Why Some Network Groups Flounder

CREATED BY JACKY SHERMAN Published: 15/05/2026 @ 09:00AM #Networking #SmallBusiness #NetworkGroups #Entrepreneur #BusinessGrowth

If you're running your own small business, sooner or later, you will go networking. And when you do, you will quite quickly discover that some network groups thrive whilst others flounder ...

Network groups can often flounder due to a lack of clear goals and communication among members

You will also discover that some thrive and then suddenly nose-dive. Let me share a psychological experiment that offers one reason for that happening. David McRaney explains it in his book You Are Not So Smart.

It's called The Public Good Game!

A group of people sit around a table, and each person is given a few pounds. The group is told they can put as much money as they want into the community pot. An experimenter then doubles the pot, and everyone receives an equal share.

If it's 10 people, everyone puts in £2, so the pot would be £20. It's doubled and then divided among everyone. They all get back £4. The game then continues in rounds. You would think that everyone would just put the maximum amount in the pot each time, but they don't.

Someone usually gets the gist of the game and realises that one can put in very little, or nothing at all, and still start making more money than everyone else. If everyone but you puts in £2, the pot will be £18, doubled to £36, and everyone gets £3.60 ... including you ... the one who put in nothing at all.

Even though this is a thought experiment, everyone
can see what is happening!

The pot initially increases and then decreases due to someone in the group freeloading. Although the others are still winning and could keep winning if they continue, they begin to imitate the free-rider's behaviour to avoid being exploited. Ultimately, this leads to the game stalling entirely.

This behaviour changes only if the group applies sanctions (punishment for the cheater). Just rewarding the good players doesn't work. What people are reacting to is their innate sense of fairness. Psychologically, as part of the tribe, you know that one cheater will ruin everything and that most people will cheat if they think the system is cheating them.

Now, apply that to a networking group!

Everyone is motivated to help everyone else win business. If only one person in the group is taking without contributing, that behaviour spreads. Existing members may not realise that it's happening because high givers will continue to give, but not so much.

New visitors will pick up a reticence amongst existing members to be generous. Slowly at first, but people will start to drift away. At some stage, a few members will form a breakaway group.

The group disintegrates and only strong and, often painful, action will save it .... applying some sanctions to the transgressors. More often than not, the group breaks apart. So, how can you stop this from happening?

Here are my three tips:

• Have clear expectations for the group. What is the purpose? If the purpose is to generate business through referrals, many groups expect you to bring referrals and will monitor members' contributions to that endeavour.
• Other groups may have softer expectations around what counts as giving. Make sure you choose one that fits with your own expectations.
• Give strong leadership that is aware of the group's dynamics, spots people who are floundering or not contributing, and, most importantly, takes action.

Whilst I would always advocate encouraging first, listen to the conversations and be prepared to support the leader in tackling blatant and not-so-blatant free loaders.

And be conscious of your own behaviours too. Are you slipping into destructive behaviours without even realising it? If this group is valuable to you, be prepared to put in the extra effort required to turn this around. Find your allies in the group and start making a difference.

As Gandhi said, "Be the change you want to see in the world".

Until next time ...

JACKY SHERMAN
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