Social Capital 101 – Interview with Bill Sherman

Bill Sherman has been a friend for years and has helped me with many projects. Two weeks ago, I spent a few days with Bill where I had a chance to learn about his research on “social capital” in the last few months. The topic is of great interest to me and his research findings were intriguing. So I asked Bill to share some of those gems here.

Bill Sherman writes on social capital and thought-leadership marketing at Aha-Moments, where he’s preparing a book on leveraging global relationships. Bill currently serves on the board of advisors for a number of companies in Silicon Valley: Heartwood Studios, Acceledge, and Resiligence.

As a consultant, Bill specializes in organizational diagnostics and analysis. He has consulted with Fortune 500 companies across virtually every functional area, which gives him the nimble ability to leverage solutions across vertical silos.

Now, here is the Q&A with Bill

RS: What’s the problem with today’s social networking?

BS: Many people joined the social networking craze because, on the surface, it’s seems so easy and effortless to build your network. Click a link and make a connection—through LinkedIn, FriendFeed, Facebook, Plaxo, etc. That’s even easier than trading business cards. The problem is that it’s easier to click links than actually build connections. Many people adopted these technologies into their business lives without any strategy or forethought. Now, we’re all increasingly tangled within multi-layered social network technologies.

Here’s just one dilemma. If I accept your invite on LinkedIn, should I also accept your invite on Plaxo or Facebook? I’ve seen people try to answer this question based on the degree of friendship—whether they’re a good friend, a casual acquaintance, or a chance meeting at a business conference.

RS: I’ve heard you say that social networks are just the foundation for social capital—what do you mean by that?

BS: A social network is a collection of connections, but the term doesn’t tell you how well that network will help you achieve your goals. It’s just a map of who you know. Let’s contrast that with social capital.

Social capital represents your ability to locate and mobilize resources within your network. It’s not just who you know, but what would they be willing to do to help you achieve your goals. Maybe they will let you know about a job opening, offer you a hand on a project, serve as your mentor, or invite you into a new opportunity.

RS: Can social capital make an impact on someone’s career?

BS: Absolutely. Let’s take a look at a two studies conducted by sociologists. Ronald Burt studied managers within a high-tech company, and he identified several patterns within managers’ social networks. Those managers who had built the most diverse networks (across functional areas and with channel partners) tended to experience two benefits: early promotion (young for their age) and fast promotion (short time before promotion).  Bonnie Erickson, looked at hiring decisions for upper-level jobs.  She found that “employers prefer to hire people with greater social capital for many upper-level jobs, and that employees with greater social capital get better jobs whether they were hired through personal contacts or not.” Those are pretty compelling arguments for social capital right there.

RS: That reminds me of something Tim Sanders wrote in Love is the Killer App, wrote that “your network is your net worth.” Is that what you’re referring to when you refer to social capital?

BS: I’ve actually discussed that quote a lot with Tim. He was incredibly accurate when he wrote that line, but it’s also just the entry point into a very complex issue on relationships.

Researchers have shown that most people don’t follow a plan when they build their social networks. Their networks just grow organically over time. However, some social network strategies can help you reach your goals sooner while other social network strategies can actually slow you down.

RS: So, which relationship-strategies work and which ones don’t?

BS: When it comes to social networks and social capital, there’s no one-size-fits-all answer. Let’s look at three examples of people with very different network strategies:

A newly-promoted executive: You need to locate a champion and mentor quickly, but that person shouldn’t be your boss. It should be in a dashed-line relationship. You also need to craft relationships with new peers, your direct reports, and perhaps strategic vendors.

A commercial real-estate agent: You might have a mentor in your field and a few specialized peers in town who help you on deals, but your most important connections will be high-level decision makers in other fields.

An IT recruiter: Here, you might want to know many people with similar sets of IT skills so that you can place them at client companies.

Some people build closely-tied professional networks filled with people who share similar skills and interests, while other people build networks with people who have vastly diverse skills and interests. Either strategy can accelerate (or hinder) your career; It depends on how well your strategy fits your goals.

RS: What action should I take to increase my social capital?

BS: People who ask that question have already started to differentiate themselves. From what I’ve seen, people who are successful with social capital build healthy relationship ecosystems around themselves that contain valuable resources that relate to their goal. If you want to be able to mobilize resources within your network, you also must be willing to help others achieve their goals. When you talk to someone within your network, take time to ask what help they’re looking for. Then, locate and mobilize these resources within your network on their behalf.

If you want to access relevant resources, you must give relevant support to your connections. That means you have to invest time beyond just a quick “Let’s connect!” request on LinkedIn. You actually have to build relationships.

Lastly, here is the link to Bill’s blog again: