by Jeff De Cagna

Jeff De Cagna is managing director, Strategic Learning and Development for the Special Libraries Association. He can be reached at jeff@sla.org.

A Word to the Wise:
Don't Dismiss Social Capital

It's amazing how much of what we do not see going on inside our organizations actually influences our effectiveness. One of the most powerful, yet invisible phenomena of the modern workplace is "social capital," the shared commitment to others that makes collective action possible. We wanted to learn about the critical role that social capital plays in the modern organization, so we asked Larry Prusak, executive director of IBM's Institute for Knowledge Management and co-author (with Don Cohen) of the recent book, In Good Company: How Social Capital Makes Organizations Work (Harvard Business School Press 2001) to explain it to us. If you attended SLA's 1999 Annual Conference in Minneapolis, you probably heard Larry's provocative keynote address. The good news: our conversation with him was just as provocative!

A word to the wise: don't dismiss the concept of social capital as yet another fad designed to sell books. Whether you're aware of it or not, social capital impacts your work as an information professional, and your awareness of it can transform you into an impact player within your organization. But you'll need to change the way you work and, quite possibly, the "company you keep!"

Jeff De Cagna: What was it that inspired you and Don to explore the concept of social capital in a book?

LP: Well, I have done a great deal of work with The World Bank. Since World War II, the World Bank has put infrastructure-dams, roads and the like-in place to help countries pull themselves out of poverty, but to very little avail. In fact, you could make the argument that large parts of the world are poorer after 25-50 years of this activity. It occurred to me, and to the World Bank, that in the absence of social capital to effect institutional and cultural change in these nations, pure infrastructure will never change behavior.

The same insight can apply to consulting activities. Many consulting firms say that "people, process, and technology" is the vital formula for how a firm works. The World Bank believed this as well, but it is not true. All firms have people, and big firms have a great bell curve of people so that they are not all geniuses, and they are not all idiots. All firms have processes or they couldn't do what they do, and all firms have technology in some form. So, we came to the conclusion, just like the World Bank, that it is the space between people, process, and technology that makes all the difference: the "whitespace," the culture, the norms, the attitudes, the networks-the social capital-that really makes the difference.

JD: What do you think has changed in organizations over the last decade that makes it more important for us to be paying attention to social capital than we have in the past?

LP: The two V's, volatility and virtuality. Anyone who owns one share of stock knows about increased volatility today. The stock market goes up 200-300 points one day, and it drops the same amount or more the next day. This type of volatility is a big part of the dot-com craze. The dot-coms are constantly on the edge, laying off people

here, hiring people there. They don't know quite how to react to a volatile world they helped to create. Unfortunately, when companies react by laying people off, it disrupts long-term networks. This disruption, in turn, damages knowledge formation, and it really injures the psychological contracts between organizations and their employees. This is one phenomenon we're trying to counter.

The other force is the whole notion of virtuality. Now, I am far from being a Luddite. I use technology in my work. The idea, however, that work is solitary, that a "free agent" or "road warrior" with a laptop alone, not plugged into networks, and not seen in person by his or her colleagues is somehow more efficient and effective than those working face-to-face with others is simply wrong. Work is deeply social.

I understand, of course, that there are times when you need to be at a distance, but the optimal situation is when there are arguments, passion, face-to-face discussion, with people being there. The closer you can get to that, the better. We try to offset both of these ideas, virtuality and volatility, with the idea of social capital, and that is new stuff.

JD: Which of the organizations you researched for your book impressed you the most by how they are thinking about and investing in social capital?

LP: Without question, it was SAS and UPS. UPS is really just a great American firm. They really care about certain values and they stick to them, come what may. SAS was recently voted one of the best firms to work for in the United States by Fortune magazine. They have less than three-percent turnover, and it is a software firm. I think the next largest software firm has something like 46-percent turnover. These firms are aware of the importance of social capital. Although they may not use the actual term, they are deeply aware of norms, values, treating people a certain way, retaining people, letting networks form, all the ideas we discuss in In Good Company.

Other firms do this work well, too. I mean, Hewlett-Packard is a good example, but H-P's recent difficulties show that it is not the silver bullet. There are firms that have high social capital and fail, and there are firms that have low social capital that have been successful. We are not talking about a holistic thing. There is nothing on Earth like that.

JD: Something you point out in the book that I think is of particular importance to our readers is how we use the terms "network" and "community" in an interchangeable way.

