The Reputation Economy

I was at a conference recently where one of the presenters threw out some blogging statistics (unfortunately I don't have the source in my notes). 17% of companies currently are blogging. 35% expect to be blogging by the end of 2007 and 48% have no plans. Almost half of the companies out there have no plans to implement a simple (and almost free) means by which to start meaningful conversations with their customers.

A year ago many companies and executives still didn't even know what a blog was. Now it is unlikely that there is a CEO that doesn't know what one is, however the problem they are trying to figure out now is how to enter into this game without screwing up... and by the way screwing up means different things depending on who you are talking to - Peers, shareholders, investors, customers, industry experts, and other bloggers. Unfortunately it seems that most are just planning to ignore it.

What companies need to understand is that we are now truly in the reputation economy. Of course having a good reputation has always been important, but in the past companies had some means of controlling reputation perception through PR and advertising. Additionally, the mechanisms by which reputation spread was somewhat limited. You may have a good or bad reputation in your town, but move out from there and its like starting over (which could be either a positive or negative depending on the company).

Its similar to the ebola virus. It has always been around, but if it hit a small village it might wipe out the town the it could only spread that far since there were little to no connections outside of the town. Then towns became closer together, and faster means of transportation got developed, and the virus now pops up in many different places and everyone gets in a panic about the new virus...Social software tools are the rapid transportation mechanisms that are allowing reputation virus's spread quickly, pop up in new areas and surprising consumers... and can no longer be contained.

And its not just blogs that determine your reputation now - A plethora of social tools are now going mainstream. Wiki's and social networks from the behemoth mainstream players to the growing population of niche social networks, are the places where your corporate reputation will be determined - not your PR engine.

What makes this entire situation more interesting is that not only are tools available for the market to define your reputation, but whatever they define will be recorded for eternity in search indexes.

So for the nearly 50 percent of companies that have no plans to blog (and presumable no plans to use any other social tools), ignoring the change is not going to solve the problem. The solution is to learn, participate, communicate, and learn some more. Above all be humble.

The Long Tail of Social Networks

Yesterday I received a post on Tech Crunch regarding a company called Ning, that now has now modified their tool for creating online social networks without any development knowledge. I created one myself in about 5 minutes and also sent the link around to a few at work. One of my colleagues also created one, and we started talking about what this means. A tool like this that any web-savvy user can create with, the long tail of social networks will start. They have as Chris Anderson stated 'democratized the tools of production'. No longer is one forced to mold into one of the big existing social networks. These now mainstream social networks have critical mass in terms of size but little to no focus, on anything besides creating large friend lists and an online communication portal. I have already stated that I think large social networks will reach a tipping point. Ning's tool will allow social networks to be created on any topic/interest that one can imagine. And just like the long tail has proven for niche content creation through blogging, I expect the same to happen here.

Of course these long tail social networks will not build memberships in the 10's of millions, but that is not their purpose. Their goal is not to compete against MySpace or Facebook. They offer what the mainstream social networks can't, due to their large size. They allow small focused groups to form, bond and socialize on specific topics of interest. Think about the potential for knowledge sharing and networking that could be done now. Personal blogs started two way conversations. Long tail social networks will create focused many-to-many conversations. They may become a natural extension of active blogs, where blogs test the waters to see if the conversation is worth having, and niche social networks extend these conversations. The long tail has proven that if one person has interest in a topic, there are others.

From an advertising perspective, long tail social networks could be an untapped goldmine. A few hundred eyes or possibly a few thousand eyes, that are part of a long tail social network that has a narrow focus, it likely more valuable than 100,000 eyes in a mainstream social network, where all you really know is that these people are social and they are likely under 30.

Thinking Networks

A lot of people join work related networks, but the majority of the time the intent is either to help find people that you may want to hire, or in the event that you are looking for work hopefully your search will be more fruitful and efficient. These are great reasons to have networks. Linkedin is a great online network, and most communities have networks to help meet and link up with other professionals. Many people also join what are often called 'leads groups' which are usually smaller, but are focused on helping find leads in whatever field you are in.

