Social capital and social contractReading time: 2 mins
Behavioural dynamics and social networks
Social media completely changed the internet in many profound means. The internet initially seemed like a toy, mostly just for researchers and most of the real work was supposed to be done on a proprietary network called the Information Superhighway. As internet matured, the data-types prevalent were text, images and links. Social media, for the first time enabled profiles to be made on the internet. This seems like a straight-forward extrapolation to us now but it has had far-reaching consequences.
Over the time, as more people get on social media, they form inter-connected networks and those networks have immense value to both the user and also how other products built by that company integrate into your network to make it better. I’ll come back to this but let’s take a step back and ask why do we join new social networks? We join new social networks because on the previous ones, we have built a community around us: Our friends who become a part of our social capital. We join new networks to invest that social capital for greater returns, or put differently, we want to meet and interact with new people using our old community of friends as leverage.
This is a very simple concept but it hides an incredibly important corollary: We can assume that most people in a specific age-group are on social media (the age-group can be college students). Given that we know most college-students have some social capital, how can we design new services that maximize their social capital? Put simply, this corollary implies the question: How can we design services that don’t ruin a user’s social capital? Now one might ask, how can a new service ruin social capital. This can be explained by an age-old concept of social contract.
Social media is a business characterized by high-switching costs but that couldn’t be farther from the truth. Users don’t really have high switching costs but they do have these un-written rules about how they would behave in a dynamic world and how they respond/react to changes. Most people are generally resistant to changes, a good example is how people generally get upset from Facebook updates. For new services, understanding the importance of social contracts is critical because this is the foundation of social capital. The social contracts seep into the network making it easier to make more of those contracts and get better returns on the social capital. When you can increase the ease of making new social contracts, the users will see higher returns and in turn, the service will see more users.
The easier it gets to form new social contracts, the higher the adoption rate for your new social network. The fun part is how you implement making new social-contracts, that’s what will set your service apart from the competitors by giving your users a different experience.