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6.4 Electronic Social Networks

Learning Objectives

After studying this section you should be able to do the following:

  1. Know what social networks are, be able to list key features, and understand how they are used by individuals, groups, and corporations.
  2. Understand the difference between major social networks MySpace, Facebook, and LinkedIn.
  3. Recognize the benefits and risks of using social networks.
  4. Be aware of trends that may influence the evolution of social networks.

Social networksAn online community that allows users to establish a personal profile and communicate with others. Large public social networks include MySpace, Facebook, LinkedIn, and Google’s Orkut. have garnered increasing attention as established networks grow and innovate, new networks emerge, and value is demonstrated. MySpace signed a billion-dollar deal to carry ads from Google’s AdSense network. Meanwhile, privately held Facebook has moved beyond its college roots, and opened its network to third-party application developers. LinkedIn, which rounds out the Big Three U.S. public social networks, has grown to the point where its influence is threatening recruiting sites like and CareerBuilder.M. Boyle, “Recruiting: Enough to Make a Monster Tremble,” BusinessWeek, June 25, 2009. It now offers services for messaging, information sharing, and even integration with the BusinessWeek Web site.

Media reports often mention MySpace, Facebook, and LinkedIn in the same sentence. However, while these networks share some common features, they serve very different purposes. MySpace pages are largely for public consumption. The site was originally started by musicians as a tool to help users discover new music and engage with bands. Today, MySpace members leverage the service to discover people with similar tastes or experiences (say fans of a comic, or sufferers of a condition).

Facebook, by contrast, is more oriented towards reinforcing existing social ties between people who already know each other. This difference leads to varying usage patterns. Since Facebook is perceived by users as relatively secure, with only invited “friends” seeing your profile, over a third of Facebook users post their mobile phone numbers on their profile pages.

LinkedIn was conceived from the start as a social network for business users. The site’s profiles act as a sort of digital Rolodex that users update as they move or change jobs. Users can pose questions to members of their network, engage in group discussions, ask for introductions through mutual contacts, and comment on others’ profiles (e.g., recommending a member).

Active members find the site invaluable for maintaining professional contacts, seeking peer advice, networking, and even recruiting. Carmen Hudson, Starbucks manager of enterprise staffing, states LinkedIn is “one of the best things for finding midlevel executives.”Rachel King, “No Rest for the Wiki,” BusinessWeek, March 12, 2007. Such networks are also putting increasing pressure on firms to work particularly hard to retain top talent. While once HR managers fiercely guarded employee directories for fear that a list of talent may fall into the hands of rivals, today’s social networks make it easy for anyone to gain a list of a firm’s staff, complete with contact information.

While these networks dominate in the United States, the network effect and cultural differences work to create islands where other social networks are favored by a particular culture or region. The first site to gain traction in a given market is usually the winner. Google’s Orkut, Bebo (now owned by AOL), and Cyworld have small U.S. followings, but are among the largest sites in Brazil, Europe, and South Korea. Research by Ipsos Insight also suggests that users in many global markets, including Brazil, South Korea, and China, are more active social networkers than their U.S. counterparts.Ipsos Insights, Online Video and Social Networking Web Sites Set to Drive the Evolution of Tomorrow’s Digital Lifestyle Globally, July 5, 2007.

Perhaps the most powerful (and controversial) feature of most social networks is the feedAn update on an individual’s activities that are broadcast to a member’s contacts or “friends.” Feeds may include activities such as posting messages, photos, or video, joining groups, or installing applications. (or newsfeed). Pioneered by Facebook but now adopted by most services, feeds provide a timely update on the activities of people or topics that an individual has an association with. Facebook feeds can give you a heads up when someone makes a friend, joins a group, posts a photo, or installs an application.

Feeds are inherently viralIn this context, information or applications that spread rapidly between users.. By seeing what others are doing on a social network, feeds can rapidly mobilize populations and dramatically spread the adoption of applications. Leveraging feeds, it took just ten days for the Facebook group Support the Monks’ Protest in Burma to amass over one hundred and sixty thousand Facebook members. Feeds also helped music app iLike garner three million Facebook users just two weeks after its launch.Sarah Lacy, Once You’re Lucky, Twice You’re Good: The Rebirth of Silicon Valley and the Rise of Web 2.0 (New York: Gotham Books, 2008); and K. Nicole, “iLike Sees Exponential Growth with Facebook App,” Mashable, June 11, 2007. Its previous Web-based effort took eight months to reach those numbers.

But feeds are also controversial. Many users react negatively to this sort of public broadcast of their online activity, and feed mismanagement can create public relations snafus, user discontent, and potentially open up a site to legal action. Facebook initially dealt with a massive user outcry at the launch of feeds, and faced a subsequent backlash when its Beacon service broadcast user purchases without first explicitly asking their permission (see Chapter 7 "Facebook: Building a Business from the Social Graph" for more details).

