Discovering the value of Social Networks and Communities of Practice

There has been much written about measuring the value of online communities such as Social Networks or Communities of Practice.  However, most pundits tend to think of measuring value from a purely financial perspective, i.e. the Return on Investment (ROI).  Clearly this is an important factor, but it’s not the only factor that should be considered. Surprisingly few organisations consider the value that is being created by having better informed and more knowledgeable staff, or the potential value of getting closer to customers and local communities. These latter factors are quite difficult to measure in terms of ROI, and will normally take more than one business cycle (e.g. a financial year) before any meaningful financial measures can be made. Unfortunately – and especially in today’s financial climate – organisations plan around 1 or 2 year business years, whereas online communities will not usually be time-limited, and very rarely be driven by finance and budgets. Allowing for the relatively small cost of bandwidth and technology, conversations are – for the most part – deemed to be free.

I was pleased to see that Matt Rhodes over at Freshnetworks did refer to non-financial ROI, though I would have liked to have seen more emphasis on the value that is generated for the members of these online communities, rather than the usual social media impact measures (numbers of page hits, numbers of conversations etc.) – important as these are, and adequately illustrated in the accompanying presentation.

I have taken a slightly different approach to the issue of how the value of online communities is measured, giving more emphasis to the discovery of value rather than the dispassionate assembly of a series of metrics – financial or otherwise. I should also add that the perspective is on public sector communities since this is where I’ve been primarily engaged over the past few years. The main points are covered in a presentation I gave to the Public Health Information Network Conference earlier this year and reproduced below:

1. We need to distinguish between cost and value.

I used the humble nutmeg to illustrate this point. Weight for weight more valuable than gold in 17th century Europe. The spice was held to have powerful medicinal properties. It rocketed in price when physicians in Elizabethan London claimed that their nutmeg pomanders were the only certain cure for the plague. So, cost was very high, but the value? Well, despite the assertions of the medical experts of the day, it certainly didn’t cure the plague!

The point is reinforced by the following quotations:

I conceive that the great part of the miseries of mankind are brought upon them by false estimates they have made of the value of things.
Benjamin Franklin 1706-1790.

A cynic is a man who knows the price of everything but the value of nothing.

Oscar Wilde 1854 – 1900.

2.  We are more likely to find and create value from the communities we choose for ourselves than the communities we are compelled to join.

I have argued that one of the key characteristics of a Community of Practice is the fact that the members are self-selected, i.e. they are there because they want to be there and not because they have to be there. They may select to become members because they share the same interests, passions and goals as the other members. A successful CoP will create value for the members – either collectively in terms of working towards a common goal or objective, or personally, e.g. through self-development or sharing knowledge.

3. We are re-discovering networks and communities and through them, re-learning how to have conversations.

It’s sad fact that 20th century working practices and pressures of modern life have led to a sense of personal isolation. Mass production, prescriptive and repetitive tasks and limited social opportunities in the workplace have created a workforce conditioned to think and act as a corporate entity, limiting individual aspirations and creative thought.  The opportunities for sharing information and knowledge have been gradually eroded over the past 50 years; social clubs have closed; people don’t have the time (or money) to regularly socialise after work; we are increasingly driven by task-oriented emails.

What is sometimes forgotten is that professional communities, where good and notable practice is shared amongst fellow artisans, are still flourishing today in the form of Worshipful Companies (over 800 in London alone), with most having existed for many hundreds of years. Communities of Practice are not new; they’ve just discovered they can exist in a virtual world. The key issue for many people though, is learning how to have on-line conversations.  The following points from one of the slides are worth re-iterating:

  • We don’t know what we don’t know
  • People don’t learn from content – they learn from other people.
  • We don’t know the value of knowledge until it is shared
  • We need to find where the conversations are happening….and join in!

And…

Dialogue is NOT:

  • Discussion, deliberation, negotiation
  • Committee, team, task or working group
  • Majority wins, minority dominance, groupthink

Dialogue IS:

  • Free-flowing exchange of ideas among equals
  • All ideas are solicited and are considered
  • Best ideas rise to the top

4. ROI doesn’t just mean ‘Return on Investment’

I’ve taken the liberty of using something I once heard Euan Semple say: “Keep the I small and the R will look after itself”. I think this is a good mantra because anyone worth their salt in the Social Media/Social Web world knows that implementing a social media strategy doesn’t have to cost a fortune. The days of multi-million pound corporate websites is fast diminishing, and anyone with this amount of money to spend is going to be quite rightly questioned on ROI – and they better make sure they have the answers.

