Social networks have been with us since time immemorial. However for the purpose of this post, the definition of social networks is limited to web 2.0 frenzy. It is useful to start with a plain vanilla description of social networks which basically entail the inter-connection of agents leading to interactions that result in emergent behaviour. In the context of the internet as well social networks have existed perhaps as long as its existence in the form of mailing lists, forums e.t.c

So why does social computing buzz under the umbrella of web 2.0? Whether one looks at social networks from an industry, management or end user perspective the value of social networks stem from the user bandwidth. Once this user bandwidth surpasses a critical mass then an exponential increase of users is expected to a certain equilibrium level. Once this critical mass is achieved, value is derived from the interactions amongst agents.

The end user derives value from user bandwidth or rather the size of the social network itself by interacting with agents known and unknown to them usually along the lines of interest and similar tastes. So the typical end user will indulge in discussions or exchange of information on petty items such as their favourite chocolate or colour to more serious topics such as investment decisions.

From an organisation management perspective social networks add value to the dissipation of information or knowledge across or along the organisation hierarchy. Not only can managers leverage on social networks to continuously embody and communicate the organisations’ vision to all employees it also offers a platform to communicate and gauge the effect of decisions and strategies.

The industrial window presents a rather intriguing scenario. Traditionally industry or enterprise has and will always be driven by the profit motive. So the relevance of social networks to industry is in the form of an income generator. Firms leverage on social networks to dissipate information about their products and services with the hope of increased sales. This explains why certain firms are willing to pay a huge premium to get privileged access and control of such networks. A good example will be the interest of Microsoft, Yahoo on Facebook, the defacto social network of current times.

This post presents a rather generic analysis of social networks. Hopefully in future posts we will be able dig into detail. Nonetheless the hidden value of social networks can be qualitatively deduced the intrinsic dissipation of knowledge as a result of agent interactions. Depending on the user bandwidth it is also expected that the velocity of information and knowledge increases exponentially with user bandwidth, though other factors such the order of connections per agent and relative activity per agent could have an effect as well. We postulate that emergent behaviour in social networks adds value to the innovation process by leveraging on the viscosity (amount) and velocity (speed) of information flow between the agents. Increased velocity results in faster decisions being made hence faster innovation and on the other hand increased viscosity should result in higher quality innovation. Although the results have not been quantified as yet, one thing for sure is that social networks have and will change business operations. Business models are likely to evolve around social networks (both web 2.0 and generic) in order to leverage on their hidden value.

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The Hidden Value of Social Networks



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