The changing face of business relationships.

From networking to net-working.

“People buy from people” is something that is frequently quoted at me. And yet the evidence is that we’re becoming increasingly comfortable buying a lot of things from a faceless online retailer who we never speak to and may not even be located on the same continent.

As a psychologist, I have to ask “why?”Has our diet of Apple, Blackberry, Raspberry or other selected fruit based technologies changed our business appetites? Geography has, especially, become less relevant as we are able to extend our trade networks from Bognor to Boston and beyond and collaborate with anyone and everyone in real time.

However, there is one sophisticated piece of technology that hasn’t been updated recently – and that’s our brains. Our inner caveman still dictates a lot of our behaviour. That’s why, despite thousands of technologies out there that will kill distance, we do often still default to face-to-face meetings.

As we virtualise, there is a huge need to understand the dynamics of collaboration better – especially since this research suggests that less and less of us are meeting in person, although we would like to. Email is often the collaboration tool of choice in the digital space – even though it is objectively an exceptionally bad collaboration mechanism. For a start, email collaboration requires me to know WHO I need to collaborate with before I can contact

them. It’s hard to convey any emotion in it – unless I pepper it with emoji or emoticons ;). Plus those rather strange millennials (a.k.a. young people) existing amongst us think email is “so last year”. Chat and social media is often where it’s at with them. They may have a point.

When is email appropriate? When is it better to pick up the phone? Does social networking really work and why is face-to-face sometimes worth the effort?

All of these questions are things we need to understand, and quantify, as our digital future beckons.

By understanding how we can collaborate better in both the real and virtual world, we can move from “networking” to “net-working” for future business success.

Dr Nicola Millard, Head of Customer Insight & Futures BT Global Innovation Team.

111

Snapshot of a changing world.The world is changing faster than it ever has. This extraordinary pace of change is especially evident in the way we do business.

When you’re caught in the middle of change, it’s sometimes hard to understand what impact it’s having on you. But the more you understand, the better you can adapt. And the better you can exploit the new opportunities that change throws your way.

That’s why we’ve commissioned a major new research project by market research and strategy consultancy Populus into exactly how our business relationships are changing. This report is a summary of their findings.

The methodology.

WHO: Populus interviewed 1,001 senior decision makers at businesses with 0-500 employees. We chose the interviewees carefully to represent companies of different sizes (0-9, 10-99, 100-249 and over 250 employees).

HOW: The interviews were conducted via an online panel.

WHEN: The fieldwork took place between the 5th and 16th of June, 2015.

Entrepreneurs at ease with connections.

Technology has been a key enabler in connecting start-ups and growing businesses to each other, to suppliers, and to potential customers in the UK and across the globe.

This report shows entrepreneurs increasingly at ease in making connections and doing business with people they haven’t met (whilst still placing a high value on face-to-face communication). It shows technology has made the world a smaller and more connected place, and one that makes the working life of the self-employed so much easier. For instance, we can see social media is being embraced for promotion, cloud computing for key business functions and digital marketplaces for international trade.

Each day I see modern small businesses growing through outsourcing, and sub-contracting work to partners and fellow professionals. They are building profitable and nimble businesses, and realise the ability to form and manage partnerships is a key factor in commercial success. Powerful partnerships equals profitable business has become a mantra in the world of small business. This report makes a significant contribution in making the case for collaboration, connections and partnerships. I’m sure it will be embraced and acted upon by small businesses, from all types of sectors and various stages of growth.

Emma Jones MBE, Founder, Enterprise Nation.

Virtually normal.Business revolves around relationships. People connecting with people. In the past, these connections have largely been made face-to-face in real time.

Our research shows that the virtual business relationship is now becoming increasingly the norm. We believe this will become even more prevalent in the future, due to the fact that younger business managers are far more likely to have customers or clients that they have never met in person compared to older managers.

What do we mean by a virtual business relationship? It’s one where two or more people in business interact and deal with each other mostly, if not exclusively, via technology.

We’ve always placed a high value on business relationships. We know how critical they can be to our success.

That basic principle hasn’t changed. But what has changed is the way we collaborate with our partners in business, be they customers, colleagues or suppliers.

Nowadays the first connection between businesses is often made virtually, through social media networks. And highly effective business relationships can be maintained without anyone ever meeting face-to-face. None of this could have been possible without the internet, a technological advance that has had a major impact on the way we work together.

