Relationship Capital

The Barista Principle -Starbucks and the Rise of Relational Capital is an interesting article on the importance of relationships. Write Ranjay Gulati, Sarah Huffman, and Gary Neilson in Strategy+Business:

Winning companies define and deploy relationships in a consistent, specific, multifaceted manner. Although some companies will dub any concluded business deal a relationship, top-performing companies focus extraordinary, enterprise-wide energy on moving beyond a transactional mind-set as they develop trust-based, mutually beneficial, and long-term associations, specifically with four key constituencies: customers, suppliers, alliance partners, and their own employees. Starbucks, we believe, exemplifies this new model of the relationship-centric organization.

The relationships with these four constituencies are so valuable that they should be considered, collectively, a core asset of a firm. We call this asset “relational capital”, and define it as the value of a firm’s network of relationships with its customers, suppliers, alliance partners, and employees.

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.