Why do online social platforms flourish, but most importantly, why do companies often fail to translate their “likes” and “followers” into tangible gains? These questions form the two pillars on which the two respective parts of this book are based on.
Drawing from sociology, economic theory, and strategy, Piskorski argues that online social platforms exist because they enable us to engage in interactions that we would otherwise not be able to, in the offline world. In other words, social platforms thrive on the existence of social failures.
Much like market failures, social failures represent transactions (connections) that do not occur, but that would benefit all involved parties if they did. This is primarily due to costs that are inherent to the nature of certain interactions and that typically have social and economic underpinnings. Such costs can be inherent to increasing one’s access to relevant individuals (breadth), conveying personal information to others (display), obtaining personal information from others (search), or exchanging personal information with others (communication) in order to generate value. Social platforms, in essence, emerged to provide solutions that address both the economic and social causes of the aforementioned interaction costs.
However, certain trade-offs exist between the social solutions that such platforms could actually deliver. Via the use of various case studies (e.g. Facebook, LinkedIn, Twitter) Pirskorky eloquently illustrates why for example we couldn’t possibly have a successful platform that would allow everyone to search and communicate with everyone else – which boils down to the fact that the more the platform satisfies our need for breadth the more it increases the cost of communication (countless requests to deal with). In the same manner, a trade-off exists between minimizing the interaction costs related to private and public interactions.
The above are adequately discussed in the first part of the book constantly accompanied by theoretical as well as real-life examples and set a good foundation for the reader that wants to understand the driving forces behind the emergence and spread of online social platforms as well as the various challenges that are embedded in the successful implementation of one.
The second part of the book is targeted more towards the business reader as it focuses on how a firm could in fact generate value from such platforms. Piskorsky argues that the prevalent strategy of firms to try and build relationships with their customers as if they were their friends usually doesn’t pay off. Instead, companies should focus their resources in trying to connect customers with each other via their products or services. Of course providing such a social solution inevitably entails certain strategic and tactical decisions. Consistent with the first part, the second part of the books supports Piskorski’s arguments via a careful selection of cases that illustrate such strategic and tactical choices made by firms, while pursuing their organizational goals (e.g. Zynga, Yelp, and American Express).
Overall the book is very accessible, it provides useful insights for both academics and practitioners and the multitude of selected cases support all the main arguments convincingly. The concepts of social failures, social solutions, and social strategies are quire powerful and provide useful tools for sociologists and strategists to theorize and address the phenomena that relate to the recent boom of online social network platforms. In essence, they can assist our understanding of why people often fail to engage in mutually beneficial interactions, how to properly design institutions that could alleviate such deficiencies, and finally, how firms can develop a competitive advantage by carefully crafting their social strategy.
