As SMEs across Canada rely more than ever on the value of online tools and spaces, digital networking has regained a central role in commercial considerations. Networking has developed beyond social media follower counts to become an often intangible source of value that translates to success in many areas.
Studies show that developing the value of your digital network is a central pillar for successful SMEs. “The better entrepreneurs are at practicing these networking behaviors, the more influence they have on the success of their startups… [and scale-ups],” write researchers from two Jordanian Universities in their paper, “The effect of networking behaviors on the success of entrepreneurial startups”.
But what is digital networking? It’s not a new concept, but it still can mean a variety of things to different people, and there are many different types of digital networks, serving different purposes for entrepreneurs.
Traditionally, interpersonal networking for business usually revolves around cultivating contacts, socializing with your connections, involving yourself with the community and in professional activities. However, the inclusion of artificial intelligence and algorithms and other features of digitization give entrepreneurs even more ways to extract the most value from their connections.
“We're seeing the world innovate at an exponential rate,” Keith West, founder and CEO of Network & Chill, recently told entrepreneur.com.
“Having a one-stop-shop to connect startups with like-minded brands, founders, marketing professionals and businesses, offering advice and connections to help guide and support individuals on their entrepreneurial journey, is essential.”
The benefits of networking for SMEs For individual entrepreneurs, the immediate benefits of online networking for small and medium businesses are well known, and are only getting stronger as more businesses digitize both across Canada and worldwide. According to HubSpot, a reported 85% of job openings are filled via Networking, and if the percentage is to be believed, is the first place the vast majority of customers look to when trying to connect with a business, or find a product or service.
In a study on the networking behaviours of entrepreneurs and investors among the alumni at X, researchers found that professional networks are the most effective in:
Market due diligence
Advice on management
Fact-finding on new industries
Discovering service providers for your business
Identifying a variety of best practices
Networking has also been credited with lowering transaction costs, increasing social capital, achieving economies of scale, and fostering internationalization, and on.
“Expanding perspectives [through networking] gives each of us an opportunity to invite diverse viewpoints into the way we build our products and services. It helps us invite the expertise of others into our thought process and be sure we’re building in a way that will best serve our customers,” CEO and Co-Founder of Remento, Charlie Greene, tells Cubeler.
Rebecca Kacaba, CEO and co-Founder of DealMaker, agrees. She tells us that “building your network is your best way to have as many feet on the ground as possible and is key to keeping your finger on the pulse of your industry. Staying connected with all the different players in the space lets us take a proactive approach, rather than a reactive one.”
Harnessing the power of indirect network effects
One of the most common conceptions of successful digital networking is follower or friend counts, like those collected on Facebook or LinkedIn. The more followers you have, the farther your “reach” and the more leads (or growth, or value, or data, or whatever other metric you’re looking for) you achieve.
While acquiring a wide network base is often one goal, it represents a closed, direct network, which usually can only expand one way and requires endlessly adding new people and organizations to increase its value.
Indirect networks, on the other hand, occur when network users and providers interact in a mutually optimal way, and can eventually become self-perpetuating. Sometimes referred to as the “flywheel effect,” indirect network effects occur when every new user increases the value of the network to existing users. This is done in numerous ways, depending on the type of networks, businesses, and industries involved.
One example is This mutual exchange creates a cascading benefit to SMEs, and should be valuated as a light asset that intangibly drives financial value.
Creating value in your network
“The most valuable aspect of networking … is the sharing of rich, or street-level information,” advises Michael Clouser
Start with your value proposition and target it to your primary audience.
Consult data graphs to track your network using datagraphs to personalize customer recommendations, update products, optimize advertising, and more.
The nodes exchange more of these things when the friction is low due to physical proximity, interaction frequency, tribal trust, similarity, etc. The nodes also exchange more when the benefit is high due to resources gain, status gain, tribal trust gain, etc.
Networking is a key element for any SME to fully realize their marketing efforts. As business has evolved however, so have the ways in which networking takes place in today’s market. One thing SMEs must keep in mind as was mentioned is that fostering your networks, both direct and especially indirect, is key to increasing the ability your SME has to reach newer and possibly more lucrative audiences. It’s not only about using the gift of the gab as was coined in the late 1700’s, these days it’s about extending your “reach” via digital methods. LinkedIn, Facebook, Twitter, etc., as all vast resources that can reach millions of people that you would never otherwise meet face to face. Beyond simply extending your reach, the same values hold true, you most foster your relationships and continually engage in an exchange of information that results in the mutual benefit of the entire network. Today’s concept of networking has never been more vast, and to some complicated, yet despite this, once you step into the modern networking landscape, you’ll soon discover it’s just as easy as it’s ever been. Connect with your networks' network, and create value at every step of the way.
Building your network in today’s world is not simply about connecting with as many people as possible, even if this was once the best practice. These days, you most cover all your bases, reach out through multiple different avenues, and ensure that your network doesn’t remain limited to those directly around you. Indirect connections can not only quickly become first line connections once a mutual interest is discovered, but the number of ways you can extend your reach to your indirect network has multiplied, making it as easy as sending a quick message, friend request, or in mail message. Remember, in the digital age, your indirect connections can quickly become direct connections with the simple click of a button, or friend suggestion.