How Social Networks Create Competitive Advantage

Description

Global managers can gain competitive advantage by bridging information gaps -- or structural holes -- between different islands of knowledge within their organizations, whether these are functional areas, business units or geographic markets. By manning these bridges, they are in a unique position to collect and transfer information, and most important, reframe it to make sure that it is understandable across diverse islands. To learn how to gain competitive advantage, however, a clear understanding of the origins of reputation is key. In electronic networks like Amazon and eBay, reputation emerges in a closed system that vendors can directly monitor and manage, since the same information is distributed to everyone. Controlling one's reputation gets a bit trickier in human networks. In this case, closed networks become echo chambers, fed by select bits of information (aka gossip) that is unevenly processed and selectively distributed, depending on the parties involved. The upside of this "information exchange" is its role in cultivating relationships in an organization. The potential downside: its wide-ranging implications for managing reputation.