A couple of hundred years ago, Adam Smith presented a revolutionary idea: well-coordinated specialization is the source of economic advantage.  He saw trade and markets as providing the requisite coordinating mechanism.  That said, trade between the right sources of specialized resources at just the right time isn't always easy.  Other forms of collaboration are often required.

Out here on the economic frontier, the concurrent requirements of specialization and collaboration are increasingly apparent.  From the outset, the ambitious entrepreneur in the boonyack must think of selling his or her goods or services on a regional, national, and international scale, for the simple reason that there is no substantial local market.  But, to overcome the impediment of time and distance, the entrepreneur must offer compelling value which, in a competitive environment, requires specialization.  However, specialized output requires specialized input, which is exactly what is most likely to be missing outside the urban mainstream.

A Catch-22?

Not necessarily, say collaboration gurus Jeff Shuman and Jan Twombly at The Rhythm of Business in Boston.  You can create a virtuous cycle of productive collaborations, if you embrace the tenants of entrepreneurship in a systematic way.  To paraphrase some of the key points I gleaned from Shuman and Twombly's latest book, Everyone is a Customer:

• Relationships exist between people, not organizations.
• A relationship, whether with a customer, vendor, employeer, or investor, is, by definition, a two-way street.  Your counterparty will maintain a relationship with you only so long as you help them get what they want.  As my former partner Steve Smiley would admonish, "Sell, then buy."  And, as my friend Cindy Taylor says, "Selling is the process of helping people get what they want."
• Relationships are costly to develop and maintain.  Given finite resources, you can't invest in a relationship out of proportion to the benefits you receive.  You've got to give to get; but you need to get to live.
• Cash isn't the only currency available to you.  Your customers, products and services, competencies, technology, and intellectual property may also have value, as can information about, or access to, such currencies.  Remember that value is in the mind of the customer.
• Even though it may be fruitless to attempt to place a precise monetary value on your business relationships, it does make sense to place relative values on such relationships relative to how each relationship can help you achieve your goals.

All of the preceding would seem intuitive to the best entrepreneurs.  Greg Gianforte, the founder of RightNow Technologies and the 2003 Ernst & Young Pacific Northwest Entrepreneur of the Year, knows more than a little bit about effective bootstrapping.  He's fond of saying that there are only two core functions in business: "making bullets and shooting bullets."  Everybody else should be supporting those two functions.  So, when it comes to business, Greg constantly asks two questions of each of his relationships:

• What are your goals, and can my business help you accomplish them?
• How can you help my business "make bullets" or "shoot bullets?"

Seemingly, Greg continuously updates his ranked list of business relationships according to some hidden discounted present value function that is based upon timing, investment requirements, and returns relative to his business goals.  Is it a little disconcerting to think about human relationships in that way?  Perhaps.  But, Greg's business results speak for themselves.

For those of us who haven't yet developed Greg's skills, Shuman and Twombly's framework is most welcome.  At just under 200 pages in length, it's easy to mistake Everyone is a Customer as being typical easy-to-digest-because-there-is-no-substance business book fare.  That would be wrong.  Shuman is not only a PhD and a professor of entrepreneurship, he is also the 1999 Ernst & Young New England Entrepreneur of the Year.  Jeff thinks, teaches, and practices entrepreneurship.  Jan Twombly is a CPA by training, and it strikes me that her accounting background makes a very substantial contribution to the topic.  Accounting (versus mere bean counting) has proven itself to be an enormously successful attempt to implement some very abstract concepts regarding value.  Straightforward mechanisms such as the "relationship scorecard" are tools that could realistically be adopted in order to help prioritize investments in business relationships.

I had the pleasure of meeting Shuman and Twombly over the phone recently as a result of a collaboration they've undertaken with EVO Knowledge, which is lead by Paul Manzano, a member of Pioneer Entrepreneurs.  EVO Knowledge is providing the online publishing platform for The Rhythm of Business's latest effort.  To see a preview, click here.