Relationships: the Bonds that Tie Ecosystems Together

Part 1: What are Relationships?

In ecosystems, Relationships are the connections that tie Assets together, or the edges between the nodes that make up the final part of the underlying ecosystem network structure

As discussed in the last topic, ecosystems are full of Assets - the organizations, people, resources, opportunities, and activity that make up any community or industry. But in order for these assets to form an ecosystem, they must be connected in some way - that's where Relationships come in.

Relationships are, perhaps unsurprisingly, the different ways that assets are related to eachother within an ecosystem - for example, how an organization "funds" a resource, a person is "employed by" an organization, or a news article is "about" a specific initiative or opportunity. Relationships are arguably the most important part of any given ecosystem - if the assets were not related to eachother, it wouldn't be an ecosystem at all. Additionally, the relationships between assets are what determine the structure of an ecosystem, how it changes, and whether or not it is "healthy" or "effective.

Before we dive into why relationships matter in ecosystems, it helps to understand them better. Just like Assets, Relationships have different characteristics that are used to understand them and their influence on both the assets they connect and the ecosystem as a whole.

Part 2: Categories & Types of Relationships

The first layer of classifying Relationships is their category, of which there are two: Formal and Informal relationships: 

• Formal Relationships are codified in some way, whether that's through a contract, partnership agreement, or any mechanism that formally establishes a relationship between two assets
• Informal Relationships are not codified in any way, but they are still very real - you don't sign contracts with your friends, but those relationships are incredibly important, and you don't sign an agreement with your competitors, even though they have a significant influence on your business

There is, of course, some grey area between the two - if you have a handshake agreement of a partnership, is that a Formal or Informal relationship? The answer may very well depend on local laws, regulations, and norms. Typically, however, there is a functional difference between the two categories.

Formal relationships between assets outline specific ways in which each asset is expected to behave in the relationship - such as an organization agreeing to pay an employee in exchange for their labor. On the other hand, informal relationships tend to lack behavioral agreements or expectations.

While both formal and informal relationships can be broken, formal relationships tend to be formally broken (like an agreement being severed or a contract expiring), and both assets are aware that the relationship has dissolved. After this, the formal relationships tend to be replaced with informal ones (such as business partners to friends), or it is replaced with a different formal relationship (such as an employee signing a severance agreement after their employment ends).

Informal relationships change much more often, because there are no rules or regulations around the relationships - friends or partners can come and go, and no one needs to sign anything. However, it is faulty to think that informal relationships are less important than formal ones - in fact, informal relationships tend to have a much stronger influence on ecosystems than their formal counterparts, as we'll discuss in Part 4.

In addition to these categories of relationships, relationships are also bucketed into different Relationship Types, which describe "how" two things are related. Unlike the two categories, there are numerous types of relationships, and they vary based on the ecosystem under consideration. Some examples include: 

• Funding Relationships: Asset A “Funds” Asset B
• Partner Relationships: Asset B “Is Partners with” Asset C
• Employment Relationships: Asset C “Employs” Asset D
• Transactional Relationships: Asset D “Buys” from Asset E
• Provisional Relationships: Asset E “Provides” Asset F

There are some heuristics that help you understand the Category of a relationship based on its Type - for example, funding relationships tend to be formal, but there are no hard and fast rules. Now that we understand the basic ways we can classify Relationships, let's examine two additional attributes: a Relationship's Direction & Strength.

Part 3: Relationship Direction & Strength

While Relationship Category & Type are the most important attributes to understand, there are other characteristics of relationships that describe how assets are related to eachother, such as the Relationship's Direction and Strength.

The Direction of a relationship indicates how each asset experiences the relationship - if both assets experience the relationship in the same way, then there is no direction to the relationship. However, if the experience of Asset A is different than that of Asset B, then there is a direction to the relationship.

Let's look at an example -  a startup funded by a venture capital firm has a “funding relationship” with the firm, just as the firm has a “funding relationship” with the startup. However, the startup experiences this relationship differently - they receive funds (and oversight), whereas the firm provides funds, and hopefully gains a larger return in the long run. There is a clearly a direction to this relationship.

In other scenarios, both assets experience the relationship in largely the same way. For example, if EcoMap competes with EcoLack, and EcoLack competes with EcoMap, even if one company dislikes the other more, or if one is winning in the market, the relationship is more or less experienced the same between the two assets, and there is not much use to trying to specify a direction between it.

