Social Networking and its impact on Business

Yesterday (Nov. 30), I attended a presentation by Ellen Levy, VP for Strategic Initiatives at LinkedIn. Dr Levy came to the Washington, D.C., headquarters of the organization where I work – a multilateral development agency- to give a presentation to the staff. Two reasons prompted me to attend: the first is the  increasing importance of the social networking phenomenon in the world of business (think “social marketing” for instance); and second, as a relatively active LinkedIn member, I was curious to hear a high-level executive from the company. As someone who only has a superficial understanding of social networking, I have learned a few things.

I knew about LinkedIn’s rapid growth, generally, but I had not fully realized how explosive and how global it has been. Although the company was born in the US, it already had 50% of its membership outside the United States within only a month or two of its launch. Pretty remarkable. Not less impressive is the fact that it has gained 135 million members in less than 9 years of existence…Granted this is not as much as Facebook, but how many companies and networks can boast having so many followers, customers, or members in such a short period of time? Of course, there’s a difference between a paying customer and a network member, but let’s put this aside for a moment.

I was curious to hear how LinkedIn insiders perceive their company and its positioning relative to its competitors. LinkedIn sees itself as the “professional network” connecting an individual to his/her peers, while Facebook is the “social utility” network, connecting them to family and friends, and Twitter a “public broadcasting” instrument. Three different value propositions indeed, even though the target audience or customers may be the same.

Given this positioning, it is no surprise that “recruiting solutions” – such as matching individuals with job opportunities- has become LinkedIn’s flagship program and is most certainly an important factor behind its success. 

Another take away of the presentation for me was the growing attention that LinkedIn gives to emerging markets in general and Brazil in particular. In fact, the company announced this week the opening of its office in Sao Paulo. A further evidence of its global orientation: only 5 of LinkedIn’s 20 offices are in the United States.

I must admit that what interests me in social networking is not the exchange of pictures about someone’s exploits during last night’s party or being contacted by a woman I had a crush for in school when I was 10 years old…What really interests me is the impact that social networking can have on how business is conducted, how companies are established, financed, operated, expanded or merged. I want to ask you a few questions:

  • How do you envision the future of social networking? Do you think it is a fad or a phenomenon that is here to stay?
  • How do you see the competition between the major social networks evolve? Do you believe that the arrival of entirely new entrants is possible in that space or unlikely? Why?
  • What possible business applications do you imagine beyond social marketing or match-making services in the job market? Do you think social networking can be effectively used by entrepreneurs to find investors and partners for their start-ups? Is this already happening anywhere?
  • And finally, what are some of key risks and constraints, regulatory or technological, that could impede the development of these innovative ways of doing business?

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