This is a trend that’s set to grow as the next generation of business managers takes over. These Generation Y business managers (those born between 1980 and 1992) have grown up as digital natives. They are more at ease with forming and maintaining virtual business relationships using social media and email. In contrast, their older counterparts place a higher value on the power of face-to-face meetings.

For all that, we believe that face-to-face communication remains absolutely invaluable in the world of business. But technology has the power to bring about exciting new collaborations, to forge unexpected connections, and to make great teamwork a possibility for every business, no matter where the teams are based.

As this report shows, relationships are everything to businesses. When you collaborate, you can never know where it will take you. But you can be sure you’ll achieve more than you could on your own. The challenge – and the adventure - is to connect with others and see what happens.

Collaboration is still the key, but the way we collaborate is changing.

3

Geographical distance is given as one of the main reasons for a lack of face-to-face contact. Look at it another way and you could say that technology is enabling meaningful and productive relationships to be forged, regardless of the distances involved. You don’t have to be in the same room to collaborate with someone any more. You don’t even have to be on the same continent.

31% say it’s because they are

based in a different country.

85% have suppliers or clients they haven’t met.

62% of businesses have clients they’ve never met.

82% of business managers aged 18-34 are more likely to have customers or clients they have never met in person, compared to 60% of managers aged over 35.

97% of business managers aged 18-34 are more likely to accept contacts they have never met in person, compared to

59% say it’s because they are based

elsewhere in the country.

The main reasons they haven’t met a client or supplier.

56% of businesses have clients they’ve only ever

contacted by email.

42% of businesses communicate with each other by email.

26% of people use the phone on a daily basis.

“You may not be checking your emails out of hours, but with mobile apps and Facebook you are just constantly

connected to the client.” Nick Telson, DesignMyNight.com

4

72% of managers aged over 35.

Face-to-face facts.Even though virtual business relationships are booming, face-to-face contact still has its place. Many senior managers continue to value it highly, and say they prefer it for communicating with both colleagues and people outside their business.

There are some things that are best done face-to-face, but it may not always be possible for business people to meet in person. As people get more comfortable interacting virtually, we predict that this will become less of an issue.

Certainly, evidence suggests that the next generation of business managers will use technology such as video conferencing as a substitute for face-to-face meetings, using technology to maintain a personal connection with their business partners.

We’ve also found that younger managers are already willing to invest a similar level of trust in remote relationships, as their older colleagues invest in face-to-face meetings.

29% of managers say they prefer a face-to-face meeting when they need to communicate with someone outside their business about a specific project or work situation.

Only 13% use face-to-face meetings as the most common way of communicating.

“Phone calls and emails are fantastic for work but you tend to treat them quite formally…when meeting

face-to-face, you’ll ask that same list of questions but also build a relationship with that person.”

Adam Sopher, Joe & Seph’s

“Meeting a client face-to-face shows a sense of commitment from both sides, and adds value to

the relationship.” Mark Spoors, Esportif International

5

Performing under pressure.Today’s business environment is highly complex and demanding, placing incredible pressures on business people to perform. Somehow we need to find a way to equip ourselves with a wider set of skills than ever before.

One way of meeting these demands is to embrace collaboration and partnership as a way of working. Our research shows people in business are increasingly relying on partnerships with other businesses to help them meet this demand. It will be interesting to see whether this trend continues. Given that younger managers are just as likely as older managers to believe in the benefits of partnership, we predict that it will.

81% of businesses say that to succeed in business today you need a wider range of skills than ever before.

82% of businesses have had to seek help from another business when attempting a new or unfamiliar task at work.

37% of businesses are working with more businesses than five years ago.

Typically, a business will work with 30 other companies.

Why businesses agree to partnerships

76% helping them succeed

33% gaining new business opportunities

21% extending their services and capabilities

17% sharing knowledge.

Teams don’t necessarily need to have all the expertise in-house, provided they know how to access it quickly. Our research shows that reciprocal arrangements where knowledge is shared equally can lead to benefits and opportunities for everyone involved.

By connecting people with people, we can create a free flow of ideas and more fluid, agile working practices. We can even beat deadlines by connecting with collaborators in a different time zone on the other side of the world.

6

Fewer than 50% of interactions with their colleagues is face-to-face.

56%

30%

of business managers aged 18-34 have used video conferencing,

compared to 30% of managers aged over 35.

42% of businesses say they need help from other businesses to fill skills gaps.

