Valuing Social Capital #value #IC


Tom Short <tman9999@...>
 

It has been some time since I have read anything about this - a
Scandanavian firm comes to mind that at one time allegedly reflected
the value of social capital on their balance sheet. In the face of
Web 2.0, and the accompanying notion of Enterprise 2.0 (that would be
companies adopting web2.0 technologies inside the firewall, I'm
assuming), I wonder what is new by way of thinking about valuing
social capital in the business world. Anyone seen anything or done
anything on this front that they found compelling? Thank you for any
info.
-Tom


Valdis Krebs <valdis@...>
 

Tom,

Here is an article I wrote for an HR publication about the value of adding Social Capital to the current focus on Human Capital...

http://orgnet.com/IHJour_XII_No5_p38_42.pdf

Even with all of the social network metrics we have [see above article] I'm not sure if it is ready to go on the balance sheet... maybe an "intangible assets" balance sheet?

Valdis Krebs
http://orgnet.com
http://thenetworkthinker.com

On Jan 6, 2009, at 1:51 PM, Tom Short wrote:

It has been some time since I have read anything about this - a
Scandanavian firm comes to mind that at one time allegedly reflected
the value of social capital on their balance sheet. In the face of
Web 2.0, and the accompanying notion of Enterprise 2.0 (that would be
companies adopting web2.0 technologies inside the firewall, I'm
assuming), I wonder what is new by way of thinking about valuing
social capital in the business world. Anyone seen anything or done
anything on this front that they found compelling? Thank you for any
info.
-Tom


------------------------------------

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Tom Short <tman9999@...>
 

Thank you, Valdis - I was hoping you'd weigh in here with your latest
thinking on this topic and this article fits the bill. The list in
your article provides a potential starting point for attaching a value
to social capital, or at least the value of incremental changes in the
level of social capital within the firm. Interesting that you didn't
have on the list something about increased job satisfaction or
increased intention to stay with the company. You mentioned it later
on in the article - seems like it is as valuable an outcome as the
other items listed there.

As far as how to characterize SC as an asset, yes, perhaps an
intangible asset (viz "goodwill") is a way to do this. Now if only we
had some metrics ;-).

Thanks, again, for the info.
-Tom

--- In sikmleaders@yahoogroups.com, Valdis Krebs <valdis@...> wrote:

Tom,

Here is an article I wrote for an HR publication about the value of
adding Social Capital to the current focus on Human Capital...

http://orgnet.com/IHJour_XII_No5_p38_42.pdf

Even with all of the social network metrics we have [see above
article] I'm not sure if it is ready to go on the balance sheet...
maybe an "intangible assets" balance sheet?

Valdis Krebs
http://orgnet.com
http://thenetworkthinker.com


Valdis Krebs <valdis@...>
 

Tom,

Yes, none of the academic research articles I cited talked about that. But Daniel Brass, now @ Univ of KY, did some research on that many years ago.. late 1980s? He found, and we verified it @ TRW Space & Electronics, that those embedded in key social networks and information flows are much more likely to 1) stay with their organization and 2) more likely to be committed to their job/role [not exactly job sat, but close]. At TRW we were looking at turnover of women and minority engineers when we started to map & measure social networks.

Valdis

On Jan 6, 2009, at 6:12 PM, Tom Short wrote:

Interesting that you didn't have on the list
something about increased job satisfaction or increased intention to
stay with the company. You mentioned it later on in the article -
seems like it is as valuable an outcome as the other items listed
there.


Valdis Krebs <valdis@...>
 

There are actually plenty of metrics including ones on innovation -- Ron Burt found in one study that engineers in certain network locations tend to have better *implementable* ideas!

We can't think finance and accounting here... stop measuring the nodes and start measuring the links and the link patterns! We need to look at new metrics like opportunity, influence, integration, awareness, etc.

Valdis

On Jan 6, 2009, at 6:31 PM, Tom Short wrote:


As far as how to characterize SC as an asset, yes, perhaps an
intangible asset (viz "goodwill") is a way to do this. Now if only we
had some metrics ;-).


Steve Ardire <sardire@...>
 


Tom Short <tman9999@...>
 

Interesting, and intuitively it makes sense - the idea of the lone
inventor toiling away and coming up with a eureka moment has been
discredited before.

So innovation and worker effectiveness would both seem to benefit
from higher levels of social capital. I wonder if anyone has
studied firms in similar industries and correlated higher
profitability with higher levels of social capital?

--- In sikmleaders@yahoogroups.com, Valdis Krebs <valdis@...> wrote:

There are actually plenty of metrics including ones on innovation -
-
Ron Burt found in one study that engineers in certain network
locations tend to have better *implementable* ideas!

We can't think finance and accounting here... stop measuring the
nodes
and start measuring the links and the link patterns! We need to
look
at new metrics like opportunity, influence, integration,
awareness, etc.

Valdis


On Jan 6, 2009, at 6:31 PM, Tom Short wrote:


As far as how to characterize SC as an asset, yes, perhaps an
intangible asset (viz "goodwill") is a way to do this. Now if
only we
had some metrics ;-).


Matt Moore <laalgadger@...>
 
Edited

"I wonder if anyone has studied firms in similar industries and correlated higher profitability with higher levels of social capital?"

