Studying the impact of innovation on business and society

Social Capital: The Currency of the Social Economy

The convention for creating financial opportunities is evolving and changing the way we seed prospects, promote our expertise and prowess, and connect with those who can help us learn and advance through the facilitation of strategic and mutually beneficial alliances.

Digital capitalization is laying a foundation for expanding the need to cultivate and participate, not only in the real world, but also in the online networks and communities that can benefit us personally and professionally.

In an era of democratized publishing and equalized influence, it can be said that engagement and participation are a new, powerful and effective form of “un” marketing. At the very least, this is an epoch of empathy.

Social capital is a strong ally, an elite catalyst for lucrative relationships, and now a metric for qualification, consideration and ultimately success (however you define it).  This is a state of human economics. Our social capital and intellectual assets are defined by both online and real world conduct and its “balance sheet” is available for anyone with a web browser to review, assess, and analyze.

Reputation, trust, and relationships, are each earned at varying levels, through our action and words. Our interaction reinforces impressions and engenders experiences. As such, our personal and professional brands are essentially reflections of our contributions. In the end, we get out of it, what we invest in it.

By participating in relevant online communities and publishing content that promotes our expertise as it empathizes with those seeking information and direction in a way that literally speaks to them, we begin the process of building and shaping our online reputation, brand, and persona that traverses virtual, augmented, and actual realities. The ideas and wisdom we share and the relationships we forge only fuel its proliferation and stature.

Like any form of capital, Social capital rises and falls with the market and the individual to which it’s governed by the state of the industry and affected by the state of corresponding affairs. As it escalates, however, it unlocks opportunities that are commensurate with the community’s assessment of its value. In the same regard, the community will not support or reward lackluster, opportunistic, also-ran, or hollow engagement in the long term.

Again, social capital is measured by individual value and collective perception.

The Human Algorithm

But trust and reputation are only as valuable as their ability to represent you in your absence. And as in anything online, perception and presence are the focus of proactive programs that enhance the discovery process and steer recognition and stature in your favor.

As search plays an increasingly important role in the investigation process of surfacing qualified candidates and social objects around relevant topics, we quickly become brand managers for our intellectual and personal assets. Our livelihood now pivots on our ability to connect dots between who were are, what we stand for, and the value we offer.

You will be Googled.

You will also be Twittered, Flickrd, YouTubed, Facebooked, and LinkedIn’ed.

While Google is the standard by which all search is measured, those active in defining their presence in traditional search will do so through organic as well as through optimized techniques such as SEO. However, as search becomes social, the role of queries disseminates beyond Google with content sought and channeled directly within Social Networks as well as new breeds of real-time search platforms. As such, prominence is then ascertained by the digital shadows we cast across the traditional and social Web (yes, there is a difference) and also through our investment in driving strategic visibility. Essentially, our brand as defined by our views, opinions, thoughts, observations, and actions, becomes a social object that requires dynamic cultivation and placement.

The Human Algorithm becomes our lifeline to regulated exposure while also providing a foundation for constructing and enhancing our presence directly within the channels where prospects are seeking information.

Social Customer Hierarchy

As social media becomes ubiquitous, businesses will no longer possess the means to effectively scale and sustain participation across all conversations on Twitter, Facebook, blogs, and other online communities. Whether you agree with this or not, brands will face the need to prioritize who they engage based on what I refer to as the Social Customer Hierarchy. The level of influence and authority a customer or prospect holds determines their placement in the chain of preeminence.

Yes, we earn prominence and amass social capital through productive contributions to online societies. In the process, we increase our stature and amplify our voices and it will escalate consumer matters when other traditional means are exhausted. Brandishing this distinction however, erodes value, and over time, ranking and credibility are diminished.

Our online reputation and the activity that contribute to its definition are investments in our social capital. The return on these investments is evident in the opportunities and relationships that ensue and proliferate. Our social graph, the connections we forge and actively nurture, represents a very public testimony. If you’re not actively investing in its significance, you may actually take away from its net worth.

Connect with Brian Solis: Twitter, LinkedIn, Tumblr, Google Buzz, Facebook

Please consider buying my brand new book, Engage!

Get Putting the Public Back in Public Relations and The Conversation Prism:



Image Credit: Shutterstock

228 COMMENTS ON THIS POST To “Social Capital: The Currency of the Social Economy”

  1. smallbusinessmarketing says:

    Brian:
    WRT the social customer heirarchy, I think that if businesses focus on using social media to collaborate with their target markets, then the whole issue of customer heirarchy settles itself. Businesses can not be everything to all customers and so they ultimately must zero in on their favorite customers and social media is a prime candidate for making this happen.

