Social capital is all about where you are, not who you know

One of the notions that underlies the nature of innovation in organizations is that of the spread of new ideas. But the interesting observations of the socialogist Ronald Burt in his research into social capital is extremely illuminating. In his 2004 book Structural Holes and Good Ideas, Burt states,

“Social capital exists where people have an advantage because of their location in a social structure.”

His discussion is too long to summarize, but in essence his work shows that those who bridge across a gap in a social network, connecting otherwise disconnected subnetworks, have greater social capital than those who do not act as potential bridges in this way. For example, I know many people in Portugal, and if some innovative idea arose there I would have a greater likelihood of learning of that innovation before others in the U.S. And if I were to pass that information along, my value to those without that connection would rise.

The social capital is only potential until I actually broker it to others. Burt makes the distinction among different sorts of brokering information in the context of this structural social capital:

  1. Awareness — to make people on different sides of the structural hole aware of “interests and difficulties” of those on the other side
  2. Transferring best practice — to become familiar enough with innovative practices in one group to help them become established in another group
  3. Drawing analogies — to reflect on the practices in one group and to infer through analogy how those practices might be adapted in a second group
  4. Synthesis — to reflect on activities in practices of disparate groups and to meld together ideas, coming up with an innovative combination

The takeaways are that there is a practical advantage to being at the edge: It confers social capital. This is another proof — which Burt and other researchers discovered in disparate communities, including success in organized crime, fraud, and the more benign corporate advancement of executives — that in a connected world, the most important choice is who to follow. Because when you follow someone, you are actually changing your place in the social network. And if you want to learn the newest ideas first, find a structural hole or two and move there.