"It's hard to get too academic about this, because it's so damn simple," says Ed "Networking-Is-My-Middle-Name" Moldt, veteran company builder and now entrepreneur in residence at Indiana University. "Basically, all 'networking' means is what I call 'the dynamic use of contacts.' It's [a technique] salespeople and investment bankers have been using forever."
But while networking is "a very natural process," Moldt adds, "it has also reached a level of sophistication we've never seen before. With the computers and new databanks available today, networking has become a science. I tell all my students that the one thing they should walk out of here with is a dossier on all their classmates. If they don't, they're missing out on a great opportunity."
As Moldt suggests, the science of networking is being enhanced immeasurably by the power of the microprocessor (see sidebar, page 62). Hardware aside, however, this notion of "dynamic use of contacts" -- which can mean anything from getting casual advice to having peers redefine one's basic business plan -- describes a process not easily quantified in a computer program. Whether informal or highly structured, every network builds its peculiar circuitry around the personalities of individual players. As the science gets refined, so do the organizational principles used to weld these personalities together.Today, for instance, networking groups borrow liberally from work in the behavioral sciences, or from the grass-roots style of political organization that came of age in the 1960s. And yet, while each group has a signature -- and a purpose -- all its own, the organizations all answer the very basic need to plug into shared human experience.
"Independent operators have this hunger to stay in touch," agrees consultant/author Tom Peters, "and it's probably been that way since the end of the Middle Ages. Today, however, we're in the middle of an information explosion. Even with all these new databases to give you clues, you're not smart unless you humanize [that data] before you believe it."
Humanizing the data, as Eric Lesin and others in SoCalTEN have discovered, is an activity ideally suited to small affinity groups, where trust -- and attendance -- are highly valued commodities.But CEO-mentoring was not born in California, nor is it restricted to technology companies. Thirty-five years ago, for instance, at a meeting of young executives in New York City, the groundwork was laid for the formation of the Young Presidents' Organization (YPO), a worldwide network now numbering some 4,600 under-50 CEOs in 50 different countries (average company size: $40 million in annual sales, 343 employees). Through its Presidents' Forum program, YPO sponsors smaller idea-exchange panels much like SoCalTEN's.
Some criticize YPO as "too social" or "too trendy." ("Ten years ago," says Jerry Goldress, an ex-YPOer who specializes in turnarounds, "all the talk was of mergers and acquisitions and estate planning. If your expertise happened to be turning around failing companies, they looked at you like you carried the bubonic plague.") But YPO has its defenders, too, Tom Peters among them. "It's probably the strongest network I've ever seen, and that shocks me," says Peters, who admits a bias toward more informal networks. "These guys are fundamentally no-bullshit, aggressive types who like to work hard and play hard. Seminars are not their style, yet they seem devoted to [group functions] and rarely miss a monthly meeting."
Charles "Red" Scott, CEO of Intermark Inc. in La Jolla, Calif., offers a perspective on YPO that is slightly contrary to Peters's. A past president of the Southern California YPO chapter, Scott praises the group highly (he still speaks at YPO functions) but thinks it lacks the "pull-down-the-blackboard, blood-and-guts approach" that worked for Lesin and Cipherlink. For a dozen years, Scott has been part of a 13-person CEO roundtable sponsored by The Executive Committee (TEC), another group to which SoCalTEN acknowledges an organizational debt. Founded by a Milwaukee businessman in 1957, TEC puts the same premium on group dynamics that SoCalTEN does, but with more of a mixed membership to draw from. Intermark, for instance, was a public holding company (among its eight current partner firms are Pier 1 Imports, Munson Sporting Goods, and U.S. Press) doing about $30 million a year when Scott joined TEC in 1973. On his roundtable panel were CEOs from the housing, construction, and pharmacy industries.
"I thought I'd made a terrible mistake that first year," says Scott, rather wistfully. "I really thought about quitting.They weren't giving a lot to me, and I wasn't giving a lot to them. But I finally decided to stick with it."
He is happy he did. Intermark soon took a multimillion-dollar turn for the worse and started posting disconcerting losses. Employees had to be laid off, expenses were slashed; still, no one step stopped the bleeding. Finally, at the urging of his TEC group, Scott sold off one of his weakest subsidiaries, a bus company, and plowed the capital into a more profitable venture. Intermark bottomed out, took off, and this year will climb all the way to $550 million in revenues.
"I try almost all my ideas out on my TEC board before I take them to my big board," Scott says almost matter-of-factly now, "because they can pick them apart without fear of recrimination. The more mature we become, the more candid -- the more brutal -- we get."
