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Social capital and end-oriented networks

December 24th, 2004

I’m just about to knock off for Christmas, but I have to get ready for a conference at Queensland Uni of Technology early in the New Year where Larry Lessig will be the main speaker. I’m giving a very short presentation, and struggling to improve my understanding of all this, in particular the relationship between the technology of the Internet and notions of social capital. I haven’t come up with anything earthshattering, but I have had some thoughts on which I’d welcome comments.

Lessig stresses benefits of networks with intelligence at the ends rather than the centre. I want to think about this with respect to the network as a device for disseminating innovations, as well as for communication. In a centralised network, any innovation is automatically available to all users, so the dissemination problem is trivial. On the other hand, only those in charge of the network have the capacity to innovate. In a network with intelligence at the ends, innovators may need to take positive action to share their ideas, and can easily conceal innovations or restrict access if there are incentives for this.

This is reflected, I think in the disappointing returns to the vast amounts or money and effort poured into customer-service innovations of various kinds during the dotcom era. Everything was proprietary, and often patent-protected[2]. So even if the parts of a good idea were all there, they were unlikely to come together.

To make innovation work in an end-oriented network, we need the kind of social capital, and also the kinds of technical protocols that encourage and facilitate sharing. What these are is a topic for further research.

fn2. I had my first experience of One-Click shopping at Amazon the other day. I’m sure I’d get used to it in the end, but I must say I found it rather unnerving. One click to place the order and one to confirm it suits me rather better.

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  1. December 28th, 2004 at 00:48 | #1

    John – I remember that those who spent big on CRM software were those who had no understanding of customers at all. It’s a bit like those people who use the term “thinking outside the square’ immediately they say it you know they can’t and don’t. Those who do just get on with it.

    There was/is a case for data mining software but it was rarely used properly for the same reasons.

    Let me tell you a story.

    I used to be with the NAB since I was 10 yeas old. Switching costs and inertia.

    In one year not so long ago I received 5 letters from NAB informing me of my new “personalised account manager”. 5 “personal” managers in 1 year. None of them had any idea or interest in what my business was. I finally ditched NAB after they bounced a $30 cheque of mine when there was no money in my cheque account but lots of money in other accounts and they held a mortgage of mine that was only about 10% of my assets. They bounced the cheque without telling me until well after the payee was told I had a bounced cheque. It cost me $70 to fix the problem.

    I switched to Bendigo Bank. After only 6 months with Bendigo the Manager rang me on my mobile to inform me that a cheque for $3,000 was being presented and telling me didn’t have enough in my cheque account. He then offered to transfer the amount from my other accounts and without charge and apologised for the inconvenience. All done on the mobile. Nothing to sign. Nothing to pay. When this happened I was in a meeting. I informed the others at the meeting. Several persons afterwards transferred to Bendigo. One institution with a $100M turnover did too, largely as a result of my story.

    That’s customer service.

    And never once did Bendigo mention CRM. I went on the help form a Bendigo Community Bank in my neighbourhood.

  2. Iain
    January 2nd, 2005 at 22:09 | #2

    Robert Putnam’s new book ‘Beter Together’ has a very interesting chapter on social capital and the internet.

    The poster child for this was craigslist.org and subsequent expansion of these networks around the world.

  3. January 6th, 2005 at 23:46 | #3

    Hi –

    I’m new to your blog, so these comments may be obvious to you. Apologies if so. These are my views as a computer scientist.

    One important distinction is between information and actions. The Internet and the WWW were designed to share information and the common Internet protocols reflect this (eg, the stateless nature of HTTP). The most valuable use today, however, of the Internet involves e-commerce, which requires not only the sharing of information, but the making and sharing of (posssibly-conditional) commitments to action. Internet and WWW protocols have had to be modified to allow for action-commitments — eg, the use of cookies and session variables in HTTP — and personally, I think them somewhat a kludge for these applications.

    Any discussion of the relationship between the Internet and social capital needs, I think, to consider this distinction. Is the Internet (or similar networks) being used for distribution of information only, or are they also being used communicating directed towards actions (promises, commands, instructions, etc)?

    Unfortunately, the vast majority of computer science research has focused on information and only slowly are we realizing we need to consider actions. (The same bias is true of Philosophy, by the way.) We do not yet have good and rigorous theories of what people (or machines) are doing when they make mutual promises, or issue commands, or make claims of a social nature on one another, etc.

    If social capital is simply information sharing (which I doubt), then the relationship with the Internet is pretty clear and probably mutually beneficial. But if social capital involves the planning and execution of joint activities, and/or the making of conditional promises (“I’ll do X if you do Y”), then we have a long way to go before we have a coherent computational theory of what is happening here. And therefore a lot of research is needed before we could say with confidence what the relationship between the Internet and social capital is, or could be, or should be.

    – Peter McBurney

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