The power of networking.‘Networking’ used to be just a buzzword. Now it’s the cornerstone of how we all do business. Companies use networking to get new business leads, to recruit colleagues, to source suppliers, to share knowledge and to influence potential advocates.

It’s still true that the majority of new clients and suppliers are met through existing clients and suppliers. However, smart businesses actively use networking as a way of extending their reach and growing their business.

We predict that networking will become more and more important in the world of business. That’s because a greater proportion of younger business managers are turning to networking events to secure new business partnerships.

71% of new business leads still come from existing customers and clients,

24% of businesses find potential new clients in the virtual space via online networking sites.

Networking events are especially popular with larger companies, as over 50% of business with more than 50 employees

use networking events to meet potential clients or suppliers.

compared to 29% of managers aged over 35.

7

57% of business managers aged 18-34 meet potential new clients through networking events,

38% through mutual friends and

31% from attending networking events.

A look at LinkedIn.LinkedIn describes itself as ‘the world's largest professional network with 300 million members in over 200 countries and territories around the globe’.

Most senior managers who are on LinkedIn get a lot out of the site. They see it as a great way to make new and rewarding contacts.

Any risk involved in accepting and offering invitations to connect with ‘strangers’ is far outweighed by the perceived benefit – the chance to grasp a new business opportunity. Today’s stranger may be tomorrow’s client, or even business partner.

As we’ve seen, this trust in remote relationships is becoming the new norm. Most senior managers on LinkedIn are more than happy to accept connection invitations from people they‘ve had no prior contact with. A significant proportion claim that connecting on LinkedIn has already led to new business opportunities.

The way managers use LinkedIn reveals a real generation gap. The more digitally connected younger business managers are far more likely to use sites like LinkedIn than their older peers. We see this as a strong indication of what’s to come. If the current behaviour of younger business managers continues into the future, we expect more and more business relationships to grow online.

54% of senior managers are on LinkedIn.

73% have accepted a LinkedIn request from someone they have never met.

54% have accepted a LinkedIn request from someone they have never had any contact with at all.

70% say it’s because they work in the same industry.

62% say it’s because they see it as a new business opportunity.

57% say it’s because they have a shared contact.

39% say it has led to new business opportunities.

The reasons people accept requests from those they don’t know.

Average number of LinkedIn contacts is

243.45% of business managers aged 18-34 use sites like LinkedIn, compared to

22% of managers aged over 35.

8

Conclusion.We predict collaboration will continue to be a big part of British business in the future. In an increasingly competitive business environment, having a greater range of skills is more important than ever. Strong relationships are crucial. And whether they are forged online or offline, through existing connections or networking events, partnerships are as relevant as they have ever been.

In this ever-changing world, technology will continue to be a key enabler. It’s the glue that binds the business community together. It has the power to connect people and projects even beyond national boundaries. It can also be a way of nurturing and protecting vital relationships.

Whatever else happens in the future, we can safely predict that we will become ever more reliant on technology as the medium through which we create and experience our business relationships.

9

His dad used to make fantastic flavoured popcorn, and four years ago Adam Sopher, his mum Jackie and his brother Paul decided to take a punt and see if the world was ready for gourmet popcorn. With dad as Head Chef and mum in charge of packing and logistics, Joe & Seph’s Popcorn was born. They now produce 40 award winning flavours (they have 24 Great Taste Awards).

Joe & Seph’s has collaborated with the likes of Laurent Perrier, who they made a bespoke popcorn flavour inspired by the LP’s Chelsea Flower Show garden. Their partnerships are not limited to food and drink companies - they were recently approached by a Covent Garden clothing store. Adam probably has one or two partnerships at a time, around 20 in total since the start of the business. They’re not all permanent; they usually serve a specific purpose.

Adam gets support and advice from an informal network of other food businesses who are offering similar premium products, and says “it’s great to bounce ideas off each other. The food community is small so it’s easy to pick up the phone and chat to someone”.

But social media also has its place. Adam finds that LinkedIn is a great tool for finding the right contact within a company he might want to approach, for example as a potential stockist. It’s really useful, as category buyers in the food industry are renowned for moving around a lot. He also uses Facebook, Twitter, Instagram and Pinterest for brand building and “loves pretty much all social media”.

And how is it working with his family? “We all get on really well”, says Adam, “Of course there are challenging times, but as we’re family we are able to 100% trust each other which is so important”.

10

Case Study: Joe & Seph’s

To find out more about BT Business please visit bt.com/business