LP: Yes, and I'd throw the word "practice" into the mix as well.

JD: Absolutely, and the question I want to ask you is what are the key differences among these ideas and why must we keep them in mind as we think about the idea of social capital?

LP: It's a very important question. Networks are people who are connected in some way, so they recognize each other. If I said all the graduates of New York University at IBM are a potential network for fund-raising, that would be very legitimate, and they are. I get notes, "I am a graduate of NYU," and I occasionally get notes, "Well, we are collecting money," on this or that. I am part of this network, and a network clearly has no limit in size. A network just means people who are connected in some way who acknowledge the connection.

A community really is a different matter. In a community, the difference is altruism. A community implies that its members will act in a certain way, perhaps even against their own self-interest, to help another person. This is not true necessarily with a network. A community, whether physical or virtual, implies an extra level of care, of effort, of passion that will make you go out of your way to help another person, either proactively or in response to some need. Clearly, this is not same thing as a network.

A "practice," which is a very good word and is very important in thinking about work, implies people who know how to do a certain thing and the whole habitat of knowledge about that activity. Let's take cardiologists. There is a practice called cardiology, which includes codified knowledge, such as books on the physiology of the heart. It includes tacit knowledge. After all, not all surgeons are the same. They have legends, stories, and lore. Then they have the artifacts. A practice includes the technology. There are all sorts of heart monitoring devices that are coming out every week.

So, now let's take IBM, where I work. Clearly, there are all sorts of networks-people who are members of the IEEE, people who are members of SLA. There are also communities, such as a community of people who are deeply interested in knowledge management at IBM, and we all know each other and we help each other out. Finally, there is a practice of people who do information consulting, and that practice includes codified knowledge of products and services, non-codified tacit stories, and technologies. So all three things are there as they are in any organization. Although they mean different things, they get lumped together by sloppy thinking.

JD: And to continue along this thread, would you say that there is an appreciable difference to be considered when thinking about how each of these forms of connection contribute to social capital?

LP: I think networks, the way I am defining them, are useful to social capital. But community really is the basis of social capital. It's the single most important factor. In communities, people help each other without asking about a quid pro quo. There is generalized reciprocity, i.e., people work with each other without wondering what they are getting in return. This is the basis of retention in organizations. Very few people are extremely loyal to their organizations, but they do feel loyalty to the informal networks or communities that are the basis of their learning.

JD: In In Good Company, you wrote about the idea of "ground truth" inside the organization. From my understanding of this concept, ground truth can be quite a harsh reality, and this would be particularly true for the organizational newcomer. I am wondering what networks and communities need to do to address this concern and at the same time work to build social capital around the fact that ground truth is actually discussed?

LP: When people join organizations, they quickly connect to certain networks and communities. It doesn't take long for them to do it. And when they do, especially with communities, people start telling them what it is really like to work in the organization, both the pluses and the minuses. In my experience, most people welcome that even though it may be harsh. They welcome hearing the truth over what the HR Department tells them or what they read in their orientation materials. It actually helps them bond with their co-workers rather than with the firm. They bond to these communities. They bond to networks. They do not bond to the firm, at least not the big firms.

JD: Most SLA members know you for your extensive work in the area of knowledge and organizations. From your place at the IBM Institute for Knowledge Management, what is your assessment of the current state of knowledge activities in organizations, and where do you think we are going over the next few years?

LP: Well, I think we are at a crossroads, frankly, in the whole knowledge movement. It is my impression that about 70 percent of government agencies, large firms, even small firms are doing something around knowledge, which is a big success with respect to activity. The crossroads on KM can lead us in one of two directions. It can go in the direction of the quality movement, which was a big success and really helped American companies in world business. We have embedded quality principles in our perspectives and in the routines of work to such an extent that you don't hear them explicitly discussed much anymore. You no longer have as many vice presidents of quality or magazines and books about quality because we do it, especially in a number of manufacturing firms.

So, that is one road that knowledge management can travel.

Knowledge management can also go the road of reengineering, which was a failure and which hurt American business. Reengineering was flawed from the very beginning by bad thinking, and it has just completely gone off the landscape. I am a little worried about which way KM will head. I do my best at IKM, and people in other organizations do as well, to keep KM as a real subject, as something that is true and honest. Still, companies are always asking the same question: what is the immediate payoff? Once you ask a question like that, you get into reengineering land rather than a substantive look at how knowledge is used in organizations.

