Maybe you think to yourself, ″Hmm, this restaurant will be serving steak. And since it′s serving steak, the customers will need to have access to knives. And one thing we know about people with knives is that they might stab people. Therefore, in order to make the restaurant safe, we′d better put a cage around every table in order to keep the customers from hurting each other.″

We chuckle at this idea because, when designing a restaurant, it is patently absurd to think this way. Yes, of course it is true that from time to time people go crazy and stab others in restaurants, but we have chosen - correctly so - not to make the threat of bad behavior the central element in the design of our social institutions.

And yet, it is exactly this kind of erroneous and flawed thinking that so often seems to grip people′s minds when they think about the design of software for social interactions. Rather than start with the default assumption that we all correctly have when we drive our cars, or walk the streets, or eat in restaurants - the default assumption that virtually everyone we meet means us no harm and is not going to hurt us - some web designers (and their managers) want to start social software projects with the premise that if everything isn′t locked down under a very carefully designed permission-based model, if every piece of information is not tightly controlled, something dreadful is going to happen.

But this simply is not true, something horrific is not going to happen. As it turns out, most people are not lunatics or mean. Most people are reasonable and nice. And we should count on that and act accordingly.

A few years after Jimmy founded Wikipedia and it was becoming successful, he was invited by a major media corporation to come and advise them about wikis inside the company. Executives had noticed that, unlike some of the top-down, pseudo-revolutions that had flopped in knowledge management in the past, wikis were creeping steadily into the enterprise from the bottom-up. Employees were finding wikis immensely useful and started installing them on departmental servers themselves. And this was apparently quite scary.

In one meeting, someone from human resources suggested that if the employee handbook were placed in a wiki, perhaps someone might edit it to double the number of vacation days allowed. What could be done if that occurred? The answer is quite simple - if an employee pours coffee on a colleague in the lunch room, or participates in any number of other ridiculously unprofessional behaviors, he is reprimanded, and told to stop it immediately or risk termination. But in reality, with properly designed social software, one doesn′t need to forbid such activities, because the inherent transparency and accountability built into the software makes it clear to people that such behavior would be quickly noticed, frowned upon, and censured.

What makes Throwing Sheep in the Boardroom a timely business book is that the authors Matthew Fraser and Soumitra Dutta recognize the deeply-embedded reluctance by some organizations to embrace Web 2.0. They explain why this cautionary approach must be tackled head-on in order to fully harness the benefits of collaborative environments encompassing information-sharing and problem-solving, and wisely state that ″social interactions, like financial transactions, must be founded on some basic notion of mutual recognition and trust.″

What also makes this book appealing is that the authors take a very balanced and reasoned approach in their analysis. By neither underplaying the challenges faced by individuals and organizations participating in the online space, nor by being sensationalistically effusive about the positive social and collaborative opportunities offered, Fraser and Dutta provide an honest interdisciplinary framework that successfully blends theory with real-world examples and case studies.

To their credit, Fraser and Dutta don′t hold back in pointing out some of the questionable behavior one can observe online, such as the phenomenon of competitively collecting friends. But they also make the effort to explain that there is a deep-rooted sociological motivation behind such behavior, namely the recognition that throughout history, status is in part measured by the breadth of one′s influence, and that the desire to solidify one′s social capital has now migrated to the online world where it is hoped by many that a large circle of friends, albeit sometimes tenuous and fragile, translates into greater influence and power.

Ultimately, however, Fraser and Dutta are optimistic about the long-term benefits of social networking sites - and rightfully so. Approaching Web 2.0 adoption from a position of innovation and opportunity reaps benefits manifold.

Organizations that refuse to regard Web 2.0 implementation as some sort of disconcerting, free-for-all endeavor have correctly recognized the positive potential of embracing collective intelligence and collaboration on their employees, customers, clients, and business partners.

Simply put, the basic fact is that all societies, ranging from private corporate entities, to local communities, to nation states, and finally to the global community as a whole, are best served by vigorously employing openness and a free exchange of ideas unhampered by fear of negative repercussions or censorship. Only by creating safe environments for the expression of ideas, even occasionally controversial ones, can we hope that the most valuable ideas will rise to the top. A free marketplace of ideas, supported by the Internet and social networking tools, is what we are ultimately striving for. And this is certainly achievable if we all, as participants in this new hyper-connected world, act responsibly with personal accountability.

Social networking sites are a global phenomenon. For the hundreds of millions of people worldwide who belong to sites like MySpace and Facebook, social interaction in cyberspace has become an indispensible part of their daily lives. This book examines the powerful forces driving this social e-revolution. It also describes the equally powerful reactions to it, and makes predictions about its far-reaching consequences.

We are indeed living, thanks to the Internet, at an exciting turning point in history. As The Economist put it: ″Society is in the early phases of what appears to be a media revolution on the scale of that launched by Gutenberg in 1448.″¹ The Renaissance revolution, which brought the printed word to the masses, empowered collective action that triggered the Reformation and helped shape the conditions that led to the emergence of capitalism and modern nations. The printing press provided a powerful demonstration of how new communications systems, when leveraged socially, can topple once unassailable empires of received truths.