    • briansolis says:

      Absolutely…as well as hitting those individuals who can in turn serve as an ambassador for solutions. As Jim Long said, customer service in social media must transform all channels of service instead of playing favorites on twitter. http://bit.ly/bAi2Uw

  2. Keenan says:

    Brian,

    You are spot on. I call this the “Asset of the Future” I posted about it 7 months ago. Our online presence, our social graph is quickly moving from a nice to have or competitive advantage to a must have.

    In the not too distant future, the jobs we have, the people we date, the schools we attend, the neighborhoods we live in will all correlate with the strength of our online social presence, as you put it our social capital.

    I am currently writing a book; Online Presence: Asset of the Future – Why your social graph will be worth more than your home, that lays out this future state, which is coming to age now.

    You can check it out here: http://asalesguy.com/2009/05/14/online-presence

  3. One important point about digital & online social capital, as opposed to traditional offline face-to-face social capital, is that we as humans are still figuring out how to manage this when we don't get the benefit of actually meeting these people in person. Call it the “smell factor” but I think human beings still have an intuition or first impression about people we meet in person, that is sorely missing in digital online encounters.

    • briansolis says:

      Yumio, interesting…there is indeed an energy that doesn't necessarily precede us in online as it does in real life. The chemistry check is powerful and telling.

  4. rustycawley says:

    Agreed on all points. Which is why I'm baffled why (in your new book and your redesigned site) you are now couching all of this in terms of “un-marketing” rather than PR 2.0. The generation of social capital is the mission of public relations, not marketing. Always has been; always will be. All this talk about “mashing” the two disciplines together is nonsense, frankly. The emergence of social media calls for a stronger hand from public relations, not some bizarre alliance between PR and the marketing folks.

    • briansolis says:

      Rusty, can't say that I disagree with you…however, there is the reality of what Public Relations is and how it's viewed by decision makers at the top. I hit a wall in my mission and I needed to break through it.

    • rustycawley says:

      OK, now THAT makes sense. I will grant you that PR has done a horrible job of positioning itself over the last 50 years — and we are all dealing with the consequences. I still believe that marketing folks are incapable (by their nature) of recasting their mission as “building relationships” rather than “pushing product.” But I cede your point about communicating with decision makers.

    • @rustycawley Really bizarre of you to talk of marketing folks “nature”, rather than their training, as though they are some kind of different species!

      Also, I disagree with your point. To me, this is actually about both Marketing and PR and their ability to re-think their roles with each other and the customer.

      It is PR 2.0, for sure. It's no longer enough to talk to the press, but it's time to have conversations and relationships with actual customers. It needs to be Public Relations in the actual meaning of the phrase, rather than the way PR is now perceived (btw does it not concern you that PR has a problem with its own positioning, when spinning perception has apparently been its purpose for these past 50 years?!)

      But it is also CRM 2.0: rather than merely “pushing product”, the results of this process should augment the value that a customer receives.

    • rustycawley says:

      Fundamentally, marketing is about one-way communication with the aim of persuading customers to buy a product. Ideally, public relations is about two-way symmetrical communication with the goal of establishing and nurturing relationships that benefit the client as well as the customer.

      Until recently, Brian framed the use of social media to generate social capital in the context of public relations. Lately, he has re-framed his argument from “PR 2.0” to “un-marketing.”

      Brian is conceding a function (the creation and protection of social capital) that should belong to public relations. I'm obviously disappointed by his decision, though I understand his reasoning. Among many decision makers, “PR” is hopelessly positioned as either press agentry or spin doctoring. And, yes, the public relations business is largely to blame for this misconception.

      The point I made to Brian (and that I made in the December issue of O'Dwyer's PR Report as well as in the upcoming issue of PRSA's “The Strategist”) is that marketers are ultimately incapable of engaging the public in the sort of open, transparent, candid, two-ways conversations that Brian advocates. Marketers measure progress in units sold, not in relationships created.

      Thus: Now is the time for public relations professionals to lay claim to the management of social media and social capital, not to cede territory to the marketing department.

  5. rustycawley says:

    Agreed on all points. Which is why I'm baffled why (in your new book and your redesigned site) you are now couching all of this in terms of “un-marketing” rather than PR 2.0. The generation of social capital is the mission of public relations, not marketing. Always has been; always will be. All this talk about “mashing” the two disciplines together is nonsense, frankly. The emergence of social media calls for a stronger hand from public relations, not some bizarre alliance between PR and the marketing folks.