That sounds suspiciously like Laurie Lock Lee's PhD: http://www.optimice.com.au/documents/CorporateSocialCapitalandFirmPerformance.pdf
 


Valdis Krebs <valdis@...>
 

Interesting angle on measuring social capital... much of what you benefit from you don't own!!! Often the key links are to expertise/ knowledge/insights outside of the firm. Human capital is like financial capital, you you either own it or you don't. Social capital -- again we are focusing on the links -- is "owned" by both parties that create the link.

Human and financial capital are measured in actuals -- we have X dollars and Y employees. Social capital will probably be based on probables -- we have X ties to Y resources which may result in Z new products. How many opportunities/possibilities did Apple have before they created the iPod? We know the iPod was a result of having key EXTERNAL ties -- the iPod was NOT a totally inborn product solely from Apple.

<wild guess>
Maybe this is like Quantum physics vs. Newtonian physics... we can measure and know the location of the apple that fell on Newton's head [urban legend?] but we can only guess where the electrons are at any particular time -- we can calculate a probability of their location. We can not assure an iPod will be created, but we might be to measure the probability that something new and worthwhile may be created from this intersection of people/ideas/markets/opinions/influence/etc.
</wild guess>

Valdis

On Jan 6, 2009, at 8:22 PM, Tom Short wrote:

Interesting, and intuitively it makes sense - the idea of the lone
inventor toiling away and coming up with a eureka moment has been
discredited before.

So innovation and worker effectiveness would both seem to benefit
from higher levels of social capital. I wonder if anyone has
studied firms in similar industries and correlated higher
profitability with higher levels of social capital?

--- In sikmleaders@yahoogroups.com, Valdis Krebs <valdis@...> wrote:

There are actually plenty of metrics including ones on innovation -
-
Ron Burt found in one study that engineers in certain network
locations tend to have better *implementable* ideas!

We can't think finance and accounting here... stop measuring the
nodes
and start measuring the links and the link patterns! We need to
look
at new metrics like opportunity, influence, integration,
awareness, etc.

Valdis


On Jan 6, 2009, at 6:31 PM, Tom Short wrote:


As far as how to characterize SC as an asset, yes, perhaps an
intangible asset (viz "goodwill") is a way to do this. Now if
only we
had some metrics ;-).


------------------------------------

Yahoo! Groups Links



Larry Hawes
 

Valdis et al,

I think you are on the right track when putting Probablity forward as
a believable metric for measuring the value of social capital. A
research-intensive firm (e.g. Xerox, 3M, Sony) should, at least
ideally, have a documented history of past experimentation. This
history would allow them to discover ratios of project success to
failure for various initiatives with different partners (thinking
links, not nodes.) That ratio would communicate probability of
success when different partners collaborate to innovate.

To carry this notion a step further, we could actually derive a hard
currency value by determining the profit accrued from each past
successful innovation effort, calculating average profit, and
correlating that figure to the probability of project success. I
suppose the equation might be:

Average profit per successful innovation attempt X Probability of
success of innovation attempt = Potential value of Social Capital
focused on innovation

Feel free to rip this apart. I'm not a math whiz, but I suspect that
this is over simplified. I hope the concept makes sense at minimum,
but I may be off there too, so please bend this any way that seems to
make sense to you.

Thanks all,

Larry Hawes

--- In sikmleaders@yahoogroups.com, Valdis Krebs <valdis@...> wrote:

Interesting angle on measuring social capital... much of what you
benefit from you don't own!!! Often the key links are to expertise/
knowledge/insights outside of the firm. Human capital is like
financial capital, you you either own it or you don't. Social capital
-- again we are focusing on the links -- is "owned" by both parties
that create the link.

Human and financial capital are measured in actuals -- we have X
dollars and Y employees. Social capital will probably be based on
probables -- we have X ties to Y resources which may result in Z new
products. How many opportunities/possibilities did Apple have before
they created the iPod? We know the iPod was a result of having key
EXTERNAL ties -- the iPod was NOT a totally inborn product solely from
Apple.

<wild guess>
Maybe this is like Quantum physics vs. Newtonian physics... we can
measure and know the location of the apple that fell on Newton's head
[urban legend?] but we can only guess where the electrons are at any
particular time -- we can calculate a probability of their location.
We can not assure an iPod will be created, but we might be to measure
the probability that something new and worthwhile may be created from
this intersection of people/ideas/markets/opinions/influence/etc.
</wild guess>

Valdis


On Jan 6, 2009, at 8:22 PM, Tom Short wrote:

Interesting, and intuitively it makes sense - the idea of the lone
inventor toiling away and coming up with a eureka moment has been
discredited before.

So innovation and worker effectiveness would both seem to benefit
from higher levels of social capital. I wonder if anyone has
studied firms in similar industries and correlated higher
profitability with higher levels of social capital?

--- In sikmleaders@yahoogroups.com, Valdis Krebs <valdis@> wrote:

There are actually plenty of metrics including ones on innovation -
-
Ron Burt found in one study that engineers in certain network
locations tend to have better *implementable* ideas!

We can't think finance and accounting here... stop measuring the
nodes
and start measuring the links and the link patterns! We need to
look
at new metrics like opportunity, influence, integration,
awareness, etc.

Valdis


On Jan 6, 2009, at 6:31 PM, Tom Short wrote:


As far as how to characterize SC as an asset, yes, perhaps an
intangible asset (viz "goodwill") is a way to do this. Now if
only we
had some metrics ;-).


------------------------------------

Yahoo! Groups Links



Joe Raimondo