Circle of FriendsCircle of Friends

I've always said, somewhat jokingly, that there are only 35 people in all of Silicon Valley: We just keep circulating from one company to the next. It's one of the network effects of having worked in high tech for more than 20 years. In almost every business or social setting, I'm likely to meet someone I know or who knows me. And a lot of my business and my clients' businesses rely on that phenomenon. Six degrees of separation hardly begins to describe it.

The other thing I always say is that business is about people, not companies or job titles. The value of who we are is infinitely more important than what we do or for whom we do it — the what and for whom can change all the time, but the who is immutable (except via death, drugs, or psychotherapy, which I won't even begin to touch here). This sets up a social meritocracy that makes our interpersonal relationships more important than almost anything. Who you know and how well you know them become as important, if not more so, than what you know.

Social Connections

These concepts are at the heart of the new social networking phenomenon that has been clawing its way out of academics and into the "real world" of enterprise software. Social networking seeks to automate the social connections between people to the advantage of all. The software does this by discovering who in your social network knows the person outside your network whom you're trying to reach, and, depending on how the software works, facilitates a direct connection. A number of companies — Spoke Software and LinkedIn, among others — have emerged recently that can discover these connections and broker a contact that, hopefully, gets the job (usually sales or business development) done a lot better and faster than the haphazard connections most of us maintain today.

The irony of the growth of a social networking software market is that the more complete the automation of social networking becomes, the more the value of the social meritocracy is diminished. Once you and your competitor can get to the same buyer through a similarly close connection, your connection is relatively worthless and you're forced to compete on the hard stuff: value, features, functionality, genuine merit, and total cost of ownership. Not who knows whom.

Of course, social network theory is pretty adamant about the inability of a network to ever be at what the academics call a "state of equilibrium." The complexity of human society and socialization is that everyone can't have the same quality and quantity of relationships as everyone else. We can't all be best friends. So rule number one of social network software is that the moment a network achieves perfection, it becomes valueless. And rule number two is that perfection will never happen.

Rule three is that, given the right privacy and security constraints, social networking can be a positive force. Sales VPs and CEOs will love the uptick in order size and quantity a social network-driven sales process can deliver, and those of us with a lot of good connections will increase our social network status just because of who we know and how well we know them. And the recipients of a social network-driven pitch will be happier and more secure knowing that they're doing business with someone who knows someone they know. Sounds good. Really good, actually.

Social Faux Pas

So why does social networking still give me pause? First, the abuse factor, something that all the vendors in this space claim can be protected against via privacy and "opt-in/opt-out" functionalities. Suppose a condition of employment with your new company was that you had to open up your social network to the rest of the workforce and you couldn't refuse a fellow employee's request for a connection. It would be pretty silly to run a business in which coercive sales tactics were practiced on the unwilling, except that everyone reading this column probably knows a vendor (or two or three) that will stop at nothing to get a deal. Imagine if the next step in a "stop at nothing" sales pitch involved bringing to bear your social network on the deal. It would kill your relationships, but if it helped the company make its numbers that quarter, so what? Death by a thousand spams would look infinitely preferable to being part of a coercive social network.

The second reason is that there are a lot of examples of social network economies that don't function particularly well. When I worked in France in the 1990s, I was amazed at how many executives and other movers and shakers all hailed from the same graduate school, l'Ecole Polytechnique. For many of these "polytechniciens," entrepreneurship consisted of calling on one's fellow graduates and securing a deal. Merit, quality, and even price seemed to matter little in this closed-off social network. And I would venture that one of the big problems with French high tech at the time was that social networking was the only real goal. Competing on value just didn't make the cut among French businesses, which put them at a distinct disadvantage when other companies, American and German, dared to place value above connections.

Finally, there's what I call the friendship quality problem. Just because someone thinks you're a friend doesn't mean you feel the same way. And just because you've worked or broken bread with everyone in your social network doesn't mean you'd go to bat for them and broker that connection they so desperately need. I meet a lot of people in this world and try to maintain cordial relations with most of them. But just because I know and even like you doesn't mean I'm going to go risk my valuable relationship capital on your problem. What if I don't think it's a good idea or that the person you want to meet wouldn't care to take the meeting? How do I say no without damaging a relationship? The protagonist in Henrik Ibsen's A Doll's House brings down the ire of feminists in every generation when he says, "No man would sacrifice his honor for love." But in the world of business connections, sacrificing honor for the social network would be foolish indeed.

Social Success

Having said all that, I have to confess that I think social networking can work. It builds off a new business object, the relationships inherent in our business connections, that makes it a great platform for enterprise software success. (See "Predicting Software Success," Nov. 18, 2003.) It leverages existing technology in the form of the information already available in your contact database. And it has immediate applicability — assuming you have a decent social network to tap into, you can get started leveraging those connections quite quickly.

Whether all this connectivity will pay off is another question. Once you've made the connection, you're still stuck with proving the merits of the pitch to someone you don't necessarily know. Which means you're still dependent on having something worthwhile to sell and someone interested in buying. But all other things being equal, social network software could be a big help.

Unless you're trying to reach the 35 people who work in Silicon Valley. In which case, just drop me a line.

Joshua Greenbaum [[email protected]] is a principal at Enterprise Applications Consulting. He researches enterprise apps and e-business.

Resources

Spoke Software: www.spoke.com

LinkedIn: www.linkedin.com

"Predicting Software Success," Nov. 18, 2003