Will social networking save the world?
Jinfo Blog

28th October 2008

By Tim Buckley Owen

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Until recently, the investment bank Goldman Sachs seems to have managed to escape the worst of the fallout from the banking turmoil – but now it too has announced that up to 10% of its staff will have to go. Intriguingly, though, on the very day that the FT reported GS’s forthcoming job losses http://digbig.com/4xsqq the Guardian was listing the bank among the backers of a $22.7 million investment in the business social networking site LinkedIn. The move follows a further $53 million pumped into the site last June, the Guardian reported http://digbig.com/4xsqt (see also the LiveWire posting at http://www.vivavip.com/go/e7444 for further background). It all adds to the evidence that use of social networking for business purposes is rapidly reaching escape velocity. IT consultant Gartner predicts that, by 2010, more than 60% of Fortune 1,000 companies with a web site will connect to or host some form of online community that can be utilized for customer relationship purposes. However this will not be a risk-free activity; Gartner also warns http://digbig.com/4xsqr that more than 50% of those companies will fail to establish mutual purpose for their community, ultimately eroding both customer and company values. Further challenges are presaged by a recent Economist Intelligence Unit report, The Collaboration Advantage: Customer-Focussed Partnerships in a Global Market (details and a link to the free report at http://digbig.com/4xsqn). Sixty-nine per cent of the respondents the EIU surveyed agreed that the adoption of new technologies had benefited their most important business relationships – but half said that trusting corporate partners enough to share information was the toughest aspect of a new business relationship. Despite the challenges, 44% of the EIU’s respondents said that their collaborative relationships did enable them to share business processes and information with partners to serve their customers, compared with only 22% of respondents whose top relationship was transactional. Gartner, too, talks of customer communities providing data to support product development, customer feedback, loyalty management, customer segmentation, campaign targeting, and individual or group customer satisfaction management. But ubiquitous networking works for everybody, not just for business. Another Gartner report http://digbig.com/4xsqs predicts that, by 2011, citizen social networks will complement – and may in some cases even start to replace – government functions. And the EIU’s Democracy Index 2008 http://digbig.com/4xsqp is warning of the financial crisis discrediting western liberal values generally, halting the spread of democracy, and possibly increasing the attractiveness for many emerging markets of the Chinese model of authoritarian capitalism. Even if social networking does have the potential to nurture richer business relationships, its speed and ubiquity is such that it can spread other ideas just as effectively. We can’t control it – no-one can. But we must set ourselves the task of understanding its power.

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