Business Relationship Development: The Value Exchange Model for Building a Network That Works

Chris Herbert
11 hours ago
5 min read

This post is part of our Business Relationships series, which explores how entrepreneurs can build, evaluate, and protect the partnerships that drive their business forward. Start with the series overview: Business Relationships: Why Trust Is the Foundation.

What do you think is one of the most important assets when it comes to your career or your venture? It’s your network.

Actually, your network and the people (not organizations) in it are instrumental in you getting ahead and improving your chances of success. It is a fantastic source and creator of value.

But a network is only as strong as the trust within it. If you haven’t read our post on why trust is the foundation of every business relationship, start there — because value exchange without trust is just a transaction.

The way people “network” needs to be studied under a microscope, because many get it wrong. Others have no idea what building a network entails and whether it’s worth it or not. Effective business relationship development isn't about collecting contacts — it's about building a system of mutual value exchange.

In this post I’m going to focus on the three key sources of value you should seek AND provide when building your network. These three sources are the ingredients from which value exchange takes place. I use the term Value Exchange Network (VEN) as a means to connect network development with the idea of exchanging value.

Value Exchange Defined

In any relationship with an individual there is an exchange of value… or lack of it.

Whether it be a friendship, marriage, or a business relationship, both individuals need to give something and get something.

When the value exchange is one-sided, one person gains and the other loses. These are unhealthy and inequitable relationships, and whether they be personal or professional, they suck!

The challenge is that one-sided relationships don’t always announce themselves. They often look promising at first — exciting, even. The signs that you’re giving more than you’re getting tend to emerge gradually. In Who's Worth Your Time and Who Isn't, we look at the practical signals that tell you a relationship is going to be one-sided before you’re too deep to walk away easily.

You instinctively know whether a relationship is equitable by virtue of how that relationship with that person feels and the degree to which you support and help each other. There are a series of exchanges you have through conversations, actions, and deeds.

The ideal relationship is one where you both are interested in each other’s well-being and success. And that the value you offer each other helps move you both forward.

Value Exchange Types

There are three forms of value you can offer and receive. They have economic, social, and cultural value. Each of these types provides some form of capital or compensation.

Economic Capital

This relates to the command of economic resources (money, assets, property). It may be the abundance of valuable material possessions or resources; all property that has a monetary value or an exchangeable value.

There are three kinds of economic capital: Income, Equity, and Assets.

Income comes in the form of revenue for the business and income, dividends, and bonuses for those involved in the venture.

Equity is a form of ownership delivered through shares and stock options.

Assets can be tangible or intangible — homes, buildings, other businesses, intellectual property, and brand value that increase the valuation of a venture.

The outcome of economic capital is wealth.

Social Capital

This consists of the value that you and your network of connections and relationships offers or can exchange. More formally, it’s a group or system of interconnected people and ventures where you connect, operate, interact, and exchange information.

There are three kinds of social capital: Resources, Relationships, and Societal Impact.

Resources are the assets required or desired in order to create, deliver, and capture value.

Relationships lead to introductions, referrals, and access to subject matter expertise.

Societal Impact creates significant, positive change that addresses a pressing social challenge.

The outcome of social capital is a network.

Cultural Capital

Definition: a venture’s (or person’s) knowledge and intellectual skills that provide advantage in achieving higher social status and influence in society and/or within an industry.

It is the combination of observable and measurable knowledge, skills, abilities, and personal attributes that contribute to enhanced professional performance and ultimately result in a venture’s success.

There are three building blocks to creating cultural capital: Knowledge, Experience, and Expertise.

Knowledge emphasizes theory and the obtainment of information and ideas.

Experience stresses practice — the application of knowledge over a prolonged period of time to reinforce understanding of subject matter or a certain task. Experience means you’ve done something a lot.

Expertise means you’ve done it a lot and you do it well. We achieve expertise by doing something a lot, paying attention, and caring.

The outcome of cultural capital is capabilities — a key building block in building trust.

Putting the Value Exchange Model to Work

Knowing the three types of capital is the starting point. The harder question is: how do you evaluate whether a specific relationship is actually delivering on them? How do you stress-test a potential partnership before committing your time, money, and reputation?

That’s where a decision-making framework becomes essential. In our Business Relationship Management Framework, we take these three lenses — economic, social, and cultural value — and turn them into a practical evaluation tool you can apply to any business relationship or promotional opportunity you’re considering.

And when the evaluation reveals that a relationship is one-sided? That’s when the protective discipline kicks in. Who’s Worth Your Time? examines the three costs of every business relationship — your reputation, your alignment, and your resources — and offers a framework for knowing when to walk away.

Summary: A Model for Business Relationship Development

This post has been written to help you approach business relationship development with value exchange as a key driver. We look at value exchange through two key lenses: your business model and your network of relationships. The three types of capital — economic, social, and cultural — are the currency of every business relationship and venture, and understanding them is the first step to ensuring the exchanges in your network are equitable and productive.

Whether you’re a business professional, tradesperson, entrepreneur, or a CEO of a multinational, you can use this model for yourself and your organization. I hope this post has helped you think about your business network in a new or better way.