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Reid was LinkedIn's founding CEO for the first four years before moving to his role as Chairman and President, Products in February 2007. While CEO, Reid built the company to[…]

The founder of LinkedIn makes a case for why all companies should deploy this technology.

Question: How can social networking sites help businesses?

Reid Hoffman:  So, most people when they think of kind of professional networking and social networking sites, they think of recruiting.  And recruiting is obviously a very strong utility, both for people looking for jobs in companies, and companies looking to get, you know, high quality talent into the company.  But in addition to that, these sites, you know, mostly on the professional networking, really helps with everything from, for example, if an individual professional is reaching out to other professionals to know, you know, what are good technologies, tools, techniques, in order to stay current in their professionalism and their job, finding experts in order to help solve problems, say for example, a distribution problem.

So, you know, like one of the success cases at LinkedIn was this guy figuring out how to move 12 million tons of cement from, you know, China to Dubai.  You know, getting all of that kind of network competitive intelligence for every individual professional as a way to how to execute your job is one of the really key things for a good competitive advantage.

When thinking about how to deploy kind of professional and social networking into your business, it’s really not a question of if, it’s a question of when.  And the reason is, just think about the fact that those businesses that adopt new technologies to operate efficiently and use them to get a competitive edge are the businesses that in fact, you know, it becomes one more competitive advantage.  Whether it’s a fax machine or a mobile phone or a new way of doing financing or any of these things, you know, these are key things to do.

So, the key question is not to try to look for excuses as to, “Oh, yeah, yeah, yeah, it’s a fad, I’ll put it off,” but to think about what do you think will be actually there in the future and then arrive at the future early in order to establish a competitive advantage against your competitors.  And that’s both true as an individual, because every individual is essentially now a small business and entrepreneur and as a business, as a collection of businesses.  And these are, I think this is a key thing of like which piece of these technology do I need to adopt and then adopt them early in order to get a competitive advantage.

Question: Can social networking ever be detrimental to businesses?

Reid Hoffman:  You know, people generally worry about social networking more than they need to.  In kind of consumer internet investing and on social and professional networks, I kind of look at time spending and time efficiency.  You know, time saving sites.  So on time spending sites, things where you play lots of games or that sort of thing, you might worry about a productivity loss if people are spending a lot of time doing that.  So if there’s a lot of kind of addictive gaming going on during work hours, that won’t be as helpful to you.

Whereas things that help you get your job done better or help you get, you know, stay informed, you know, know what current, you know, kind of professional success is, those can be helpful.

So the risks really kind of come down to, are there ways that this will essentially end up taking a lot of time from employees as opposed to giving them  leverage and scale.

Recorded on August 11, 2009

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