Feb 17, 2010

Social Capital Rewriting Market Paradigms Beyond and Behind the Firewall - Clay Shirkey - Here Comes Everybody Chapter Two

My take on Coase's theory according to Clay Shirkey is that unless the benefit of a transaction exceeds its costs, management won't be interested and it won't happen. Such potential activities lie under the so-called Coasian floor.

In the name of economic efficiency many large organizations have established internal markets for internal services, where service providers operate in the billable hours paradigm better known in legal firms. An internal customer can only access the internal services on a fee for service basis. If the internal customers are strapped for cash then the internal service provider may only be able to support the poor cousins with the sponsorship of an internal patron who recognises the benefit to the greater good of the organization. However informal networks operating via email such as Behind & Beyond the Firewall provide an alternate way to support the poor cousins. Individuals helping& sharing with other individuals. Social network analysis shows,however that there are linkages and informal networks.

"Sharing creates the fewest demands on participants"...."Knowingly sharing your work with others is the simplest way to take advantage of the new tools." p49

Shirkey argues that with social media the costs of many activities that lay under the Coasian floor have now collapsed. Community minded folks are now able to carry out these activities because they want to : the tools exist, the folks have the skills and the costs are low. Such folks are operating without managerial direction and without a profit motive. A Third Way is emerging - challenging the historical struggle of whether goods & services should be provided by Central Governments or by Business. Social Capital. Going beyond sharing to having conversations and altering your own actions in cooperating creates a group identity. Communities of Practice may emerge from the more informal peer to peer email traffic.

"Cooperation is harder than simply sharing .... conversation creates more of a sense of community than sharing does" ... 'it is famously difficult to keep online conversations from devolving into name calling or blather, much less to keep them on topic". p50.

Yet great good can be generated - eg Gaia's offer to match donations from the online community to the Red Cross to assist Haiti with a $10,000 cheque is an example of a small step in redefining charitable fundraising.

Individuals may go further and agree to collaborate and operate under a set of rules in order to achieve more collectively - the opposite behaviour to that generating the Tragedy of the Commons.

"Information sharing produces shared awareness among the participants, and collaborative production relies on shared creation .... no one person can take credit for what gets created ... collaborative action involves challenges of governance , or put another way, rules for losing" p50-53

Whilst Shirkey argues that examples of collaborative action using social tools are still relatively rare ... yet they can be seen in the world of multi player online role play gaming eg World of Warcraft. So what provides the motivation for collaboration in online games - similar or not to that of face to face team collaboration in competitive games ?

"Ridiculously easy group-forming matters because the desire to be part of a group that shares, cooperates or acts in concert is a basic human instinct that has always been constrained by transaction costs." p54

And so, using social media tools, the poor cousins may be helped in other ways within the organization, not withstanding their inability to pay a fee for service to the subject matter experts. Breaking through the Coasian floor.

Posted via web from kerrieannesfridgemagnets's posterous

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