Sumolabs

Do you think social networks and social media impact corporate valuation?

Let's break down the walls of understanding between social media and the board room table.

I love ChangeThis manifestos. Once per month my reading queue goes from near empty to completely full again. It is well worth it.

I recently conferenced with Michael Cayley, author of Social Capital Value Add: Value Based Management for the Networked Age. The idea seems to be getting a lot of traction.

To simplify: traditional brand value is calculated by polling, surveying, measuring viewership, etc. However, in today's 'networked age' the majority of how the mass consumer market views your product or company, is already out there on the internet. In blogs, wikis, web-zines, forums ad infinitum.

As I understand it, why can we not measure the pulse of that social capital and use earnings forecasts to produce an actual value of what that is worth in dollars?

What is really interesting to me is Cayley's idea of SC*, or the social capital opportunity. It enables you to determine those individuals on the internet whom you are not effectively reaching, so that you can make connections with to increase your bottom line.

I believe that this is something companies would pay for.

I've attached my model of it below.

Basically, it boils down to this:

1. A digital footprint audit (DFA) is produced by analyzing the whole freaking internet to determine all identities (people) and everything they have said. Oh, and it figures out the relationships between entities too. That output is called the Social Identity Audit (SIA)
2. Now the company or corporation takes every correspondence it has ever had with people and cross references that with the Social Identity Audit
3. This cross reference exposes two pieces of information: Those identities you are actively communicating with (who are likely contributing to your Social Value Capital) and those you have yet to make contact with. Those identities you have not made contact are called your Social Capital Opportunity (Big words for: "Go out and make connections with these people and you will increase your social capital)

There is a lot more to learn about social capital. The ChangeThis manifesto is a great place to start.

In my limited viewpoint these SCVA concepts will eventually get rolled into traditional brand valuation methods (i.e. We don't need two measures, just an updated one.)

Great work Michael. Let's keep building on his work.