The value in social networks

Social networking sites have become an accepted part of the Internet, despite still being immature and likely to evolve over the next couple of years.

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The following comment highlighted just how relevant they are becoming:

[My daughter] uses Facebook the way I use Outlook – Fred Wilson

Facebook and Myspace are the words that first come to mind when you speak to businesses about social networks. And the vision that passes before their eyes rarely paints happy thoughts. Yet ignoring or banning access to social networks means people inside the organisation (employees) become less informed than people outside the organisation (customers, suppliers, partners, competitors). Is that a good thing? Here’s a simple diagram to demonstrate:

(Click on the image to view a larger version)

Lines with an S = same direction, i.e. as one increases so does the other. Lines with an O = opposite direction, as one increases the other decreases. A loop with an even number of S is a feedback loop – it will continue to increase or decrease, often exponentially. A loop with an odd number of S is a balancing loop – it seeks stability.

Social networks are a feedback loop. An organisation hierarchy is a balancing loop. The bigger the social network, the more knowledge is shared; the more knowledge that is shared, the more the social network grows. The more levels in an organisation hierarchy, the harder it is to share knowledge. The more knowledge that is shared, the more levels are created in the organisation hierarchy to manage it. This doesn’t mean that one is, by default, better than the other. The above diagram says nothing about the quality or accuracy of the know-how. It just represents behaviour ‘by design’.

What matters is that new tools on the Internet have made social networks easy to build and highly visible, increasing their growth and use. People are finding it is easier and quicker to get information from a social network than from an organisation. Take the following simple example, accessing the knowledge of 5 people:

Asking a social network for advice means you become part of the network, you participate and can go direct to the source. Ask an organisation and you are on the outside, waiting for an answer usually delivered by a messenger rather than the source. It’s a very different dynamic.

You cannot stop your customers from participating in social networks. Unless a law is broken, you can’t stop your competitors contributing either. So why would you put such a constraint on your employees? Participating in external social networks will keep you closer to your market (friend and foe). Building internal social networks will increase knowledge-sharing and the speed and ability to respond. What’s not to like?

Social networks can’t grow know-how ad infinitum. They have their own built-in constraints:

It’s a desire to control and eliminate noise that often converts a social network into an organisation hierarchy (as Wikipedia has discovered). The Internet resists being organised and people are starting to discover that not all noise is bad – see Why Google News has no noise by Robert Scoble. That makes managing (and benefiting) from noise a new skill worth acquiring. The sooner you learn to live with social networks, the sooner you can start figuring out how to deal with the noise.

If you think social networks have no value, ask yourself this: Could your business function as well without email? I remember my very first job. I got reprimanded for over- and mis-use of the shiny new email system (I was flirting with someone in a different department). Back then, email was considered an expensive and unimportant distraction from doing business. A lot like how social networks are viewed today…