The Social Revolution

Philip de Klerk, CFO of the Olefins and Polymers business of INEOS, recalls that when he first began trying the internet for business networking there were not many people using the online space.

‘I started to use it as a way to have a very up-to-date contact list of all the people I knew. From the outset I wanted to have people on my network with whom I had real contact. I was not necessarily interested in networking beyond people I already knew,’ he says.

Judging from the blizzard of invitations that are now sent by business networks to people who have often had only the slightest working contact with members, this would seem to be a wise decision. With membership of business networks expanding at a dizzying rate the need to be selective in one’s acceptance is clear.

Some networks, however, have a clear purpose if not also an obvious utility. There are reportedly 2,000 former Lehman Brothers employees huddled together on Xing, keeping in touch to find out how they are doing in the wake of their bank’s collapse. Given that in normal circumstances refugees from failed firms tend to form a powerful mafia when it comes to giving ex-colleagues a leg-up in new employment, the online Lehman networking clique may prove to be a powerful resource.

However, de Klerk accepts the limited benefits that online networking has thus far brought to the finance function.

‘You don’t have the more intense discussions and relationships, which are established at conferences.’ He also notes that with online discussions there is always the choice of whether to continue participation, while anyone who has taken the time and expense of going to a conference is committed and will seek to take advantage of face-to-face meetings.

But he believes that this is set to change not least as, in the face of rising cost pressures, every finance function seeks to cut travel and expenses (T&E) spend throughout organisations. While he doubts that in the foreseeable future the internet will replace all physical peer group gatherings, he points to some areas where it already has growing application.

‘If, for instance, you look at business to business as I did last night with some of our INEOS customers, I found that quite a few of the CFOs are linked in. I think that if you start linking in from a supplier-customer relationship at CFO level, you can start to better understand your business models and how you can help each other.

‘You can also think of it in a more functional way. So, if chief procurement officers, CFOs or treasurers start using online networking as a way of sharing best practice or discussing questions like: "What is the impact of oil prices coming down?" or "What is the impact on credit limitations?," you have the chance of sharing views more quickly.’

Not-so-social networking

De Klerk notes that at the moment online business networking tends to be more formal than informal. When it comes to exchanging business propositions, this is as it should be. But he would like to see greater informality and faster reaction to ideas floated between networkers, in what he describes as ‘the functional sharing of information’.

‘One would discuss issues such as: "Are there different ways in which we can do business in general from supplier to customer from an industry point of view, rather than specifically from my company to your company?"’

So how far has online networking replaced the former methods – such as rounds of golf or drinks?

‘If you look at how it works online, the majority of links are related to former or current colleagues. I think there is more focus on who you know in your company rather than on who you know outside it. That is different of course for head hunters and recruiters, but the majority of the people I link to are from my existing or former work environments.’

What de Klerk feels he doesn’t see enough of is what he calls ‘active networking’. He cites a message he saw ‘floating around’ un-actioned on his network announcing a vacancy and asking fellow networkers if they knew of a suitable candidate.

‘There’s not a monthly get-together on the internet for an hour to have a discussion in a chat room and no way to actively start being busy with your network’

The problem clearly is that until online networking becomes part and parcel of a participant’s business life, the regularity and quality of contributions will not attract a critical mass of discussions, ideas and business opportunities.

Less is more

As a believer in and early joiner of the concept, de Klerk says that he initially signed up with a number of business networks but over time, discovered that it was simply impractical to sustain all of them, logging in regularly to each to read what, if anything, was going on. He has now focused most of his networking efforts on LinkedIn.

In fact three months ago, FDE’s group manager Steve Dunkerley discovered de Klerk was a user of LinkedIn and invited him to join the FDE group on LinkedIn – an online forum for CFOs and readers of FDE that has now surpassed 1,000 members. With over 500 contacts, de Klerk is certainly one of the most connected CFOs in Europe and perhaps the most connected member of the FDE group on LinkedIn.

Room for improvement

Despite the obvious benefits of making business connections, some employers are reluctant to encourage online networking because of the amount of work time that it can consume.

De Klerk acknowledges the issue saying he himself confines his networking to evening and weekends, which would seem to undermine the faster reactive element he says the process lacks.

Business networking, he admits, still needs a boost because the benefits are not always apparent.

‘When there are some really great examples of how it has helped businesses, then it will really take off. Then it will also be easier for businesses to say to their people that they should spend time online networking and make it work for your daily operations. But we are not there yet.’

Recession? What recession?

US-based LinkedIn is claimed to be the world’s largest business network with almost 30 million members who, the company says, are currently joining at the rate of one every second. According to a recent Nielsen survey, worldwide traffic to LinkedIn grew 123% in the three months to 30 September 2008, compared with an overall growth in internet users of just 10%. In June 2008 LinkedIn raised $53 million from the markets followed by some $23 million last October from the likes of Goldman Sachs and German software company SAP, giving the business a valuation of $1 billion.

LinkedIn and most other business network providers make their money from site advertising and user subscriptions for premium level access. But even though LinkedIn insists it is flourishing despite the credit crunch, not every networking site aiming at executives appears to be doing so well. Last summer a new UK company TalkBizNow launched aiming at ‘supernetworkers’, existing online business network users with more than 500 contacts individually. Unlike most of its rivals, the privately-owned firm charges users no subscriptions and describes itself as ‘a workplace tool’. The aim was to build an online community of three million in six months. However, as the year ended Martin Warner, CEO, told FDE that while the business was growing strongly he now thought it would take a year to hit this target.

‘There are now scores of other providers of space for business people to network,’ says a UK analyst, ‘LinkedIn’s success has fired up a lot of competitors, but clearly they are not all going to win. Indeed, the sheer diversity may drive would-be networkers towards the big sites, because they think they can be sure of meeting the right range of people.’

The FDE group on LinkedIn

Since the last edition of FDE, the number of members to the FDE group on LinkedIn has doubled to over 1000. FDE readers seem to have found this networking forum particularly useful in getting connected with each other and participating in the discussions that enable sharing of best practice and benchmarking. There have been some interesting discussions on the subject of fair value accounting, AP automation and about what the title ‘finance director’ actually means.

FDE maintains a strict policy on who it accepts into the group to ensure that members are not hassled by recruiters, head hunters and sales people. While the majority of members are existing FDE readers, CFOs or FDs based in Europe, FDE welcomes all FDs and CFOs onto the group as well as treasurers, financial controllers, heads of internal audit, shared services and tax.

To join the FDE group on LinkedIn, please email: stevedunkerley@ spgmedia.com or go to the home page and click on the LinkedIn logo on the right-hand side.