Six degrees of separation: In 1929, Hungarian writer, Frigyes Karinthy, proposed that anyone can be connected to anyone else on the planet through a chain of acquaintances with no more than five intermediaries.
In the 1950s, professor JA Barnes described a social network as an association of people, drawn together by family, work or hobby. Today, googling ‘social networks’ produces 135 million results and the definition has changed somewhat.
Most people now think of somewhere on the internet where people meet to chat, socialise and network. MySpace, Bebo and Facebook are all social networks that help people with similar interests to connect.
They are a very new phenomenon. Facebook was founded at Harvard University, by Mark Zuckerberg, in 2004 and was restricted to Harvard students, but gradually others were added. Since 2006, anyone with an email address has been able to join. It has grown exponentially and currently has around 50 million members worldwide.
Last month Microsoft bought a 1.6% share of Facebook for $240 million, which values the company at $15 billion. This capitalisation is obviously madness, but reflects the fact that Microsoft had no choice. Its chief executive had previously called social networks “fads”, but it sees online advertising as integral to its future and its competitor, Google, is currently the leader in this fledgling industry.
Google, the world’s leading search engine, has a stake in AOL, supplies ads to MySpace, the world’s largest social network (see fig 1), and has bought YouTube and the online-advertising firm DoubleClick. Microsoft saw potential partners dwindling and became desperate for some of the action.
Social networks are attractive to advertisers excited at reaching millions of youngsters sharing information online with their friends. Grown-up business likes to think of itself as more sophisticated than a bunch of teenagers, but social networking is beginning to thrive in the business world.
Professionals are protective of contacts they have built up over time and employees are wary of giving away sensitive company information, so it was slow to take off in the corporate world. There was also the often inaccurate assumption that employees do not have sufficient time to socialise online.
There is, however, a strong need to belong, and businessmen (they are invariably men), have traditionally joined clubs to help further their professional ambitions. Perhaps it is possible for online social networks to replace the golf club as a place for relaxed business.
In some industries, workers are isolated from fellow professionals and online networks enable them to keep abreast of the latest developments. Specialist sites, such as Sermo.com for US doctors and Inmobile.org for professionals in the wireless industry, set up business models others could replicate.
Sites like LinkedIn are broad-based, business-oriented networking sites, which allow people to swap job details and contact information, often for recruitment purposes.
Xing is a network for business professionals, founded in 2003, in Germany, by Lars Hinrich. He believes a social network should work as a computer-enhanced friend, suggesting people you ought to know. He says: “Networks are filled with people who would be connected to one another if they knew their common interests.”
Xing has proved popular, with a formula that Hinrich believes could cut into the space currently occupied by headhunters. He says: “We are moving towards a project economy where people operate as free agents. Networks will become the tool for linking people.”
He says that in this environment, the value of social networks will rise over time, as will the need to control digital identity.
It is now standard practice to apply for jobs online; it can be an efficient and professional introduction to potential employers and most jobsites are now trying to utilise the new social networks, particularly in the graduate market.
Rory Fergusson, director of IT-specialist JM Recruitment Group, believes extra coverage on social sites benefits both parties. He says: “Job-seekers will not only be able to continue researching and applying to companies online, but will have a chance to forge potentially important relationships with potential colleagues in the true spirit of networking.”
Forging links with potential colleagues may seem a good idea, but there are pitfalls. Stories abound of job applicants being turned down as a result of social networking activity. It is important to be present yourself online as professionally as you would on a potential employer’s website.
Rod Bailey, ceo of ExecutiveSurf, points out an interesting perceptual shift. He says: “If you’re on a social network, it’s a great thing because in no way can it be construed as a declaration that you’re actively looking for a job. This is different to jobsites; if your boss finds you registered on a jobsite, it can still be a little uncomfortable for you.”
Bailey says: “It’s the old ‘It’ll make everybody in the world accessible’ point, which is great. The doubt is, if everyone is accessible, then it’s not really a ‘social’ network, it’s just a network. The benefit of ‘social’ is that it comes with a recommendation, but if it’s from someone you’ve never heard of, it’s useless. In a way these sites are potential victims of their own success.”
“Please accept my resignation. I don’t want to belong to any club that will have me as a member.” Groucho Marx
Metcalfe’s Law says that the value of a network is proportional to the square of the number of its users. The more people who have phones, the more useful they become. Unlike other networks, social networks seem to lose value once they reach a certain size. Its value is defined not only by who is on it, but by also by who is not.
There are plenty of comparisons with a golf club. Erik Wachtmeister is the founder of A Small World, a network started in Stockholm that can only be joined through nomination and focuses on attracting the global jet-set.
“Our members like the environment because they can feel safe and have a relatively high level of trust,” says Wachtmeister. “This is not the wild web, but a place where you can meet friends.” In other words, a private club whose members won’t be pestered by undesirables.
Women have been treated shoddily by clubs in the past. Their traditional role at golf clubs was to make the drinks and they were only allowed to play golf on special occasions. The internet and social networks have certainly had a democratising influence, with women now accounting for around 55% of time spent online.
Demos, the research institute, has produced a report called ‘Girlfriends in High Places’ and found women benefited from networks that were more structured than the informal groupings that seem to work for men.
Dame Rennie Fritchie, the British commissioner for public appointments, said: “Women network differently from men. They want to give as much as they receive. It’s not about prospecting and getting out of it all you can for yourself, or for showing your face. It’s about involvement and support and mutuality.”
It is commonplace for employers to moan about lost productivity because of staff spending too much time on sites like Facebook, but, in addition to checking up on potential employees, businesses can take advantage of social networks. The latest McKinsey Quarterly looks at the power of informal employee networks.
In a professional environment networks flourish spontaneously, people with similar interests tend to share ideas and work together, even when not formally required to. Most large companies have dozens of informal networks, often socially based, that lead to collaboration.
McKinsey was surprised at how much information flows through these networks and conversely, how little through official hierarchical structures. They discovered that formal structures do not explain how much real day-to-day work gets done.
These informal communities have shortcomings; they can increase confusion and elude control, but there is potential to harness their power. Many companies operate with vertical structures, but they could boost horizontal networking and design and manage new formal models.
Globalisation has forced companies to adapt to an increasingly fluid and competitive environment and to integrate work from different perspectives. Increased interactions can lead to increased levels of decision making and a traditional matrix structure can be swamped by conference calls and meetings.
The key to managing this environment could be to create and support formal networks, which lessen the current reliance on serendipity (a social network buzzword). A company could define a network owner, who organises an infrastructure and develops an agenda, becoming a ‘servant leader’. The firm could facilitate the network with incentives and rewards.
A big institution might have thousands of formal networks. One with 10,000 employees, could have 200 networks with 100 people in each, if everyone joined just two networks. These could vary from IT to cookery, and have any number of members. Effective networks would flourish, ineffective ones would naturally fade away, and they become efficiently self regulating.
Social networks are not a new phenomenon, but their latest manifestation is still in its infancy. Internet-based social networks are undoubtedly good for catching up with old friends and for a spot of self-branding, but in terms of business, their effectiveness may be limited. As in the real world, their popularity forces people to find ever more exclusive clubs.
Social networks reinforce the fact that people are sociable, and businesses can take advantage of our inherent clubbability by encouraging people with similar interests to communicate and collaborate.
“Golf is a good walk spoiled.” Mark Twain