Beyond Brand Valuation: Social Capital Valuation
With the global financial markets in turmoil, valuations are on everyone’s mind these days: financial valuations, market caps, brand valuations, etc. Today, I read a great article about the burst of the “Brand Bubble” and the impact this will have on brand companies’ intangible assets. Brand valuation is a concept with broad corporate acceptance and many of us are quite familiar with it. However, I’d like to throw out a new valuation model called Social Capital Value Add (SCVA).
For the past month, I’ve been conversing with Michael Cayley about his new valuation model that goes beyond Brand Valuation and explores the value of Social Capital. There is a sociology truism that the strength of the network lies in its weakest ties. Corporations with consumer-facing brands need to start looking at, evaluating (hopefully, even financially valuing) and engaging with their Social Capital, especially as consumers become more powerful in the two-way Brand conversation.
We have not figured out all the exact details of the financial model for this new metric. But, I do know that a Social Capital Valuation Model will be important to the future growth of most companies and there are many companies already recognizing this, e.g. MTV, Dell, Procter & Gamble, Monster, Comcast, CNN and several others. I’m excited to be working with companies that recognize this fundamental shift in brand strategy and I’m also thrilled to be part of an emerging team of thought leaders figuring these issues out!
If you have any related thoughts, research or are simply interested in being part of this distributed, virtual think tank, do send me a note!
5 Comments »
Raul,
Obviously, there’s something in the air… 
You are absolutely right that Social Network Analysis (SNA) is a great tool in valuing the social capital! We need to take an SNA value and translate it into a dollar-figure that can be “objectively” assigned to companies and provide a mechanism to value their “social capital market value”.
I’d love to read some of those SNA references you mentioned! Thanks again!
Rochelle,
Great post and thanks for the reference to Social Capital Value Add.
Raul – I hope that you will join us in this effort.
The work of Granovetter is referenced in SCVA along with the work of Ron Burt and other SNA thinkers.
In particular, I think that Burt’s structural holes theory, coming along roughly 20 years after Granovetter’s Strength of Weak Ties argument is a good template for thinking about the relationship between brand and Social Capital Value Add.
Structural Holes seems to address the same issues as Strength of Weak Ties, but Burt argues that it is more squarely targeted at the structural sources of value, rather than being a correlate.
SCVA and brand are related and they describe similar value, but I feel that SCVA holds more promise for the kinds of metrics that we are capable of delivering in the networked age.
See you both over at http://www.socialcapitalvalueadd.com?
Cheers,
mc
[...] Note: Jay, I keep hearing the Web 2.0 Swan Song too.) It has been echoed in conversations with Rochelle Grayson at Donat Group and Joe [...]
October 13, 2008 @ 12:00 pm
It’s SO timely that you talk about this topic, as I’m writing about Granovetter’s Strength of Weak Ties (the sociological foundation of social capital, as you accurately mentioned).
Social network analysis (the quantitative one) would certainly help you with building the metrics. I may have one or two references that might be of help.
In the literature on industrial districts, Granovetter’s work is highly praised as it argues that industries cluster where social capital networks are formed. That’s one of the reasons why we have a Vancouver high tech cluster