I’ve given some alternative definitions for ROI, such as:

  • Return on Influence
  • Return on Interaction
  • Return on Impact

These are the things which should be measured for value, and add a different dimension to the traditional financial measures.

5. Recognise that value to the organisation is different from value to the individual.

There is an over-emphasis on measuring value of online communities from the organisational perspective. I’ve given a (financial) example in the slides, using cost savings of online conferences as an example.  However, it is important to remember that there is also a value to the individual in being a member of an online community, and this aspect often goes unrecognised (and unmeasured). The value or benefit to a community member is quite difficult to measure (the member may not be able to articulate or recognise what knowledge they have gained from the community) and any outcomes may not be easily aligned with corporate goals (e.g. job satisfaction). It is nevertheless important to consider this dimension in any overall value measurement. Qualitative metrics can provide some answers, but it’s also useful to examine quantitative data to gain a better understanding of the community itself, e.g.:

  • Number of community members
  • Number of contributions
  • Number of contributors
  • Number of inactive users

Having a Social Network Analysis (SNA) application is even better, since this can reveal who the key ‘nodes’ are in the community chatter. It’s a useful discipline to consider what would happen to the online community if these community members decided to leave the community. Dependency on one or two ‘power’ contributors should be recognised as a risk.

The presentation concludes with a number of lessons learnt from the IDeA CoP platform , which has now been active (and by all measures, successful) for over 3 years. It’s always useful to have a distilled list of “do’s” and “don’ts”, herewith reproduced:

Do…

  • ..identify and look after your facilitators – they are quite often the difference between successful and unsuccessful communities
  • ..let users drive their own experimentation and use of tools.
  • ..target and support areas that have a clear desire and need.
  • ..build trust and relationships face to face where possible.
  • ..condition your managers for failure – not every CoP is going to be successful.
  • ..use online conferences and ‘Hot Seats’ to build membership growth and encourage conversations.

Don’t…

  • ..think you can force people to collaborate
  • ..assume everyone understands how to use  Web2.0/social media tools.
  • ..assume everyone knows how to contribute.
  • ..worry about the ‘lurkers’.
  • ..let command, control or hierarchy hamper or kill your community
  • ..set unrealistic targets

I hope this has been helpful to anyone involved with social networks or communities of practice, and particularly those who need to show that their online communities are delivering value. Just remember there is more to ROI than finance!


4 Comments

  1. Verna Allee said:

    Very thoughtful and interesting blog, Steve. Lots to reflect on here. I particularly appreciate your mention of SNA as there is a lot we can learn from network analysis disciplines. But the sticky question is really about the value of the network as you say.

    You might find the valuenetworks.com series of blogs on value network performance and indicators relevant to these issues.

    In particular one of the indicators that is very useful in social networks and communities is the concept of perceived value. This provides a way for people to actually rate their inputs and outputs for the level of value they are receiving or providing into the network. The one on Reciprocity is also relevant.

    Perceived Value and Brand Management in a Value Network
    http://valuenetworks.com/public/item/237131

    Reciprocity in a Value Network
    http://valuenetworks.com/public/item/237687

    Best regards,
    Verna Allee

    December 31, 2009
    Reply
  2. Steve Dale said:

    Verna,

    many thanks for your comments, and for highlighting the links to valuenetworks.com. A new website discovery for me, and I’ll certainly spend some time looking though the previous blog posts. I probably should have mentioned in my post that we do evaluate perceived value as part of a regular (annual) survey of users. However, we don’t cover this is as much detail or depth as the examples you provide at http://valuenetworks.com/public/item/237131. Something I will now look into.

    Happy New Year!

    Steve

    January 1, 2010
    Reply
  3. Euan said:

    I like your alternative ROI’s Steve. We have got very good at measuring the wrong things and then being unwilling to engage in things we can’t measure. As you rightly point out in an online world we can be much better at measuring things like reputation and trust networks but it will be a long time before those currently running most organisations take those sorts of measure seriously. As I re-tweeted recently “It is difficult to get a man to understand something when his salary depends on his not understanding it.”

    January 1, 2010
    Reply
  4. Steve Dale said:

    Thanks for the comment Euan. I like the Twitter quote. Maybe 2010 will be the year of enlightenment for our captains of industry, Well, we can hope!

    January 1, 2010
    Reply

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