Social Networks

The foundation of a social network is the user profile, but utility goes beyond the sort of listing found in a corporate information directory. Typical features of a social network include support for the following:

  • Detailed personal profiles
  • Affiliations with groups, such as alumni, employers, hobbies, fans, health conditions)
  • Affiliations with individuals (e.g., specific “friends”)
  • Private messaging and public discussions
  • Media sharing (text, photos, video)
  • Feeds” of recent activity among members (e.g., status changes, new postings, photos, applications installed)
  • The ability to install and use third-party applications tailored to the service (games, media viewers, survey tools, etc.), many of which are also social and allow others to interact.

Corporate Use of Social Networks

The use of public social networks within private organizations is becoming widespread. Many employees have organized groups using publicly available social networking sites because similar tools are not offered by their firms. Workforce Management reported that MySpace had over forty thousand groups devoted to companies or coworkers, while Facebook had over eight thousand.Ed Frauenheim, “Social Revolution,” Workforce Management, October 2007. Assuming a large fraction of these groups are focused on internal projects, this demonstrates a clear pent up demand for corporate-centric social networks.

Many firms are choosing to meet this demand by implementing internal social network platforms that are secure and tailored to firm needs. At the most basic level, these networks have supplanted the traditional employee directory. Social network listings are easy to update and expand. Employees are encouraged to add their own photos, interests, and expertise to create a living digital identity.

Firms such as Deloitte, Dow Chemical, and Goldman Sachs have created social networks for “alumni” who have left the firm or retired. These networks can be useful in maintaining contacts for future business leads, rehiring former employees (20 percent of Deloitte’s experienced hires are so called “boomerangs,” or returning employees), or recruiting retired staff to serve as contractors when labor is tight.Rachel King, “Social Networks: Execs Use Them Too,” BusinessWeek, November 11, 2006. Maintaining such networks will be critical in industries like I.T. and health care that are likely to be plagued by worker shortages for years to come.

Social networking can also be important for organizations like IBM, where some 42 percent of employees regularly work from home or client locations. IBM’s social network makes it easier to locate employee expertise within the firm, organize virtual work groups, and communicate across large distances.W. Bulkley, “Playing Well with Others,” Wall Street Journal, June 18, 2007. As a dialogue catalyst, a social network transforms the public directory into a front of knowledge sharing that promotes organization flattening and value-adding expertise sharing.

As another example of corporate social networks, Reuters has rolled out Reuters Space, a private online community for financial professionals. Profile pages can also contain a personal blog and news feeds (from Reuters or external services). Every profile page is accessible to the entire Reuters Space community, but members can choose which personal details are available to whom. While IBM and Reuters have developed their own social network platforms, firms are increasingly turning to third-party vendors like SelectMinds (adopted by Deloitte, Dow Chemical, and Goldman Sachs) and LiveWorld (adopted by Intuit, eBay, the NBA, and Scientific American).

Firms have also created their own online communities to foster brainstorming and customer engagement. Dell’s forum collects user feedback and is credited with prompting line offerings, such as the firm’s introduction of a Linux-based laptop.D. Greenfield, “How Companies Are Using I.T. to Spot Innovative Ideas,” InformationWeek, November 8, 2008. At, the coffee giant has leveraged user input to launch a series of innovations ranging from splash sticks that prevent spills in to-go cups, to new menu items. Both IdeaStorm and MyStarbucksIdea run on a platform offered by’s that not only hosts these sites, but provides integration into Facebook and other services. This platform has allowed Starbucks to leverage Facebook to promote free coffee on election day, a free cup on inauguration day for those pledging five hours of community service, and awareness of the firm’s AIDS-related (RED) campaign. This latter effort garnered an astonishing three hundred ninety million “viral impressions,” including activities such as joining a group to support the cause, messaging others, or making wall posts.M. Brandau, “Starbucks Brews Up Spot on the List of Top Social Brands in 2008,” Nation’s Restaurant News, April 6, 2009.


As with any type of social media, content flows in social networks are difficult to control. Embarrassing disclosures can emerge from public systems or insecure internal networks. Employees embracing a culture of digital sharing may err and release confidential or proprietary information. Networks could serve as a focal point for the disgruntled (imagine the activity on a corporate social network after a painful layoff). Publicly declared affiliations, political or religious views, excessive contact, declined participation, and other factors might lead to awkward or strained employee relationships. Users may not want to add a coworker as a friend on a public network if it means they’ll expose their activities, lives, persona, photos, sense of humor, and friends as they exist outside of work. And many firms fear wasted time as employees surf the musings and photos of their peers.

