How Big a Deal is “The Relationship Economy?”
Wednesday, March 17th, 2010Posted by Leslie Pratch; written by David Friedman
Today we have a guest blogger, David Friedman, who has a masters degree from the Yale School of Management and prior to starting his current firm, Bridgewell Partners, was a former partner at McKinsey & Company. He writes:
There’s been a lot of writing about the relationship economy. I have been wrestling with some of the fundamental issues/ questions and would love to have an engaged dialogue with people about it.
What I get, and deeply believe
(1) People working together with new electronic tools can create immense economic value. Many tools (social networks, etc.) are are inexpensive or free. Leveraging these tools and the relationships they facilitate (new relationships, stronger relationships) are central benefits of “the relationship economy.”
(2) Relationships in themselves are valuable to people. There is a social value to being connected to other people ; for example, people who have lots of friends live longer. Relationships are also the major (maybe sole) mechanism for personal growth, and people want to grow personally (become wiser).
(3) Many people understand that establishing rewarding relationships begins with giving, and creating trust begins with trusting.
What I’d like to think more about and talk with people about is the bigger “so what”
The relationship economy is a big deal for sure; I’m wondering if it’s a giant deal.
(1) Is the “relationship economy” just a new front in the old self-interested free enterprise economy? It certainly is that: it gives brands a new way to connect with people and can change the way companies innovate. It definitely provides some power shifting within the economy. But it would only be a fundamental change economically if it changed economics so much as to alter the world in a meaningful way. For example, if better innovation could cut the cost of what we buy by 50%, effectively doubling our income – then that would be a fundamental change (where a quantitative shift leads to qualitative difference).
(2) Is the “relationship economy” most important because it lets people start to value relationship and the experience of relationships as extremely valuable in themselves? People are starved for attention from other people–real attention, real understanding. They want the social benefits of connecting, for the experience itself. I had this “social benefits of connecting” experience while posting my first LinkedIn question. It was about software and I got 20 responses. I engaged in dialogue with about half the people, and feel like I found a new friend or two – because I asked for help and they responded effectively.
(3) Is the “relationship economy” a critical phase in the explosion of the Internet, creating a “new nervous system for the planet” and making it much easier for people to think about the whole? If this leads to more interest in the “whole” and less in “my share of the whole” then it is transformational. I think by analogy of this picture of the Earth taken from space. Seeing the planet shows us a whole and makes it harder to disregard it. Will we start thinking about the “whole” (whatever that is) and focus on making that healthy? To repeat, that would be transformational.
Which is it? Or is it all? Or is it up to us to make of it what we do? Comments are most welcome.
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Leslie Pratch, Ph.D. is a clinical psychologist who trained at Northwestern Medical School with an M.B.A. in Strategy and Finance and a B.A. in Religion from Williams College. She works with boards of directors and private equity investors to select and develop executives. She can be reached at (312) 464-7919 or email her at leslie@pratchco.com or visit www.pratchco.com.
David Friedman is a consultant, educator and thinker who cares deeply people and what happens to us. He is dedicated to creating high integrity individuals beginning with early childhood. He can be reached at (312) 863-3489.
