Business | Schumpeter

The network effect

Being a good networker pays off—but it requires skill as well as shamelessness

THE purported theme of the World Economic Forum (WEF) changes every year. At this year’s gathering, on January 21st-24th, it will be “the new global context”. Last time, it was “reshaping the world”. But the forum’s real theme is less ponderous, and more constant: the power of networking. Many people protest that they would rather devote their time to real work than to schmoozing. But the fact that more than 2,500 of the world’s busiest people fly out to the small Swiss resort of Davos for the shindig each year is proof that schmoozing gets results. As a veteran of the WEF once put it, “contacts ultimately mean contracts.”

Networking is not just for the elites. A study of staff at a range of German workplaces, carried out over three years by Hans-Georg Wolff and Klaus Moser of the University of Erlangen-Nuremberg, found a positive correlation between the amount of effort the workers said they put into building contacts—inside and outside their offices—and their pay rises and career satisfaction. “Networking can be considered an investment that pays off in the future,” it concludes. Indeed, Reid Hoffman has become a billionaire by investing in a series of companies that have brought networking to the masses—Friendster, SocialNet and LinkedIn.

How does one make the most of a networking opportunity, whether it is in a charming village in the Swiss Alps or in the conference hall of a soulless hotel next to a motorway? A few people are natural networkers. Bill Clinton is the superman of this world. He wraps people in his psychic embrace, persuading them, momentarily, that they are the most important person in the world to him. A few business leaders are also naturals. For example, Goldman Sachs’s boss, Lloyd Blankfein, has a knack of making people feel he has taken them into his confidence. But most people are more like Hillary than Bill; they have to work at it.

The first principle for would-be networkers is to abandon all shame. Be flagrant in your pursuit of the powerful and the soon-to-be-powerful, and when you have their attention, praise them to the skies. Academic research has found that people’s susceptibility to flattery is without limit and beyond satire. In a study published in 1997, B.J. Fogg and Clifford Nass of Stanford University invited people to play a guessing game with a computer, which gave them various types of feedback as they played. Participants who received praise rated both the computer and themselves more highly than those who did not—even those who had been warned beforehand that the machine would compliment them regardless of how well they were doing. Yes, even blatantly insincere, computer-generated flattery works.

But shamelessness needs to be balanced with subtlety. Pretend to disagree with your interlocutor before coming around to his point of view; that gives him a sense of mastery. Discover similar interests or experiences. People are so drawn to those like themselves that they are more likely to marry partners whose first or last names resemble their own. Go out of your way to ask for help. Lending a helping hand allows a powerful person to exercise his power while also burnishing his self-esteem. In his time in the Senate, in 2005-08, Barack Obama asked about a third of his fellow senators for help and advice.

The second principle is that you must have something to say. Success comes from having a well-stocked mind, not just a well-thumbed Rolodex. It is tempting to treat the conference’s official topic as a bit of a joke. Wrong. The more seriously you take it, the more you will succeed in your, and the gathering’s, true purpose. Go to the main sessions and ask sensible questions. Reward the self-styled “thought leaders” in each session by adding them to your Twitter “follow” list. But don’t get carried away. It is a mistake to lecture people on your own pet subjects, as this columnist has discovered. It is an even bigger mistake to question the shibboleths of the global elite. There is a case to be made that homogeneous organisations can do better than ones with diverse workforces, for example. But don’t go there. The aim is to fit in by saying the right things, not to challenge the received wisdom.

The third principle is that you need to work hard at networking. Swot up in advance on the most important people who will be at an event. If you manage to meet them, follow up with an e-mail and a suggestion to meet again. Mukesh Ambani, the boss of Reliance Industries, one of India’s largest conglomerates, makes sure that he is briefed on people he is about to meet, and asks them about their interests. Mark Tucker, the boss of AIA, one of Asia’s biggest insurers, follows up conversations with detailed e-mails, sent at all times of the day and night. Julia Hobsbawm of Editorial Intelligence, a firm which coaches executives on how to network, says that it is like exercise and dieting. You need to incorporate it into your daily routine.

Brown-nosing ahead

Although successful networkers must be calculating, ruthless and shameless, they do better when they somehow make it all seem spontaneous, accidental even. One trick is to engineer “chance” meetings that get you closer to your prey. If he is a fitness fanatic, for example, be working out in the hotel gym when he arrives for his early-morning session. Another is to make sure the people you socialise with happen to be able to introduce you to people who are useful. One of the best guidebooks on this subject, by Keith Ferrazzi, is called “Never Eat Alone”.

The perfect solution is to make networking a fundamental part of your job, perhaps by becoming some sort of ambassador for the company or maybe even by founding a global network of your own. In 1971 Klaus Schwab was a 32-year-old business professor, who might have spent his life publishing obscure academic articles. But instead Mr Schwab organised a meeting of European executives, which grew into the WEF. It now has an annual budget of $200m, and the bosses of the world’s biggest firms pay tens of thousands of dollars each to rub shoulders with him.

This article appeared in the Business section of the print edition under the headline "The network effect"

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