Cracking the Social Code

[reposted from Darwin, September 2003, courtesy of the Wayback Machine]

Can networking tools work their magic on your bottom line? Some companies hope so.

INTUITIVELY, WE ALL know the value of social networks. Gossip and politics are latent in the wiring of the human mind (or soul, depending on your religious bent), like the capacity to talk or perceive colors. And just like speech and color vision, social networking is something that most people do unconsciously, without a great deal of reflection.

As an adjunct to the rise of the Internet as the primary emporium for information and interaction, seemingly hundreds of social networking experiments are being launched, trying to make the subtle and intuitive social dance that we call networking explicit and perhaps more straightforward.

Are these experiments working? Can social tools accelerate or strengthen the human bonds that lead to collaboration, interaction and trust? Or to pose the question in more concrete terms: Do these solutions actually lead to measurable results? And in the business context, do they actually increase the top or bottom line?

Looking Askance at Social Intrusion and Network Opportunism

I have investigated a long, long list of technologies ginned up to support social networking — Ryze, Friendster, Spoke, CreatorBase and many others. There are some not-so-subtle flaws in their gerrymandering of human interaction that need fixing before they will be productively used in the business mainstream:

1. Those users with high value networks have invested a great deal of time and energy to them, and in general have little incentive to open up their Rolodexes for others to paw through. They will be completely turned off by a system that requires them to upload their entire contact database into even a semi-public fashion. For example, exposing their relationship to another person, even though the contact information is filtered out. This opens the door to intrusive requests by others using the network system.
2. It is perhaps true that the enemy of my enemy is my friend, but it is not clear that the friend of my friend is a friend of mine. Trust and regard attenuates rapidly in human relationships: a friend of a friend of a friend is unlikely to bring much social juice to bear. Except in narrowly defined and strongly affiliated groups (like religious sects, fraternities or within corporations), this transitivity of social capital does not really work.
3. The meaningless social gaming that seems to be happening at many of the individual-oriented social networks, where participants strive to accumulate “friends” or “contacts” like Chuck E. Cheese coupons or points in a massively parallel role playing game, is nothing like the organic development of purposeful business networks. It is like a cancer, where the normal DNA of social interaction is infected with some external viral protein, forcing the organism to endlessly reproduce more and more useless social connectivity. No serious business executive would get caught up Ryze networking, except as a hobby or as a student of the madness inherent in crowds.

Tighter Focus and More Control

The value proposition about social networking tools will have to be proven in the small — in tightly focused contexts — before businesses will consider its applicability in the larger, enterprisewide setting. My hunch is that sales — the part of the business closest to the top-line — is the place to start.

I recently stumbled across references to VisiblePath, a company running in a semi-stealth kind of operating mode (their website is completely password locked down), and I tracked down the president, Antony Braden. VisiblePath has jumped over most of the barriers that I enumerated earlier, by a combination of clever technological design and picking its field of battle carefully.

The product is geared toward exploiting the social networks within the enterprise to help sales. And by help, I mean shortening the sales cycle, increasing the size of deals and increasing the number of deals. Braden has some compelling initial baseline data, drawn from the beta cycle with around a dozen companies, that demonstrates a pretty clear ROI story — 22 percent higher close rate, 27 percent shorter sales cycle, 10 percent increase in deals — when strong social capital is brought to bear.

VisiblePath is a highly differentiated offering, on several key levels, over and above their currently exclusive focus on sales:

• It is tightly integrated with enterprise-grade sales force automation (SFA) offerings, such as SalesForce.com and Siebel. This means that it has access to the contact information already resident in the SFA data, including other contact-related information managed there.
• The solution gleans social network information from several other sources, in particular e-mail. VisiblePath applies a sizable collection of sophisticated algorithms (developed in collaboration with Stan Wasserman at the University of Illinois) to determine the relative strength of connections to potential customers. Factors such as the number of e-mail communications and the lag in response are used to determine the strength of the relationship. This means that the system will ferret out the person “closest” to the contact in the social topography.
• On the social side, VisiblePath neatly sidesteps both the intrusiveness and the lack of control inherent in other social networking applications. When one user of the system, for example XYZ Corp’s D.C. regional sales manager, requests an introduction to Stowe Boyd, who resides in his region, XYZ’s CTO is notified of the desire for an intro since the CTO has the closest and strongest relationship with Stowe. However, this request can be totally anonymous (unless the CTO opts for another arrangement), and the request can be turned down anonymously, if he so desires. Just as important, VisiblePath does not support the conventional fire-and-forget e-mail model where the request for introduction — if accepted — is simply forwarded along to the actual contact. The intent is that the collaborators within the company will determine what the best means to actually broker the introduction is: the CTO might call me and give me the sales manager’s contact info, or the sales manager might craft an e-mail to be reviewed by the CTO, or whatever. But the brute force, near-spam approach is completely avoided, and there is never a form e-mail in the inbox of an important contact with “powered by VisiblePath” at the footer.
• Finally, the dark issue of incentive is adroitly addressed through a closed loop integration with the SFA tool. VisiblePath tracks contributors’ activities in support of social introductions, and when deals come to a successful end, those brokering the introductions are rewarded through commissions. Braden says they have established that a baseline of 1.5% of the deal is enough of an incentive to matter and small enough that it doesn’t destabilize the existing compensation structure: a win-win.

From the Few Come Many

For social networking tools like VisiblePath to penetrate the larger enterprise they will need to start with an initial beachhead where the ROI is concrete, fast and obvious. Getting more money into corporate coffers and the pockets of the sales team (or others in the company) based on leveraging social relationships is a really good place to start. If the product is proven there, in clear-cut financial terms, the company is likely to expand its use to related activities like recruitment, channel development or general expertise searching, where the payback is perhaps fuzzier. But so long as the initial and primary benefit — more and better sales — pays the bill for the technology, the company is unlikely to begrudge the slightly higher overhead to deploy the technology more widely.

I think VisiblePath has cracked the code for enterprise adoption of social networking technology, which gets down to business basics and leaves the social altruism aside. It’s not just building a better Rolodex: it’s keeping your network happy, and at the same time making your partners’ wallets fatter when they throw you a lead.