using social media to weather the recession

The government is poised to announce that we are now officially in a recession.  Organisations big and small, private, public and voluntary will be forced to look at ways in which they can reduce running costs. Can the social tools that we have available to us today play a part in reducing organisational expenditure?

This is my attempt to paraphrase and shamelessly rip-off Clay Shirky’s explanation of the ‘Birthday Paradox’ and how it feeds into the ‘Organisational Dilema’. 

The Birthday Paradox deals with the mathematics of the probability of tw0 people, selected randomly, sharing the same birthday (day and month).

Imagine you are standing in a room with 35 other people. What is the chance that tw0 people in that room share the same birthday? Most people make the mistake of imagining the odds to be quite low – about 1 in 10 (10%) as there are 365 days in the year and 35 people in the room – but in fact the odds are very high, around 80%.

The reason why people make this common mistake is because when in a group, individuals tend to think of themselves and their relationship with the group rather than the group as a whole. This leads to a skewing of the question to become; what is the chance of somebody in the group sharing my birthday. In a group your relationship to the members of the group is not the only factor, there is also the complex range of relationships between other group members to consider.

If you were comparing birthdays in a group of three you would have a comparison between yourself and the other 2 two people. But there would also be a comparison between the other two people, resulting in three comparisons. In a group of four there would be six comparisons, three of which would not even involve you and in a group of five there would be 10 comparisons and so on. With 35 people in the room there would be over 600 comparisons, thus greatly increasing the probability of two of those comparisons producing a match.

When human nature is thrown into this mathematical mix it becomes apparent why getting agreement between a group of people is so difficult.  Shirky demonstrates this concept with the use of a social situation and so will I.

If a group consisting of only two people were planning their Christmas lunch, getting agreement on the details: what day to go, which restaurant to go to, what time to go, would be fairly easy as it only requires one agreement between the two people. Doubling the size of the group to four becomes  far more complex. Instead of the one agreement that needed to be made between two people, six agreements now need to be made – the Birthday Paradox. This tells us that getting a group of four to agree or collaborate is six times more difficult than with a group of two.  A group of ten people would require a staggering 45 decisions to be made to reach agreement.  This is why events such as Christmas celebrations, karting sessions, leaving parties, in fact any change in general are so difficult to organise and coordinate.

As the group gets bigger it becomes more difficult for the members of the group to have a direct relationship with one and other. Imagine you managed to get that Christmas lunch organised for your group of 20. Being impossible for everyone to interact with everyone else the would invariably split into smaller sub groups. Each connected to, but behaving independantly from the group as a whole. 

Coordinating groups is thus a complex and costly practice which forces every organisation into a dilemma. In order to produce its intended outcomes an organisation must employ people and group them. The organisation has to expend a great deal of its resource – time, attention, money –  managing these groups and, as a result of these ‘transaction costs’ is thus not able to expend all of its resources in the production its outcomes.

An organisation can only be successful when its transaction costs are lower than the gain of incurring that cost. Or, the value of the product or service is greater than the cost of production – which includes the management of the production.  

The Internet has been a key tool in the reduction of these transaction costs: email, news groups, information sharing and instant global publishing to name but a few. The social tools available to us today have made the cost of group formation and coordination almost disappear and are thus changing the ways we work and collaborate. The ease and low cost of group forming, collaboration and information exchange has lead to the Internet becoming a tool of engagement and exchange which is having a profound impact on society and the workplace.


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