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Monday, March 03, 2008

Relationship Capital can never be destroyed

The Laws of Relationship Capital - Part 5
The Fifth Law

By Adam J. Kovitz, CEO, Editor-in-Chief
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So far in our series on the Laws of Relationship Capital we have learned who and what may possess Relationship Capital, even long after they’re gone (historical figures, fossil fuels). We have learned how both quantity and quality play into the calculation of Relationship Capital. We have learned that Relationship Capital Value can be both positive, neutral or negative and fluctuate with time, depending upon our actions. Furthermore, we have learned that the implications of the first four laws will allow us someday soon to develop a more complete picture of the world around us; past, present and future. And while all this is fine and good, there are many questions left still unanswered, such as “What is the final resting place of all Relationship Capital?” and “What’s the worst thing that can happen in the world of Relationship Capital?” This is where the Fifth Law comes in…

The Fifth Law

Based upon the the first four Laws, the Fifth Law states that:

Relationship Capital can never be destroyed.

Let’s examine the implications...

Old Soldiers

We have stated before that relationships last forever; whether they are recognized or not, they still exist. We have also stated that Relationship Capital Value can have a neutral state (zero) representing a relationship that is unknown, unrecognized, undiscovered, brand new, irrelevant, inert, forgotten and having no recognizable effect whatsoever upon any other Relationship Capital Entity (people, products, assets, business units, authoritative position). Who would have thought that when General Douglas MacArthur said, “Old soldiers never die; they just fade away,” he was making a prophetic statement about the nature of Relationship Capital!

The Effects of Fame/Notoriety

Of course the mere mention of MacArthur’s quote in this publication shows that this soldier never really did “fade away” and of course his legacy lives on in his own personal Relationship Capital Value. This example, however, gives us insight into the nature of both fame (or notoriety) and Relationship Capital; if we map out Relationship Capital Value (measured in Relationship Capital Points, or “RCPs”) over time there is some boundary (possibly Malcolm Gladwell’s “Tipping Point”?) or “fame/notoriety threshold” by which the nature of Relationship Capital is less likely to be altered with respect to time. Once the fame/notoriety is crossed, the adage “it’s not about who you know, it’s about who knows you” becomes quite relevant because the amount of relationships and interactions drawn to the famous entity is effortless…for better or worse.

The above graph indicates three subjects: Subject A, who achieved fame over their lifetime, Subject B, although with considerably positive Relationship Capital never quite “made it” and Subject C, who rose quickly to fame only to quickly fall and achieve notoriety. The good news is that we have complete control over our Relationship Capital Value, provided that we have not breached either of the two thresholds and, as stated in Part 4 of this series, can modify it by applying Reputational Force through our own actions. The bad news is that we only have control over our own Relationship Capital as long as we are alive and even if we are alive, we have less control when we are either famous or notorious.

The End of the Road?

So if fame is Relationship Capital’s best friend, obscurity is its worst nightmare; zero RCPs. Time, of course, also plays its part. While MacArthur’s statement, in context, was about himself (click here for the full quote) and may have backfired for him (at least at this point in time), it is quite valid for the vast majority of soldiers who did, indeed, fade away.

But just because we might fade into obscurity and have no Relationship Capital to speak of, does not necessarily mean that it’s the end. The above graph shows a possible Relationship Capital graph for a creature that might have lived millions of years ago; say the dinosaur mummy recently publicized in the news and TV. Over the period of its life, it interacted with other fauna and flora of the day earning and losing Relationship Capital due to its own actions. Upon its death, it quickly went into a dormant obscurity, where it remained so for 65 million years until it was discovered by a North Dakota teen in 1990. Upon discovery, it was excavated and examined by scientists who had discovered that some of their previous theories were dramatically incorrect. Their discoveries have since been publicized and broadcasted thereby bringing a certain amount of fame to this long-gone reptile.

The Effects of Relationship Capital Decay

But while our own actions can affect our Relationship Capital, there are other effects that would work to reduce our RCPs to zero. We see this happening in business settings all the time…the “what have you done for me lately?” and “out of sight; out of mind” syndrome. Just like radioactive isotopes have their own half lives, so does Relationship Capital…to a degree.

The above graph shows the effects of decay upon Relationship Capital by looking at three subjects. Subject A has achieved a fairly high amount of Relationship Capital in their lifetime, close to achieving fame but eventually faded into obscurity (possibly after their death?). The fairly mild decay in RCPs might indicate that the person was well liked within their own personal network. Subject B, much like (yet conversely) to Subject A had a similar run of achieving near notoriety, but never quite made it either. In contrast, to the rates of decay of Subjects A and B, subject C, due achieving fame, has had a relatively slower decay, which would be indicative of one of our great historical and influential figures.

Discussion Points

And while organizations like RNIA work to turn the theory of Relationship Capital into a practicality, there is current discussion of dealing with Relationship Capital Decay by possibly assigning expiration dates to some or all RCPs. What effects this will have as we transition towards the Relationship Economy is too early to tell.

Another issue is that if Relationship Capital can never be destroyed, it begs one major question; “Is Relationship Capital created or is it always there, but just undiscovered? Does it act like energy or mass in that it can neither be created, nor destroyed?

While for the purposes of practicality it might not matter in due course of business, the implications of one versus the other would be a complete revolution in understanding. If Relationship Capital can only be created and not destroyed, then it behaves similarly to entropy, or disorder, which would also lend itself to our current scientific understanding of our increasingly-expanding universe. Relationship Capital would stand as a value that is created at inception as an immediate interaction is developed between the individual and both parents.

If, on the other hand, Relationship Capital can neither be created nor destroyed, then it begins to raise certain esoteric and controversial issues, but would also conveniently align with a “Law of Conservation of Relationship Capital”. Provided this were true, we would be forced to develop a framework of understanding that Relationship Capital may also be owned by entities that have yet to be discovered or created. If this were true, then RCPs of all entities would exist in obscurity at zero RCPs until created.

From this discussion, we can see that there is much more to Relationship Capital that just “working a room”. I am of the opinion that there is a link between Relationship Capital and Einstein’s Unified Field Theory. We can begin to see it touch upon all aspects of our lives, and while more questions are answered, more arise. Again, the purpose of these articles is to spark both discussion and thought.

Stay tuned next month, for Part 6, when we will focus upon the cumulative and aggregative effects of Relationship Capital as it applies to systems.

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The Emergence of The Relationship Economy

The Emergence of The Relationship Economy
The Emergence of the Relationship Economy features TNNWC Founder, Adam J. Kovitz as a contributing author and contains some of his early work on The Laws of Relationship Capital. The book is available in hardcopy and e-book formats. With a forward written by Doc Searls (of Cluetrain Manifesto fame), it is considered a "must read" for anyone responsible for the strategic direction of their business. If you would like to purchase your own copy, please click the image above.


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