All are advised to be cautious in their social media sharing. Employers are trawling the Internet, mining Facebook, and scouring YouTube for any tip-off that a would-be hire should be passed over. A word to the wise: those Facebook party pics, YouTube videos of open mic performances, or blog postings from a particularly militant period might not age well, and may haunt you forever in a Google search. Think twice before clicking the upload button! As Socialnomics author Erik Qualman puts it, “What happens in Vegas stays on YouTube (and Flickr, Twitter, Facebook…).”

Despite these concerns, trying to micromanage a firm’s social network is probably not the answer. At IBM, rules for online behavior are surprisingly open. The firm’s code of conduct reminds employees to remember privacy, respect, and confidentiality in all electronic communications. Anonymity is not permitted on IBM’s systems, making everyone accountable for their actions. As for external postings, the firm insists that employees don’t disparage competitors or reveal customers’ names without permission, and asks that employee posts from IBM accounts or that mention the firm also include disclosures indicating that opinions and thoughts shared publicly are the individual’s and not Big Blue’s.

Trends to Watch

Global positioning system (GPS)A network of satellites and supporting technologies used to identify a device’s physical location. and location-based services in devices are appearing in social software that allows colleagues and friends to find one another when nearby, ushering in a host of productivity and privacy issues along with them. At the launch of Apple’s iPhone 3G, Loopt CEO Sam Altman showed how the firm’s touch app for iPhones and iPods could display a map with dots representing anyone on his or her contact list who elected to broadcast their whereabouts to him. Claims Altman, “You never have to eat lunch alone again.”

Other efforts seek to increase information exchange and potentially lower switching costs between platforms. Facebook Connect allows users to access affiliated services using their Facebook I.D. and to share information between Facebook and these sites. OpenSocial, sponsored by Google and embraced by MySpace, LinkedIn, and many others, is a platform allowing third-party programmers to build widgets that take advantage of personal data and profile connections across social networking sites. Similarly,, is an effort, supported by all major public social network platforms, to allow users to migrate data from one site for reuse elsewhere. The initiative should also allow vendors to foster additional innovation and utility through safe, cross-site data exchange.

Key Takeaways

  • Electronic social networks help individuals maintain contacts, discover and engage people with common interests, share updates, and organize as groups.
  • Modern social networks are major messaging services, supporting private one-to-one notes, public postings, and broadcast updates or “feeds.”
  • Social networks also raise some of the strongest privacy concerns, as status updates, past messages, photos, and other content linger, even as a user’s online behavior and network of contacts changes.
  • Network effects and cultural differences result in one social network being favored over others in a particular culture or region.
  • Information spreads virally via news feeds. Feeds can rapidly mobilize populations, and dramatically spread the adoption of applications. The flow of content in social networks is also difficult to control and sometimes results in embarrassing public disclosures.
  • Feeds have a downside and there have been instances where feed mismanagement has caused user discontent, public relations problems, and the possibility of legal action.
  • The use of public social networks within private organizations is growing, and many organizations are implementing their own, private, social networks.
  • Firms are also setting up social networks for customer engagement and mining these sites for customer ideas, innovation, and feedback.
  • Emerging trends related to social networks that bear watching include: the use of e-mail to add contacts; the use of GPS; and the development of platforms to facilitate single sign-on, and sharing of information between sites.

Questions and Exercises

  1. Visit the major social networks (MySpace, Facebook, LinkedIn). What distinguishes one from the other? Are you a member of any of these services? Why or why not?
  2. How are organizations like Deloitte, Goldman Sachs, and IBM using social networks? What advantages do they gain from these systems?
  3. What factors might cause an individual, employee, or firm to be cautious in their use of social networks?
  4. How do you feel about the feed feature common in social networks like Facebook? What risks does a firm expose itself to if it leverages feeds? How might a firm mitigate these kinds of risks?
  5. What sorts of restrictions or guidelines should firms place on the use of social networks or the other Web 2.0 tools discussed in this chapter? Are these tools a threat to security? Can they tarnish a firm’s reputation? Can they enhance a firm’s reputation? How so?
  6. Why do information and applications spread so quickly within networks like Facebook? What feature enables this? What key promotional concept (described in Chapter 2 "Strategy and Technology") does this feature foster?
  7. Why are some social networks more popular in some nations than others?
  8. Investigate social networks on your own. Look for examples of their use for fostering political and social movements; for their use in healthcare, among doctors, patients, and physicians; and for their use among other professional groups or enthusiasts. Identify how these networks might be used effectively, and also look for any potential risks or downside. How are these efforts supported? Is there a clear revenue model, and do you find these methods appropriate or potentially controversial? Be prepared to share your findings with your class.