  6. WrittenBySumer says:

    Brian, You have an indescribable ability to reach deep down into the exact formula of what is occurring in the online social realm. You bring the deepest insight to the state of communication I have ever seen.

    Taking the currency of intellectual assets one step further, I believe that in listening to the conversation occurring on new media and applying your own intellectual assets to what's going on, not only facilitates growth in your vision for the future of your company and how you connect with your prospects, but also enables your mind to be flexible with the current social economy.

    You can never know the potential of your intellectual assets unless you connect with others–the interaction of different minds is what facilitates growth.

    • briansolis says:

      You are on to something that we see in many aspects of real life…it aligns with an old saying. To find your true potential in chess, play people who are better than you and keep an open mind as you do.

  7. John Paul says:

    Great post.. But Brian your killing me with the terms and “big” words,. lol Like being in english class again.

    The power is now in the hands of the consumer, it is so easy for people to google you and find the good and the ba. Your job is to keep the bad to a minimum and the good at a high, by putting great informational content, that brans you as a influencer, or at the very least someone to go to get answers.

  8. brianzisk says:

    Nice post Brian.

    Would you be interested in paneling at the Future of Money and Technology Summit which we'll be throwing on April 26th at San Francisco's Hotel Kabuki?

    Lots of rock stars in the space are scheduled to appear, including Tara Hunt, Dave McClure, Jeff Clavier, Aaron Patzer, Paul Kedrosky, Vikas Gupta, Bill Tai, Phillip Rosedale, Peter Pham, Brad Strothkamp and many more. You'd fit right in, and I hope you'll be able to make it…

  9. AndrewPeel says:

    Phew! Would have made 4 Good Posts. Is there a Plain English version? KISS – that's the way to engage. I can imagine the technorati will get the above so I am unable to comment on the relevance or otherwise of the content. However purely as someone who has been studying and using Social Media every day honest feedback is this is information overload.

  10. Hey Brian – perfect timing, your post fit right into our discussions today in the post grad level PR program at Humber in Toronto. You are welcome to join the more than 90 PR execs from all over the world who are mentors at http://www.humberpr.ning.com or check out our social media course design here: http://bit.ly/8YXQtT

    When you talk about “Social Customer Hierarchy” do you mean that connections need to be managed based upon the resources that are embedded in them and the ability to mobilize those resources for a purpose?

    That purpose could be a sale, but equally so an optimum design or production process, getting through a regulatory process, etc … so the implications go beyond CRM, agreed?

    I think this “State of the Nation: The New Economic Model” post adds some value to the conversation here.

    http://bit.ly/2IVbeQ

    It evolved last year out of Business of Community Networking conference in Boston and Web 2.0 Expo in San Francisco.

    I have also released a ChangeThis manifesto and ebook called “Introducing Social Capital Value Add” that proposes a method to link social media to corporate valuation, sort of how brand valuation was developing in the 1980s. You can grab that at http://www.socialcapitalvalueadd.com. Would love to have you drop by.

    Cheers,
    Michael

  11. lizgebhardt says:

    Thoughtful post Brian. And I just ordered your new book. I would have gone for the download, but am waiting patiently for the iPad 🙂

    Two points in particular caught my attention.
    (1) From your post: “However, as search becomes social, the role of queries disseminates beyond Google with content sought and channeled directly within Social Networks as well as new breeds of real-time search platforms.”
    This is especially interesting to me in light of the ShareThis announcement this week of the ShareThis Stream service/product. New relevant queries may well be about what people an individual respects (in certain content areas) are sharing. Being able to access this “personally filtered firehose” of relevant info is incredibly important not just to us as individuals, but to media publishers and brands. And eventually being able to trace back to the initial node of the share and most influential sharers around topic areas seems the next logical step in development. ShareThis stream info at: http://blog.sharethis.com/2010/03/02/introducin

    (2) And about the topic of INFLUENCE, in your post: “Whether you agree with this or not, brands will face the need to prioritize who they engage based on what I refer to as the Social Customer Hierarchy. The level of influence and authority a customer or prospect holds determines their placement in the chain of preeminence.”

    I believe that understanding the true nature and value of INFLUENCE is a big part of defining an actionable social media optimization strategy. My thought is that: Might the relevant mix of Trust, Expertise and Attention (TEA) come together to define “contextual specific engagement” which provides the opportunity (but not the guarantee) for a receptive and relevant “audience”, for the appropriately timed moments of INFLUENCE? (Meaning that influence is defined for both individuals/groups, as well as time). If you are interested, more on that work here: http://www.thinkingoutloud.com/eg_ventures/2009

  12. larryirons says:

    Two social norms regulate social capital: the norm of reciprocity (quid pro quo) and the norm of beneficence (giving something for nothing). Without the latter social capital doesn't get started. Without the former it doesn't grow. The two work together over time as trust deepens.

