WHAT'S YOUR SOCIAL CAPITAL? We All Know Someone Who Boasts of Their 200 Friends on Facebook. but It's Not the Number of Online Contacts You Have, It's How Valuable They Are, Writes Philip Delves Broughton

Article excerpt

Byline: Philip Delves Broughton

ONLINE social networks have come to serve all kinds of purposes never imagined even as recently as the early days of MySpace. Barely a week passes without investors piling into yet another derivation. One of the latest, Gowalla, creates virtual scavenger hunts, to encourage people to share their location with others by offering rewards for visiting certain places. These locations are then gathered on a user's profile, adding to the gigabytes of data already being gathered on all of us. At least [pounds sterling]5.5 million of venturecapital money invested last week indicates how seriously this kind of thing is taken.

But when you dig past the frills, what all of these services depend on is our desire to improve our social capital, a catch-all term for our status, popularity and effectiveness. Social capital is not about having the largest or most diverse network. But rather the network that serves each of our very particular purposes.

For the start-up entrepreneur, for example, the network of investors, potential employees and clients is essential. For a Westminster-based reporter, it's the politicians and their aides ready to pass along a tip in the Members' Lobby. These are what the academics call "dense networks", knots of people each of whom matters.

Dense networks have both good and bad aspects. They are good in that they're good for getting things done. Look at how Goldman Sachs and its alumni have their way with the financial world. Or the dynamics of a great sports team.

The downside is that they can often be inward-looking and selfish. They can be claustrophobic and produce unimaginative group thinking.

The danger of online social networks is that rather than improving a dense network, they tend to grow large, sparse networks, random agglomerations of people whose inclusion is based on nothing more than the fact they responded to an emailed invitation. These sparse networks are mostly useless and can in fact be dangerous.

In the US, 45 per cent of employers now go onto social networks to screen potential employees. A posting about you, or a photograph put up by a distant acquaintance, suddenly becomes part of your public profile. Sparse networks are often the least controllable. They're the ones that produce the awkward Bullingdon Club photograph or the teenaged hook-up you'd rather everyone forgot.

Martin Gargiulo, a professor of organisational behaviour at Insead business school and an expert on social network analysis, said recently that "networks are like copper or electrical wires. The thicker the wire, the more power it carries; the more you can help people, the more people will be willing to invest time and energy in helping you out."

Thick wires, however, are expensive.

You can't afford a lot of them. …