Networking Redefined: The Economics and Strategy of Goodwill

July 18, 2013
by Vu H. Pham

Participants in my courses often state that they see so much insincerity when networking. Some virtually feel the slime drip off another person’s palm as they shake hands. Others feel like a target for those social sharks that just want to take advantage of others. These sentiments are understandable. Let’s transform the ill will to goodwill as we re-envision and re-align our views on networking. In this piece, I redefine networking toward a strategic way to build relationships.

According to a longitudinal study by researchers Hans-Georg Wolff and Klaus Moser at the University of Erlangen-Nuremberg, networking actually leads to increased salary and career satisfaction. It’s seldom a clear linear path, so they measured the results over a three-year period.

In order to best leverage it in mutually beneficial ways, we need to redefine networking as the “economics of goodwill.” Let’s start with economics. People generally define economics as the production, distribution and consumption of goods and services. I define networking as the production, distribution and consumption of goodwill and services. Rather than goods, we distribute goodwill. And let’s reaffirm the root word of “services,” which is to “serve.” This way, networking inherently takes a positive and productive role. Equipped with the will to do good and the desire to serve, networking now takes new form and will increasingly benefit multiple parties.

Yes, a negative, selfish version of the economics of people can exist, but I purposely focus on the positives and envision a state where we embrace the goodwill and service, rather than simply take advantage of others. If we start with what we can give and invest, this creates social economic flow—and good economies need to circulate these resources. In effect, we elevate networking from meeting people to building social capital and producing economic goodwill. In building social capital for tomorrow, rather than today, this prompts us to think strategically, as any great strategist predicts, plans and shapes the future.

Concretely, let’s break down the three core areas of these economics and place them in social context: production, distribution and consumption.

Production: Networking should involve producing goodwill. This means investing in others, while investing in yourself. Networking essentially builds social capital. The more you invest in others, the more capital you build. When networking, think about how you can help others to grow them professionally. This includes event invitations, sharing information or giving them a resource or gift that will help them in some way. Rather than meeting someone to ask for a favor, when you invest in them, you add funds to your social investment in your relationship with them. And if the person you invest in can’t or won’t help you in the future? Think of it economically as a write-off. Isn’t that philanthropy and giving? Either way, you’ve engaged in productive behaviors by investing in others.

Distribution: Like the economy, resources need to circulate and flow. Relationships should follow the same path. Networking should entail more than meeting people and growing your own numbers. It can entail connecting existing contacts in your network with others. Connecting people to one another will build goodwill and relationship flow. When you introduce trusted people in your network, as long as they find synergies, they will refer back to you and how you’ve matched them up in a great way. You will develop into a networking nexus. Remember, stimulating an economy means distributing resources. The economics of goodwill, or networking, entails engaging this at a people level.

Consumption: If someone else consumes your service and connections that you’ve distributed their way, hopefully, they will utilize and appreciate it. This service or goodwill lives with them. Like any investment, if they grow from it, then you will hopefully receive an excellent return-on-investment (ROI) from them in the form of a stronger relationship. You may cash in on this social investment and ask for help from this relationship one day—that’s a social ROI.

Think about the reverse effect of an economy. If everyone hoards cash and fails to circulate it, this constricts the entire economy. In turbulent economic times, when all hits bottom, that’s the best time to invest. If you stimulate the social economy as an investor, you’ll receive future dividends as you grow your portfolio of relationships. Even if you never seek the ROI, you’ll at least know that you’ve engaged in philanthropy that has positively changed the lives of others. That’s networking, or the economics of goodwill, at its best.

As the Managing Partner of Spectrum Knowledge, Inc., Vu H. Pham, Ph.D. works with dozens of organizations from the Fortune 500 to governmental and non-profit agencies to boost organizational performance and strategic effectiveness. He conducts interactive training and data-driven research to achieve these results. He also currently chairs programs at the Center for Executive Development at the UC San Diego Rady School of Management, as well as Chair of the Center for Research on Employment and the Workforce, known as CREW, a partnership with California State University—Fullerton and the University of California, Riverside.