7.4 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 networks 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 blown past the flagging MySpace. Its leadership in privacy management, offering new features, allowing third-party applications on its platform, and providing sophisticated analytics tools to corporations and other on-site sponsors have helped the firm move beyond its college roots. 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 Monster.com and CareerBuilder (Boyle, 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. Started by musicians, MySpace casts itself as a media discovery tool bringing together users with similar tastes (Johnson, 2010).

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” (King, 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, Mixi, and Cyworld have small U.S. followings, but are among the largest sites in Brazil, Japan, 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. counterparts1.

Perhaps the most powerful (and controversial) feature of most social networks is the feed (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. 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 viral. 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 (Lacy, 2008; Nicole, 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, and during attempts to rework its privacy policy and make Facebook data more public and accessible. (See Chapter 8 “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)
  • Discovery-fueling 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

Hundreds of firms have established “fan” pages on Facebook and communites on LinkedIn. These are now legitimate customer- and client-engagement platforms that also support advertising. If a customer has decided to press the “like” button of a firm’s Facebook page and become a “fan,” corporate information will appear in their newsfeed, gaining more user attention than the often-ignored ads that run on the sides of social networks. (For more on social networks and advertising, see Chapter 8 “Facebook: Building a Business from the Social Graph”.)

But social networks have also become organizational productivity tools. 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 (Frauenheim, 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 (and creates issues as work dialogue moves outside firm-supported services).

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 (King, 2006). Maintaining such networks will be critical in industries like IT 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 (Bulkley, 2007). As a dialogue catalyst, a social network transforms the public directory into a font of knowledge sharing that promotes organization flattening and value-adding expertise sharing.

While IBM has 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). Ning allows anyone to create a social network and currently hosts over 2.3 million separate online communities (Swisher, 2010).

A Little Too Public?

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…).”

Firms have also created their own online communities to foster brainstorming and customer engagement. Dell’s IdeaStorm.com forum collects user feedback and is credited with prompting line offerings, such as the firm’s introduction of a Linux-based laptop (Greenfield, 2008). At MyStarbucksIdea.com, 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 Salesforce.com that not only hosts these sites but also provides integration into Facebook and other services. Starbucks (the corporate brand with the most Facebook “fans”) has extensively leveraged the site, using Facebook as a linchpin in the “Free Pastry Day” promotion (credited with generating one million in-store visits in a single day) and promotion of the firm’s AIDS-related (Starbucks) RED campaign, which garnered an astonishing three hundred ninety million “viral impressions” through feeds, wall posts, and other messaging (Brandau, 2009).

Social Networks and Health Care

Dr. Daniel Palestrant often shows a gruesome slide that provides a powerful anecdote for Sermo, the social network for physicians that he cofounded and where he serves as CEO. The image is of an eight-inch saw blade poking through both sides of the bloodied thumb of a construction worker who’d recently arrived in a hospital emergency room. A photo of the incident was posted to Sermo, along with an inquiry on how to remove the blade without damaging tissue or risking a severed nerve. Within minutes replies started coming back. While many replies advised to get a hand surgeon, one novel approach suggested cutting a straw lengthwise, inserting it under the teeth of the blade, and sliding the protected blade out while minimizing further tissue tears (Schulder, 2009). The example illustrates how doctors using tools like Sermo can tap into the wisdom of crowds to save thumbs and a whole lot more.

Sermo is a godsend to remote physicians looking to gain peer opinion on confounding cases or other medical questions. The American Medical Association endorsed the site early on2, and the Nature scientific journals have included a “Discuss on Sermo” button alongside the online versions of their medical articles. Doctors are screened and verified to maintain the integrity of participants. Members leverage the site both to share information with each other and to engage in learning opportunities provided by pharmaceutical companies and other firms. Institutional investors also pay for special access to poll Sermo doctors on key questions, such as opinions on pending FDA drug approval. Sermo posts can send valuable warning signals on issues such as disease outbreaks or unseen drug side effects. And doctors have also used the service to rally against insurance company policy changes.

While Sermo focuses on the provider side of the health care equation, a short walk from the firm’s Cambridge, Massachusetts, headquarters will bring one to PatientsLikeMe (PLM), a social network empowering chronically ill patients across a wide variety of disease states. The firm’s “openness policy” is in contrast to privacy rules posted on many sites and encourages patients to publicly track and post conditions, treatments, and symptom variation over time, using the site’s sophisticated graphing and charting tools. The goal is to help others improve the quality of their own care by harnessing the wisdom of crowds.

Todd Small, a multiple sclerosis sufferer, used the member charts and data on PLM to discover that his physician had been undermedicating him. After sharing site data with his doctor, his physician verified the problem and upped the dose. Small reports that the finding changed his life, helping him walk better than he had in a decade and a half and eliminating a feeling that he described as being trapped in “quicksand” (Goetz, 2008). In another example of PLM’s people power, the site ran its own clinical trial–like experiment to rapidly investigate promising claims that the drug Lithium could improve conditions for ALS (amyotrophic lateral sclerosis) patients. While community efforts did not support these initial claims, a decision was arrived at in months, whereas previous efforts to marshal researchers and resources to focus on the relatively rare disease would have taken many years, even if funding could be found (Kane, et. al., 2009).

Both Sermo and PatientsLikeMe are start-ups that are still exploring the best way to fund their efforts for growth and impact. Regardless of where these firms end up, it should be clear from these examples that social media will remain a powerful force on the health care landscape.

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.

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: Concepts and Frameworks for Understanding What Separates Winners from Losers”) 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 health care, 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.

1Ipsos Insights, Online Video and Social Networking Web Sites Set to Drive the Evolution of Tomorrow’s Digital Lifestyle Globally, July 5, 2007.

2The AMA and Sermo have since broken ties; see B. Comer, “Sermo and AMA Break Ties,” Medical Marketing and Media, July 9, 2009.


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Bulkley, W., “Playing Well with Others,” Wall Street Journal, June 18, 2007.

Frauenheim, E., “Social Revolution,” Workforce Management, October 2007.

Goetz, T., “Practicing Patients,” New York Times Magazine, March 23, 2008.

Greenfield, D., “How Companies Are Using I.T. to Spot Innovative Ideas,” InformationWeek, November 8, 2008.

Johnson, B., “MySpace Bosses Battle to Oust Facebook from Social Networking Top Spot,” The Guardian, March 15, 2010.

Kane, J., R. Fichman, J. Gallaugher, and J. Glaser, “Community Relations 2.0,” Harvard Business Review, November 2009.

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King, R., “Social Networks: Execs Use Them Too,” BusinessWeek, November 11, 2006.

Lacy, S., 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).

Nicole, K., “iLike Sees Exponential Growth with Facebook App,” Mashable, June 11, 2007.

Schulder, M., “50on50: Saw Blade through Thumb. What Would You Do?” CNN, November 4, 2009.

Swisher, K., “Ning CEO Gina Bianchini to Step Down—Becomes an EIR at Andreessen Horowitz,” AllThingsD, March 15, 2010.


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