The Direction of a relationship thus describes one component of how each asset experiences the relationship. However, there is one other factor at play: the Strength of the Relationship.

The Strength of a relationship is a measure of how much influence each asset has on the other because of the existence of the relationship.

In weaker relationships, the actions of Asset A tend to have little influence on Asset B. In stronger relationships, the actions of Asset A can have a large influence on Asset B. For example - you have a strong relationship with your partner, and their decision to leave the country would have a noticeable impact on you. However, you have a weak relationship with acquaintances, so if a high school classmate suddenly moved, you likely wouldn't notice or care.

The Strength of relationships differs from the other three characteristics in that it is nearly impossible to measure generically (meaning that you can define and measure the strength of relationships on a per-asset or per-ecosystem basis, but it would be nearly impossible to define a universal measure of relationship strength. Additionally, the strength of relationships can change overtime without any modification to the structure of the relationship, whereas changes in the category, type, or direction of a relationship would inherently indicate a change in the relationship's structure.

Yet second to the existence of a relationship itself, the strength of a relationship is perhaps the most consequential characteristic in terms of how that relationship influences both the assets and the broader ecosystem. Let's dive in to how these relationships - and their characteristics influence the ecosystems we live and work in everyday.

Part 4: Why Ecosystem Relationships Matter

Obviously, relationships matter within ecosystems because without the edges between the asset nodes, the ecosystem wouldn't exist at all.

However, there are four specific attributes of ecosystems that are controlled or heavily influenced by the nature of the relationships between the various assets: the interconnectedness of the ecosystem, how information flows within it, how resistant the ecosystem is to change, and how equitable & accessible the ecosystem is.
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1. Interconnectedness - the interconnectedness of an ecosystem describes how, well, connected that ecosystem is, defined by how many relationships there are between assets and the strength of those relationships. In highly interconnected ecosystems, there are a ton of relationships relative to the number of assets ("everyone knows everyone here"). In ecosystems with low interconnectedness, there are typically a ton of clusters (groups of assets with strong relationships between them), bur these clusters are siloed from eachother (few and weak connections between assets in one cluster and the other). In this way, the interconnectedness of an ecosystem - defined almost wholly by relationships - influences many other attributes of that ecosystem
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2. Flow of Information - ecosystems that are more interconnected have a higher rate of informational flow. In a highly interconnected ecosystem, information is passed quickly and clearly from one asset to another, such as news about the creation of a new funding program. In ecosystems with low interconnectivity, information does not flow effectively - news of the creation of that program may never actually reach specific groups. All information technically flows through a relationship (reading a news article means that a Person is Receiving information from a News asset), but information that is passed between strong Person-Person / Person-Org / Org-Org relationships tends to be better understood, integrated, and acted upon than information passed through weaker relationships
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3. Resistance to Change - the relationships between assets are what both enable - and paralyze - change within a given ecosystem. This topic is incredibly complex (we wrote a whole whitepaper on it) but here's a summary: Ecosystems are hard to change because systems are hard to change - you can't just move one or two assets in a given direction and expect lasting change, without considering the other assets within the ecosystem and how they are connected. On one hand, if you are able to shift an asset that is well-connected to other assets, you might be able to create more effective change, because the relationships between that assets and the others will encourage the others to move in the same direction (such as an influential investor deciding to invest at the pre-seed stage, which encourages all her close friends to do so as well). However, this also means that if you shift an asset, and the assets it are related to do not move, that original asset may snap back into place (such as that investor deciding to stop investing in pre-seed companies after all of her friends deciding to not do so). Again, this topic is beyond the scope of this article, but we will circle back to it later.
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4. Ecosystem Equity & Accessibility - one of the core measures of ecosystem equity and accessibility (which we will dive into in a future topic) is how connected an ecosystem is, how many silos there are and what the makeup of those silos are, and how readily information flows throughout the ecosystem. All of these traits are influenced by the nature of relationships in the ecosystem. For example - if a new person lands in a city, how easy is it for them to get connected to their peers or mentors. Once they are connected, are the getting the information they need to move forward? Or do they run into existing ecosystem silos, that lock them out? In general, the more relationships that exist between diverse assets within an ecosystem, the more equitable it is - but like Resistance to Change, this topic is much more nuanced than we have space to cover here

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There you have it! More than you would ever want to know about the relationships within an ecosystem.