Executive Insights | September 2011 | By Julie Knudson

Your Network Worth

Robust network connections help CEOs gather information, scope out trends, and spot potential brand problems.

Amit Kleinberger is CEO of Menchie's, a frozen yogurt concept.
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 Quick-serve CEOs usually get the final say when their companies make big moves or decisions, but experts say executives must maintain strong personal networks to help guide those everyday decisions.

Some of the goals of a strong C-level network are “to identify and recruit world-class talent, to identify faint market signals and match the relevant ones to market opportunities, [and] to overcome quick-serve industry challenges and obstacles through his or her portfolio of relationships,” says David Nour, consultant and author of Relationship Economics: Transform Your Most Valuable Business Contacts Into Personal and Professional Success.

Amit Kleinberger, CEO of Encino, California–based Menchie’s, developed a network that ranges from government agencies to peer CEOs of franchise companies. He says that, because CEOs are typically very busy, maximizing the usefulness of a network to reap the benefits outlined by Nour takes a determined focus.

“It’s important to make sure that networking really is for the purpose of expanding the wealth of knowledge of things that are paramount and relevant to your own company,” he says. He says a strong network of fellow CEO peers helps him know more about those topics that are important to him. “There is always information to share,” he says, explaining that other CEOs have likely faced situations he himself is up against. “I contact any one of my peer CEOs, and I ask them how they would handle it or if they handled it in the past … and if they had the same situation, what [were] their thoughts.”

Developing a good network doesn’t happen overnight, says Marley Hodgson, CEO and cofounder of Denver-based Mad Greens. “You have to work at it for a while. It’s something you can’t just up and start,” he says. “When I really put in the effort to make sure the network is healthy, those are the times when it’s paid dividends.”

Like Kleinberger, Hodgson also has a robust network that extends far beyond quick serves. However, he also seeks out peers—and even competitors—when he needs advice. He says those relationships are two-way streets, and that reaching out is valuable, especially when considering operational issues such as vendor selection. “I’m very interested to know what one of my direct competitors thinks because, most of the time, they’re going to have a legitimate opinion that I can relate to,” he says.

While Kleinberger frequently leverages connections with people outside the restaurant arena, he says CEOs should first focus on networking with peers from similar industries. “The best advice I have received thus far was from peer CEOs of franchise companies, because that’s the company that I own,” he says. “When you have a franchise company, you really need the advice of people that are aware of the specific specialty niche matters that are part of the franchise company’s day-to-day matters.”

Hodgson says the importance of internal connections is sometimes overlooked.

“Make sure that networking really is for the purpose of expanding the wealth of knowledge of things that are paramount and relevant to your own company.”

“It’s really critical that, from a networking perspective, you’re reaching down a few levels,” he says, “and that you’re not just staying networked with the folks that report directly to you.” He uses informal staff feedback to maintain a good perspective. “That’s the way you keep your finger on the pulse of your culture, and whether it’s actually being disseminated the way that you would wish it to be or hope that it would be.”

In addition to building a robust network, experts recommend developing a smaller group of seasoned advisers that can provide direct and honest advice.

“A competent, capable, astute CEO is constantly looking at his or her inner circle and is evaluating key individuals both within and external to the organization with foresight to help identify what’s around the corner, be a trusted sounding board of ideas, and decisively suggest options for the CEO to explore or evaluate,” Nour says.

He says CEOs should develop an inner circle that includes “trusted sources with unique expertise who will tell them what they need to hear versus what they want to hear.”

That sentiment is echoed by Kleinberger, who says that long hours behind a desk may result in what he calls “the CEO’s blind spot.”

“The only medication you can take against [it] is keeping a close inner circle with your team of executives and, outside, a team of advisers that you trust,” he says. Kleinberger and his inner circle share a two-way relationship, in which “I advise them, and I am advised by them.”

Cultivating relationships with other senior-level professionals, including board members, has been an important part of Hodgson’s networking efforts.

“Most of these people are executives themselves. They are CEOs, they’re owners of companies, or in some cases, high-level executives,” he says. While he leans on his inner circle for advice, he says that CEOs should also look to their closest advisers to “sometimes help you stay on the straight and narrow.”

Nour says building a successful network takes focus. “Networking, connections, or relationships are not standalone concepts—they don’t make sense by themselves,” he says. “They’re most productive when they’re an enabler of a business goal or an objective one cannot achieve by him or herself.” He says that most networking fails because it lacks a purpose and a plan, and determining which connections a CEO should make will depend heavily on the company’s challenges and opportunities.

“People are going to want to network with you because you’re a CEO or an executive, but in order to get a lot out of it, you’ve got to make sure that those are the right people,” Hodgson says, adding that it’s sometimes easy to get mired in online networks where “friend” requests can come from anywhere. “When I really want to network with somebody, I’m reaching out to them directly.”

Kleinberger says he’s been careful to develop a network that supports his specific needs and goals, rather than making connections just for the sake of it. “I will not just expand networks and attend a lot of shows and things,” he says. “I prefer doing it in a much more targeted manner because it’s a better use of my time.”