  13. I agree that the community will not reward “lackluster, opportunistic, also-ran, or hollow engagement in the long term,” but is sure is disheartening to watch it be rewarded in the short term. I think the problem with people working in social media is that the capital is determined by perception, but that perception is being shaped around players who lack in substance or strategic thought, but fairly ooze with moxie and buzz words. Slow and steady wins the race (and builds the prominence), but fast and flashy can upset the Whuffie balance in a heartbeat.

  14. billrylance says:

    You state that “….online reputation and the activity that contribute to its definition are investments in our social capital.” Excuse me, but doesn't that suggest that people are gearing their activity towards improving their social capital as a end unto itself? That concerns me. The best social capital is created when the goal is truly selfless or, at least, enlightened self-interest where others stand to benefit. Too many people are trying to create social capital as the end-game. It's digital spin. We are a new company in Asia called WATATAWA (Walk The Talk, Talk the Walk) and we have an ironic inspiration. Check it out at http://www.watatawa.asia/

    • briansolis says:

      Love the name of the company!

      If improving social capital is governed by the community and the laws it introduces and enforces online as well as the corresponding rewards, then self-interest is regulated. Those who operate under the assumption that the end game is to climb the social ladder at all costs, will find themselves disconnected. However, as Jen says, the community is unfortunately rewarding these individuals right now…so the community will need to self-correct in order for this to work over time. As you say, “The best social capital is created when the goal is truly selfless or, at least, enlightened self-interest where others stand to benefit.”

    • Bill Rylance says:

      Thanks for the clarification, which I totally agree with. I like your blog and look forward to sharing views, news and developments on social capital issues from Asia. True to our oriental heritage, WATATAWA believes that social capital and market capital are the “yin yang” of the modern economy – truly interdependent, one without the other is simply not sustainable.

  15. judyyi says:

    Brian, you are right that we are “brand managers… of our personal assets,” but we've always been responsible for that ever since humans have been social animals. How this changes over time is only the scope and speed in which we create, reinforce, or destroy our reputation and good name.

    It's interesting to observe that Social Media is simultaneously seeking adoption and legitimacy, but is also already at risk of being dismissed as static, spam, or junk mail. I agree with recent comments that there's a lot of noise for sake of attention — the text is too often gratuitous placeholders for links and linkbacks. At some point the small talk has to deepen into meaningful messages. We want consistent value or the audience will soon tire of the new toy.

  16. TheBetsy says:

    I really like how you say that as the platforms of conversation increase, so does the issues and problems of trying to listen to it all- you reach the point of diminishing returns.

    Brings things back to basics of both marketing and PR. Figure out who your customer IS, who you want it TO be, THEN design your company's Social Media interaction program and let the guiding principals formed in the planning/strategy flow to all customer touch-points both SM and traditional.

    For Social Media, this could be basic (customer service, outreach) to more complex (new product designs.) Depending upon the fit for your customer base.

    Seems like for the past year, everyone's been in a hurry not to be left out that they either stretch themselves and/or budget too thin, or they spend too much without the thought of ROI, until after the fact. The “Where's the Beef” moment so to speak. And then some just do Social Media programs in lieu of incorporating more (and for them, more appropriate) traditional marketing and PR into their mix.

    It's good to read your thoughts and take a step back at the bigger picture, that an overall, far-reaching (custom) strategy is key.

  17. hey brian,

    thanks for the brief exchange about this topic on twitter. i built it out into a post because i think there's the potential for the term “social capital” to be misconstrued and abused, and then instead of moving towards a new level of Social Business, we'll recreate the same problems we're trying to fix because of confusion over jargon or semantics. i appreciate this post, because it gave me the opportunity to address the very dense concept of social capital, and i hope it will lead to deep dialogue about how we want to move forward.

    http://emergentbydesign.com/2010/03/06/social-c

    best,

    @venessamiemis

    • briansolis says:

      Venessa, based on your post, here's some “plain talk…”

      I respect you. Nothing more or less than an honest statement…

      Things evolve and that includes definitions and the forums in which they're used. We can either debate it or focus on helping those understand how they're contributing to change in the hopes of steering things in a more positive direction.

      Where this argument breaks down for me, using your words, is that you remove personal presence from the equation focusing instead on the networks that facilitate interaction. I don't disagree with the prevailing definition. I do however, believe we have a responsibility to help those who don't know better or worse, believe they do based on how they are communicating with one another.