So, I'm a little concerned, even though we may have to close membership in the Institute soon because we have so many companies wanting to join. Clearly, things are going on, but I don't know what the future holds. Five years from now, it will be interesting to see what happens.

JD: I have heard you say that you and Tom Davenport wish you could take this term "knowledge management" back.

LP: Yes. It is really working with knowledge. You can't manage knowledge, per se. It is not a thing that is manageable. You can't manage love or honor or patriotism or piety. It is clearly working with knowledge, but the words got out there and there it is.

JD: And it is clear that you are not someone who favors the techno-centric knowledge management approach.

LP: I think it is a disaster.

JD: So the question is do you think that organizations are beginning to get the message here?

LP: You know, it is much easier to buy technology than to think. I mean, if you get some senior executives in a room and you are a persuasive person, you can get them to buy technology. Sure, maybe they need the technology, but what is really hard is to get them to sit still and think through the issues of where the knowledge resides in the organization, what should be done with it, what the organization knows, doesn't know, and needs to know. Even if you offer frameworks and methods, it is tough. We sell a great deal more technology than we facilitate one-day strategy sessions, which is something we offer that would be infinitely more valuable to most organizations.

Don't get me wrong. I think technology is a fine thing. I am not against it at all, but it should be thought about more and then pursued after you understand where you want to go with it. Unfortunately, organizations and their leaders think they are stuck with technology in many ways. They are so accustomed to buying what they need, and there is a huge industry pushing it to them. Well, very few people are pushing "reflectiveness" and thoughtfulness. Maybe some people are, but it is a small group saying, "Let's think this through. What do we need to do? Why are we trying to do it? What return would we get, and how might we measure this return?" These are very legitimate and important questions.

So, yes, I think the technology push in knowledge management is very strong and very hard to resist. If it wins, it will sink the subject.

JD: You obviously are concerned about the growing virtualization, not just of our organizations, but also of our society in general. What is your take on how we strike the appropriate balance between "high tech and high touch?"

LP: You need a good mix. You know, a number of studies have actually tried to quantify how often a global team or a virtual team needs to meet to prevent entropy from occurring. The consensus seems to be at least quarterly. So I think you must have a mix. Of course, you can't tell people to eschew the virtual tools that are available to them. On the other hand, if they don't meet regularly, you will have entropy. You will lose passion, and the spark of innovation. You will lose more than you gain.

JD: I loved the story in the book about the informal survey taken at Logan Airport. Was that you?

LP: Yes. It's a true story. All of my life, I have taken that flight from Boston to New York City. And what I've found is that these flights are always crowded. From 6 am to midnight, they are always full, in both good times and in bad. I wondered, "Where are all these people going?"

So when my wife called to say that I didn't have to fly that day, I decided to ask them. You know what? They are all going to meetings, and about 50 percent go to internal meetings. When you ask people why, they say, "I have to be there." I asked them why they didn't do a videoconference? It costs them a $500 plane ticket and a long cab ride from the airport to be there in person. It is an unpleasant day. Why not do it via video? They say, "No, I have to be there. I pick up the cues, the non-verbal text of the conversation. If you are not there, you are nowhere." This is a constant, just ask people.

I have been in trouble at IBM for saying this, but I am not aware of anyone who telecommuted ever having been promoted to a solid executive position, and I think librarians, to be candid, who buy into the technological response to work will never be anything but librarians. If they have any ambition, they had better show up. If you want to get somewhere, you have to be there. It is as simple as that.

JD: What do you think that information professionals can be doing, should be doing to nurture social capital within their organizations?

LP: I think they need to learn new algorithms. As far as I'm concerned, most information professionals have the right stuff to be very valuable in their organizations. They are altruistic, smart, usually sociable, and have good insights. Unfortunately, information professionals are very focused on information, thinking that it is the key unit of analysis, the most important thing in an organization. Well, it isn't. It never has been, and it never will be. "The right information to the right person at the right time" is not a good algorithm for success of an organization. I would be happy to defend that statement. It is not the right formula. Instead, I would say that "access to the right knowledge at the right time" is much more valuable.

Knowledge makes a difference, and networks and communities make a difference. So, I would encourage information professionals to move away from managing information to working with knowledge. They should participate in building networks and nurturing communities, and work to create situations where people can meet each other. They should get to know who knows what and share that knowledge with other people. This is my advice.

