“No business will survive long if it can’t make a profit; but no business deserves to survive at all if it can’t make a positive difference in the lives of its employees, customers, clients, and community.” This powerful statement comes from Tommy Spaulding in his new book It’s Not Just Who You Know: Transform Your Life (and Your Organization) by Turning Colleagues and Contacts into Lasting, Genuine Relationships. According to Spaulding, success — in business and in life — is tied directly to relationships. The most powerful relationships come when we focus on helping others.

Perhaps the most common measurement of business success is ROI — return on investment. When it comes to relationship economics, Spaulding introduces a different concept — Return on Relationships (ROR). According to Spaulding, ROR comes in many forms and should be as important to individuals and organizations as profits, revenues and ROI — because with out generating ROR, the ROI won’t matter. He cites as proof a 2007 Gallop Management Journal survey that estimates that “actively disengaged workers” cost the U.S. economy about $382 billion annually. Developing relationships drives engagement (in school, in work, in personal lives) that pays dividends.

Spaulding describes relationships in terms of a five-floor building. The deeper the relationship, the higher the floor. While relationships seldom fit into a nice, tight definition, the “Five Floor” plan provides definition and gives boundaries that define relationships:

• First Floor: We meet and greet. We exchange business cards. It typically involves a transactional exchange.
• Second Floor: We begin sharing more information, but it’s very basic information; the type dispensed out of social obligation or because it’s a job requirement, not because we’re offering some insight into who we are.
• Third Floor: People develop an emotional comfort level that goes beyond facts and information. We learn about the lives of our co-workers, vendors and clients and other professional associates. We begin to understand something about who they are as people, even if we don’t agree with all their opinions.
• Fourth Floor: These relationships take on a deeper, more significant meaning. We share common interests, goals, beliefs and causes. At this level we’ve learned to work through conflicts, and we respond in ways that show we value the relationship for its own sake.
• Fifth Floor: These relationships go well beyond Dale Carnegie’s How to Win Friends & Influence People. In these relationships, vulnerability, authenticity, trust and loyalty are off the charts. They are relationships built on shared empathy — an intuitive understanding of each other’s needs, even those that aren’t necessarily expressed. We literally “feel” another person’s state of mind.

Success, in any endeavor, requires effective relationships. Leadership grows and develops through building effective relationships. I highly recommend It’s Not Just Who You Know as guidebook to building effective relationships and increasing your leadership potential.

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The Product Management Perspective: Building effective relationships is absolutely crucial for success in product management. Product managers rely heavily on other people — engineers, sales people, support, etc. — to ship successful products. PMs that focus on building strong relationships experience more success. PMs who build consensus and inspire team members develop a high ROI on their products and ROR with their colleagues.