For over a year now, I have been part of a group that can probably be best described as a thought network. A small but diverse group of individuals that get together to discuss business related topics. We get together typically once a week for coffee/breakfast at 6:30AM. The agenda is rarely defined, and the group size changes week to week based on availability, but the discussions are always interesting ranging from someone asking for advice on terminating an under-performer, to business productivity tools to startup ideas to name a few. It is often referred to as the safe haven group - a place where you can be free to ask questions, and discuss topics as a peer group, where the intention is for everyone to learn and grow.

The great thing about the group, is that it is often self correcting. New people come in through existing members, but sometime with a misunderstanding of group's purpose or with different intentions. People that come in looking to sell business or find a job often stop coming after a while. When people come in with a self serving intentions they are often disappointed. Leads do happen in this group, but its all about the intention of the individuals. People build up trusting relationships with other members of the group through meaningful and well intended discussion to help each other.

Most people reading this belong to the more superficial work related networks but I urge you to think about trying to create a small thinking network. I was once told by a great management trainer: 'In your professional development, you are either moving forward or moving backwards. There is no standing still.' Business is changing so fast these days, it is crucial to create peer groups across different types of businesses and job types to assist with forward progression. This diversity, will help you grow professionally as well as personally in ways that simply cannot be done with people in the same company, same industry or profession. Also remember the key tenants of trust and caring. Its not just about who has the best ideas or solutions to problems - its about genuinely taking an interest in the development of others, and they in you.

Community Immunity - Will Social Networks Tip?

I recently listed to the audio version of the Tipping Point by Malcolm Gladwell. He has a more recent update to the end of the book where he talks about the concept of immunity and social epidemics.

He introduced the concept of the “fax effect” originally proposed by Kevin Kelly. If you are unfamiliar it goes like this: The first fax machine cost millions of R&D dollars, and retailed for a few thousand dollars, but was relatively useless since there were no other machines to communicate with. Each successive fax machine purchased made all the previous machines more valuable. When you bought a fax machine, you were buying access to the network which is much more valuable than the machine itself. This is referred to as the law of plentitude. Cell companies use a similar concept to market and sell their products and services. The logic of the network is that power and value come from abundance.

Gladwell continues to explain that this is why email is supposed to be so powerful, but is this true? Just like the phone network has grown so large that users have built up ‘immunity’ (answering machines, caller ID, and other filtering mechanisms), so too is this starting to happen with email. When you first got email, and had your first few members of the network, you spent much time and effort crafting well thought out messages. Now we get 1000 (hopefully filtered) spam emails, and often 10’s or hundreds of messages from people. Most email users are now creating shorter responses, being more selective and delayed in response. Gladwell argues that these are all symptoms of immunity, and that large network communication channels have, and will continue to suffer growth tipping points creating immunity, similar to how virus’s spread and eventually die once enough users become immune.

My question is whether this will happen to social networking communities, and I think unfortunately it will. Think about MySpace. Who can really manage a hundreds or thousands of ‘friends’. Once the novelty wears off, when does this network just become like the hundreds of emails you get. Social networks could too reach an immunity tipping point, where they become so large that the very reason that they seemed so attractive, cause its own demise. In a members’ quest to become connected, they are starting to repeat what other networks have already succumbed to. Linkedin is also beginning to show signs of this, with ‘super connectors’ who will link with anyone and everyone. It seems like a great way to grow the network, but this is essentially the beginning of a possible immunity tipping point. Ultimately it comes down to the community members to keep the social network thriving, but not letting it get out of control to a point where community immunity kicks in.

The business of Social Networking

What was once thought of as a fad, is now proving to have some staying power. Sites such as MySpace and Facebook are showing with their large user base and investment funding that the phenomenon will be around for some time to come. Advertisers are also starting to shift their thinking on how to utilize these sites to their advantage. Check out Socializing for Dollars. Most of these sites however are mostly about meeting people, making friends, trying to show how cool you are, fitting in, and just finding yourself and your place in the world. We are social beings and this concept definitely has it place, but how can or will this trend or model transfer into the business world? Linkedin, and Simplyhired take the concept of social networking and put it to work in a business application, but I feel that this is just scratching the surface as to where we could go to create social networking applications that can actually drive economic progress inside company walls as well as the business community in general. Plus, think about the the MySpace generation as it (eventually) grows up and enters the workforce. Applications that use the social networking model should be adopted easily, as long as it increases productivity, and not just killing time at work.