JD: In the book, you and Don talk about the power of space in building social capital. Do you think we should be concerned about the loss of the physical spaces that we call "libraries" within many of today's organizations?

LP: Yes, I do, big time. I would fight against it. It may be possible to change the name from "library" to "knowledge node," but if I were a stakeholder in an organization and cared about its success, I would be looking at the library. There is a big study currently being conducted by Stanford University, [consulting firm] Accenture and others on optimal environments for knowledge workers. For me, a piece of the answer must be a comfortable physical space in which to interact with other people. Perhaps the library, instead of housing of documents (something that can be done with technology), can be the place that people can go to meet other people, more of a social space. This would be a really a valuable thing.

But I think we should all watch this very carefully, because this is sure to be a big issue for organizations going forward. Organizations that don't understand physical space will never really have innovative thinking, and they won't attract the best knowledge people.

JD: When you spoke to SLA members in Minneapolis two years ago, you asked a pretty controversial question: where is the "science" in library science? Are you still asking yourself the same question today?

LP: Yes, because I still don't think there is any science there. I think there is a subject called information science, which is a branch of computer science. It has nothing to do with humans or context. It has a great deal to do with the engineering of signals. It is a real subject. Library science, in contrast, is a craft, a practice. It is not a science. Of course, the same thing could be said about management.

I think with information, though, the schools that teach it should really bring in people who understand organizational theory, sociological theory, how people learn, and the like. Now that would be infinitely more valuable than what is taught today. I would throw out 90 percent of the current curriculum and talk about psychology, economics, how organizations work, how people learn, and the role of information and knowledge in organizations. These ideas could fill up easily a one-year or two-year curriculum.

JD: So what is your take on the role a professional organization like SLA should play in trying to change what and how information professionals learn?

LP: Perhaps there needs to be a conversation about what is being taught in library schools today. I mean, you know, I have seen thousands of librarians jump on the Web. All you hear about is the Web, the Web, the Web. Let me assure you that people know how to use the Web. They don't need librarians there. As a matter of fact, if anything, I think it probably helps eliminate some of the functions librarians traditionally perform. People can find their own stuff online. But information professionals have really bought into the technological view of their own work, and I think it serves them poorly, because they give up the very thing that often differentiates them: an understanding of the social dynamics of knowledge and information. So if library schools really want to teach something that is very useful and revolutionary, they should cross disciplinary boundaries and invite in faculty with a variety of perspectives to help bolster this understanding.

JD: One of the things we are looking at pretty closely and that you discuss in In Good Company is storytelling. What advice would you offer to information professionals who want to operate as organizational storytellers or as "gatherers" of the organization's stories?

LP: Well, I have seen a number of information professionals achieve real success by having speakers come in and tell stories both from within the firm and outside the firm. As [former World Bank knowledge management leader] Stephen Denning will tell you, stories are an important way that people learn. If you have worked on a successful project or, even more valuable, on a less successful project, people really want to know about the experience and they don't want it in a document. A document is two-dimensional, so you don't get the passion and the non-verbal cues when you read something instead of talking to someone in person. People are hard-wired to learn from stories and learn from each other face-to-face.

So I think that inviting in, for example, the person who just came back from helping to build a big factory in from China to talk about her experiences is a great

idea for an information professional. People would much rather hear the story of the project-its ups and downs-than read a report, that's for sure.

JD: We like to help our readers get to know the person we are interviewing a little bit better. I know you are a voracious reader. What is the most interesting thing that you have read recently besides, of course, your own book?

LP: Well, thanks for the last part of your question, because you gave me a good laugh. Seriously though, I recently re-read a new translation from the University of Chicago of Alexis de Tocqueville's Democracy in America, all 800 pages, and I loved it. I am struck by his prophetic vision. I mean this guy really understood the persistence of culture and institutions in countries. Even though de Tocqueville wrote in the 1830's, the things he says are still absolutely true today. Of course, he is the founding father of social capital and civic society thinking. He really was the first person to really write about it in an analytical way. This book influenced my thinking a great deal.

JD: As we close, let me ask you this: what do you love about libraries?

LP: Libraries are physical places that people can enter without any agenda. I mean, people go to libraries. Do you ever watch them? They walk around. They sniff out things. They look for other people to talk to. They are happy to be there. Unlike most places or organizations, they are happy to be there. I like that welcome feeling.