      In the live web, a small but growing subset of the real world, one where people are measured by google results before they have a chance to explain them, our online value as it applies to specific opportunities can be confused with that of a ticker symbol – one that changes based on our contributions and the reactions to them.

      I'm sure this will lead to many more productive discussions, but I do hope you keep them productive. Some of your tweets, one in particular, was not taken kindly. So for that, I hope you can appreciate my honest, but brief reaction. More to come when I can free up time from my current focus.

  18. Hi Brian.

    I agree with what you've said. In essence we need to calculate the NPV of a customer, but add in their Social Influence which may be worth far more than their individual buying power.

    I used to think Social Gravity was a nice way of refering to this stuff.

    Brands can build Social Capital of course, but for that there is a term that has been around for over a hundred years that is actually perfect: Goodwill.

    As Lord Lindley apparently put it back in 1893: “The term goodwill is generally used to denote benefit arising from connections and reputation.”

    Sounds about right to me 🙂

  19. Erik Boles says:

    Brian,

    Another great post. I love the way you draw relevance and context to your posts. If there is one message that everyone on the world should get out of this post, it is, quite simply:

    In the end, we get out of it, what we invest in it.

    With all of the clients i consult for, the message I yell the loudest is simple:

    SHUT UP! Your customers are talking to you!

    I see more and more businesses adopt social media, and the majority of them use it to fire off an RSS feed, post content to, talk about promotions, gather followers and never follow back or engage their audience, and, at the end of it all, bail out on the project because “Social Media is a fad and doesn't work”.

    This approach, as you put much more eloquently above than I ever could, is much like me walking into a bar, interrupting every girl I see, telling her how great I am and what I have going for myself without actually ever having a conversation, and then deducing that “All women are bitches” because they won't go out with me.

    It is absolutely critical that a Social Media strategy be headed up by someone who truly understands it, has the support of the executive team and is absolutely aligned with Marketing, Sales and Support organizations within the enterprise.

    A great report by Altimeter and a great summary by you. Looking forward to meeting you at SxSW.

    Erik Boles
    http://ErikBoles.com
    http://twitter.com/ErikBoles

  20. dhargreaves says:

    I have only just seen this post. But one of the things we have been wrestling with is how to measure the “Social capital” of an organization – defined as the business value associated with the mentions of a brand across all digital channels.

    An organization's social capital would be a cumulative measure of the degree to which a brand was talked about positively across individual social graphs.

    I am not sure if you were thinking about social capital as applied to an organization but I think it equally applies.

    david

  21. Pingback: associationjam.org
  22. Hi Brian,

    The concept of social capital is important in many areas. Building trust and strong relationship with other people opens let us tap into a wealth of resources.

    There is a new social media site called Unvarnished (http://www.getunvarnished.com/beta) that allow anyone to anonymously post a review about anyone. Unvarnished will not let us delete negative comments. Unvarnished has the potential to shake our social capital. I would really love to hear your thoughts about the site and how we as social media user can avoid the negative impacts of unvarnished.

    Cheers.

  23. samtysrt says:

    Sunrise Capital Private Limited is a privately owned independent company At the core, Sunrise Capital is a team of highly accomplished financial professionals with a range of skills and qualifications which enable us to advise confidently and competently on most aspects of portfolio management and associated financial planning issues including specialist areas. kse pk

  24. vibram shoes says:

    There were many friends have hobbies of tourism! I am also one! What XX do you usually wear when going out? Recently I bought a set of XX, how do you like them? vibram shoes

  25. ugg boots says:

    I totally agree the standpoint of upstairs, and I believe this will be a trend. I often come this forum , rom here I learn much and know the newest tide! the content here constantly update and I love it! Another I know some websites which often update their contents, you guys should browse if you are free. Dior homme shoes

  26. Very well written!

    As a founder for a startup in the social ranking industry one of the HUGE holes I'm seeing it the marketing industry really struggling to keep up, or more accurately continuing to bury their heads in the sand.

    Like it or not we still live in a world of messaging being pushed at us. This idea of listening more than speaking and befriending the people who already talk to your audience is a complete paradigm shift. Exciting to some of us and frightening to others.

  27. Is That goos post , yes it is 😉

Leave a Reply

Your email address will not be published. Required fields are marked *

Join Our Mailing List

You have Successfully Subscribed!

Stay Connected
Twitter
  • RT @NathalieNahai: "There is this notion of wellness that we have long ignored in business. The concept of, to give it a word or a term, em…
  • I'm in NY for my 2nd live, in-person keynote and I'm starting to notice a concerning pattern...all of my suits have shrunk during COVID.️