Relationship Capital, Starting With Your Customers

As with human capital, relationship capital has always been a part of business.

Organizations have always had customers, vendors and financing partners, to name a few. But the nature of these relationships has been changing more dramatically in recent years. First of all, networking technology has made it easier to outsource pieces of a business that were formerly inside the corporation. The relationships with critical outsourcing partners are closer than that of arms-length client-vendor relationships.

You may find yourself on both sides of this dynamic, performing outsourced services for your customers but also outsourcing some of your internal processes to a vendor. Technology also facilitates customization and co-creation, which has made it easier for customers to play the role of innovation partners with your organization, again more intimate than a classic customer relationship.

Nowhere is this growing importance of relationships more obvious than on the Internet. In the next chapter, you will read how Google’s search business is so clearly and intimately tied to its users and its advertisers. These shifts help us understand relationships as a two-way knowledge asset. The line between customers, suppliers, users and relationships of all kinds are starting to blur. Every company has a unique set of knowledge assets and this uniqueness extends to its combination of relationships.

So if you want to understand the nature and strength of a company’s knowledge assets, you must understand the nature and strength of their relationship capital. Where to look? We will lay out three basic categories of relationship capital: customers, partners, and brands. Today, we’ll start with customers and look at the other two in the next few days.

Customers

Where is the knowledge in customer relationships? It is in the shared understanding of each others’ businesses. You know an enormous amount about your best customers: their history, their culture, their product or service requirements, their current market position and their goals for the future. You can probably name their management team and a large number of their staff. People in your organization have personal relationships with many of the people in their organization enabling any of you to pick up the phone and talk about challenges and opportunities you see. Sometime you will even know about the personal life of your counterpart. You will know and care about each other as individuals.

In today’s world, it is increasingly common for companies to share information electronically and even be directly networked together. This kind of link serves to strengthen your relationship but also to make it harder to end it. And the existence of an electronic network means that you are sharing information in real time. All this is knowledge. And all this knowledge gives you strength and power. It’s this kind of power that makes intangible capital more and more important in business today.

Next time: Relationship Capital and Partners

Adapted from Intangible Capital: Putting Knowledge to Work in the 21st Century Organization