A preview of the presentation that Konstantin Guericke, Co-founder and VP of Marketing for LinkedIn will be presenting at our Information Intelligence 2006 (ii2006) Summit in Arizona, April 10-13, 2006.
How can you build, or destroy Social Capital, and how can Social Capital be traded or used as information or to drive innovation?
MP3 File
Complete Transcription follows:
Dan Keldsen: Once again this is Dan Keldsen from the Delphi Group in Boston. We can be found at www.Delphigroup.com. Today I am talking about with Konstantin Guericke, cofounder and V.P. of Marketing from LinkedIn.
We are going to be talking about - at least at this moment it is before the presentation that Konstantin will be at our Information Intelligence 2006 event in Arizona. That presentation is called "The Link Between Social Capital, Information and Innovation." We are just going to give a quick preview of this and if you don't happen to have the opportunity to sit in on the session, I'm sure that either Konstantin or myself could bring you up to speed if you contact us.
Hopefully we will give you enough of a nugget here to get some food for thought on what's the role of social capital in your personal life and perhaps in your career in your organization. So, Konstantin, why don't you start us off with a quick nugget on what is social capital?
Konstantin Guericke: Social capital is basically the reputation that you earn among your [fellow] professionals. It has implication both for business and career. The career implications are often the most obvious. I don't think we can spend a lot of time on it.
Most people ended up with the job they have because there is some connection because the trust that the connection provides enables the career transaction. It's the same thing. The trust that connections provide really benefits business transactions.
Sales is one example where people are much more likely to buy from somebody if they know somebody who knows that person just because it feels like you can ask more questions and get more background information. You can place the person. So, it's very important to foster trust and social capital is something that is kind of a little bit like karma.
The more you accumulate the more you can draw on it and use it as a resource whether it's for career or for business. For example if you are in sales, sales people are often very aware of the social capital that they have and good sales people are often very willing to help other people where they are in sales and different things. They realize the more people they help, they always need help at some point.
Then people are much more willing to help them if they help them to begin with, a little bit like the pay it forward attitude. You see similar people who are very good with social capital management tend to be in professional services firms.
I recently talked with a gentleman at Merrill Lynch. He is basically using LinkedIn to accelerate the build up of social capital. He says, "Look, I have a client." He works with people who have personal assets of over ten million dollars, God bless them and manage that money.
He says, "Look, if his daughter wants to talk to an admission officer at a university that one of my contacts knows, I'm very happy to help him with that transaction because that builds up social capital for me and makes it more likely that he will go out of his way to recommend me to other high network individuals."
So, that's how "Pay it Forward" is not just a fun movie that makes you feel good. It's actually good business.
Dan: Right, and it was a good movie.
Konstantin: Yeah.
Dan: So far you have mentioned some of the ways you might build up social capital. But, is it measurable? Is it something that you just carry around in a notebook?
Konstantin: Yes, it's measured by the people around you.
Sometimes you may not know exactly. You get a feeling for how responsive people are to you. If you are ever in the situation where you got laid off and you need people's help sometimes you find out very quickly what your social capital is.
(laughter)
How many people volunteer to help you? If you have to ask, or if you contact people and they give evasive answers then your social capital is probably not as good as it should be. It's not a single number although there is a Connection icon which shows you how many people are willing to recommend you. I don't think that's the be all and end all. It's just kind of a general indicator.
We have very specific ratings that we expose at the relevant time. For example if you use our InMail service where you contact people directly and it doesn't go through an intermediary, we show a one to four star rating based on how other people you contacted directly reacted. That's the kind of information that will help the receiver make the decision should I spend time on this message or should I not?
Normally with e-mail you don't get any of that. You don't know who the sender is. You don't know if other people have responded favorably to this person's e-mail. On LinkedIn there is a lot more contexts for that.
Dan: So, reputation at least as implied or seen through LinkedIn, you can get some sense as to a sender's reputation by receiving an e-mail invitation?
Konstantin: The other thing is you see the profile. On the profile you see what companies they have worked at in the past so maybe you have some contacts out there. Maybe they attended some of the same conferences you attended so there are different kinds of bonds like that. Obviously this is very helpful for sales people to establish credibility.
