heart of survival ... Until 15 years ago, there was very little soft infrastructure in China to support business, such as credit rating agencies and employment agencies ... In this context, being able to rely on information from personal networks was an essential form of insurance and basis for trust."
Mr Rabin, meanwhile, says his online efforts have had the desired effect. He received funding, counts a former PayPal executive (recruited via LinkedIn) among his non-executive directors, and has shifted the headquarters from his bedroom to New Bond Street. But he is contemplating a move to Silicon Roundabout, mainly, he says, "because we'll network with the right people".
More News From Financial Times