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Friendships: The Next Big Business Strategy?

The value of burgeoning social networks.

If you have 347 followers on Twitter , what are the chances that they'll click on the same online ad you clicked on last night? This is the kind of question that advertisers and researchers at MIT and IBM are dying to know the answer to, according to Stephen Baker, in the June 1, 2009 article in BusinessWeek, "What's A Friend Worth."

Jeffrey Rayport, formerly of Harvard Business School, reports in an article in BusinessWeek, May 18, 2009, "The Shift To A Social Web," that a shift is underway that is ushering in the next stage in the battle for influence on the Web, which involves companies such as Google, Yahoo, Microsoft, and AOL and others. This battle will change the way we use the Internet and how advertising is used. Rayport sees the capability of people taking their social identity from site to site, which means Web companies are no longer in the business of building "destination sites,", but rather, social networking players are racing to extend their influence over the entire Web by exporting their social features to all sites. We may even see Google's cited mission "to organize the world's information" change to "organize the world's people."

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Friendships have changed drastically, particularly among Gen X'ers and Gen Y'ers, because of the technological tools of social networking sites. The really successful networkers combine face-to-face relationships with the online connections such as Facebook and LinkedIn, to keep the network of friends and business connections alive.

Many companies now are realizing the goldmine of marketing and promotion that exists and are using social networking to their advantage, which may in turn sound the eventual death knell for traditional advertising. Other companies, such as Hewlett-Packard and IBM are examining employee relationships inside the companies with the intent to improve communication and knowledge.

A third area of social networking--of personal opportunity--is an important development. Entrepreneurs and recruiters and career managers realize the power of social networking, using it to create business opportunities and recruit talent.

In essence, we are witnessing a great social and technological experiment in which millions of people around the globe are working and socializing in oceans of data. And advertisers are now realizing they can understand better people's attitudes, preferences and psychology by studying social networking sites. Of course this massive amount of information produced by social networking sites is not all good, and much of it can be inaccurate, irrelevant or just plain boring. So the issue of information literacy rises to the fore--the ability of people to access, assess and use information wisely from the Internet, including social networking sites-- in an intelligent manner.

So where do we get the best information? From our friends, maybe the only trusted source? Friendship data promise insights into not only the marketplace but also the corporation itself. Researchers now can trace the hidden networks, identifying both the people who transmit valuable information and those who may actually block it, and how people can bypass them. Some companies now study their internal networks, and actually suggest friends to employees, much the same as a networker might arrange a personal luncheon between two strangers for mutual benefit.

For managers and executives who have launched themselves into using social networks for business purposes, the challenge becomes how to interpret friendship data and how to manage these networks and fit them into employee careers.

There is no question that the value in online friendships for both businesses and individuals alike is poised to grow and be used for purposes beyond what we can now imagine.

Ray Williams is the author of Breaking Bad Habits and The Leadership Edge.

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