Also, you might see that there are five different people you know in common. That gives you a lot more comfort in engaging a transaction. It helps you get the attention. Increasingly the difficult thing is with the Internet you have lowered friction. It's so much easier for people to contact each other.
Basically once you know someone's name you can send them an e-mail. You just have to guess different ways of putting in first name dot last name or different things. The problem isn't getting an e-mail to somebody or placing a phone call to somebody.
The question is; are they ever going to see it? Are they going to answer it? Are they going to take time to speak with you? Are they going to be candid with you? Attention is just a finite resource.
This is where social capital is really important is if you get introduced by someone that the person respects they are much more likely to pay attention to you. That person can also introduce you much better than you could yourself because they know the recipient much better than you do.
Dan: Right. Having a third party is always handy.
Konstantin: Right, so for example the link to information is very clear. What do you have as competitive advantages in companies today? One obviously is to hire the best and the brightest. That's one of the applications of LinkedIn - to source people for your team.
A source of competitive advantage is having access to information that your competitors don't have access to. It's an information economy.
Dan: Right.
Konstantin: All of your competitors probably all have access to Google and can find the same information that you can find. They probably read a lot of the same reports that are published. The most valuable information though is usually not published. It's in someone's head.
The question is, how do you find that person? How do you get their attention? Do you get them to agree to speak with you? When they speak with you will they be candid? All of those things are facilitated by social capital, by shared connections.
The same thing is true when let's say you have a base and you want to bring it to the market. There is a lot of talk about Malcolm Gladwell and Tipping Point and influencers.
Dan: Sure.
Konstantin: Influencers are not hard to find, right? They are usually very easy to find. Again, it's getting their attention which is hard and the most reputable influencers usually can't be bought. So, having a shared connection vouches for you. It's much more likely to get your foot in the door to get the message to the influencer.
That's really what social capital is all about and that's why we firmly believe that most business professionals should care about their social capital. They should look for ways to increase it. One of the things we've learned is that some people try to increase it by talking, by saying nice things to other people and complementing them and so forth.
That helps somewhat, but you know what? Actions really speak louder than words. If say you are in sales and you help someone else get a job well, if you need their help now they are much more likely to help you than if you just complemented them on the color of their tie.
Dan: Right.
Konstantin: So, actions are very important but the reality is that making introductions can be very time consuming. One of the things that we hear from you is that they like LinkedIn. It actually helps them save time and they make more introductions so they spend less time on the process and are getting more social capital in return.
Dan: Very quickly, so we don't give away too much of your presentation, what is the link to innovation.
Konstantin: With innovation what is really important is to have access to a diverse network with different information.
For example there was a study done a couple of years ago at the Stanford Business School that said entrepreneurs were three times more likely to innovate if they are in a diverse network. Your direct connections tend to be people who are kind of similar to you or of the same kind.
It is very important to cultivate some connections with people who are doing something a little different. Sometimes that can go back to college class mates who have gone off to become doctors or lawyers or doing things other than what you do. Also tapping into your second degree because your connections, by the second degree it gets a lot more diverse.
So that's one of the things. Once you have this network it's a great way to generate ideas from that network from the diverse information sources. You can test ideas and also you want to benefit from the lessons and mistakes of others. There are very few things in this world that haven't been tried before.
Dan: Right.
Konstantin: Before you start and try something that you think is new you want to talk to the people that tried it five years ago and find out why it didn't work. Maybe you can learn from their expensive lessons.
Dan: Right. That's an interesting twist and it's kind of a twist on Mark Granovetter's study on how people find jobs and how those networks work. If all you are ever looking at is your direct network, then it can become very difficult to find another job because, for example, if there has been a massive wave of layoffs amongst your network then everybody is clamoring for the same sort of world that you are.
You don't have that ability to look over the horizon and see what might be right next door to your area (network), but an opportunity could be just over the horizon and you can't get there from here as they say in New England.
Konstantin: Yeah, absolutely.
Dan: Interesting. Great! I'm looking forward to seeing you at the event and seeing the continuing evolution of social networking and all of these ties into information advantages, innovation and tapping into multiple networks for folks.
Konstantin: I'm looking forward to the conference.
Dan: Alright. Thanks a lot.
Konstantin: Take care, Dan.
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