The underlying argument of this book is that the ″Web 2.0″ revolution represents an equally powerful rupture - which we call an e-ruption - in established forms of social organization. These cataclysmic changes are occurring at a time when many, empowered by new technologies, are questioning core assumptions and breaking with past practices. We are entering an era of liberating self-awareness and self-reliance. We no longer need to make personal choices and organize our lives with deference to established values and institutions. Today, we are increasingly trusting our gut feelings and acting on instinct and intimate conviction. We have grasped that crowds, when their collective intelligence is harnessed, are frequently smarter and wiser than the most exalted expert. We have realized that everything important in life is essentially miscellaneous, unplanned, unexpected. We have learned the value of cooperating with others. And we have, above all, felt the liberating power of consumer sovereignty and citizenship engagement.

We are, in short, living in an era that marks a rupture with values based on deference to rational design, orderly markets and vertical institutions. We are embracing the exhilarating uncertainty of delightful randomness, creative destruction and horizontal networks. In a word, we are celebrating our deepest social impulses.

What we are describing here has been boldly declared, loudly trumpeted and sometimes unequivocally condemned, by other authors in a growing body of literature on the subject. If this book can make any claim to originality, it resides in the breadth of its analytical scope. Specifically, this book examines the impact of social networking sites at three different levels: first, our informal personal interactions; second, our formal relationships inside organizations; and third, our behaviour as consumers and citizens.

These three forms of social interaction - personal, organizational and consumer/civic - constitute the three parts of this book. They also correspond to the book′s triptych thematic structure, which we have called ″ISP″ - identity, status and power.

At its most fundamental level, all social interaction is concerned with questions related to our personal identity. We need to construct our identities before we can meaningfully interact socially with others. The first part of this book examines the impact of social networking sites on personal identities.

Our place within organizations, and in society as a whole, is significantly determined by notions of status. How we regard ourselves is frequently determined by how others look at us. The book′s second part focuses on the e-ruptive influence of sites like MySpace and Facebook on the way social status is assigned, acquired, maintained and enhanced.

Finally, the third part of this book examines the role of social networking sites on the distribution and exercise of power - in social relations, in organizations, in markets and in political institutions.

While this book, on the surface, is rich in anecdotes and case studies about how social networking sites are affecting our daily lives, our analysis never loses sight of the underlying theme of how they are transforming accepted notions of identity, status and power.

Who will want to read this book? This book is written for a wide readership. It will, we hope, appeal to experts and laymen alike, to the young and old, to Web aficionados and Internet novices.

If you have heard only vaguely about the Web 2.0 revolution - Facebook, YouTube, Wikipedia - but have never used online social sites, this book is for you.

If you are a parent concerned about the inordinate amount of time your children are spending on MySpace, iTunes, Bebo and other sites, this book is for you.

If you are a business professional who knows about social networking sites like LinkedIn but are uncertain about how they work and what advantages they offer, this book is for you.

If you are already a member of social networking sites and wish to gain a deeper understanding of their underlying dynamics, this book is for you.

If you work in a corporate environment where Facebook and other sites are being used by colleagues and you wish to learn more about the ramifications for the workplace, this book is for you.

If you work for a voluntary organization or government bureaucracy and you are wondering about the opportunities and challenges presented by social media, this book is for you.

If you are a corporate manager assessing how Web 2.0 tools can affect your company′s performance, this book is for you.

Finally, if you are simply an intellectually curious reader who wishes to learn more about the global explosion of sites like MySpace, Facebook, YouTube, Bebo, Cyworld and Orkut, this book is for you too.

This book describes, assesses and analyses the dynamics of the Web 2.0 e-ruption and explains what it means for you - today, tomorrow and in the future.

Thanks, too, to literary agent Ashton Westwood of Westwood Creative Artists for taking care of business. And to Cristina Casanova for her excellent design work on the ThrowingSheep.com website; and to Ashwin Reddy for his expertise as the site′s webmaster.

At our publisher Wiley, executive editor Rosemary Nixon and her team brought tremendous enthusiasm and creativity to the project and much is owed to their hard and inspiring work.

Matthew Fraser would like to thank his students in France who give him real-time feedback every day on Facebook; and also his stepson David Ham for pressuring him to join Facebook in the first place.

Soumitra Dutta would like to express his deep gratitude to his wife Lourdes Casanova for her unfailing support; and to their daughter Sara who, as a member of ″Gen V″, instinctively knows more about the Web 2.0 revolution than the authors could ever hope.

Yet there is a troubling paradox at the heart of these designs: our personal selves - or ″true″ identities - are usually banished from the organizations and institutions that formalize our relations with the world. Apart from genuine eccentrics, most of us instinctively keep in check our personal identity, which is concealed awkwardly behind a rigidly polite mask when we are interacting with strangers, conversing with colleagues and dealing with bureaucracies.

This tension between our personal and institutional selves is particularly acute at the office. No matter how sincere an employer may seem about creating a relaxed, convivial working ambiance - think ″casual Fridays″ - everyone except the pathologically naive is well-advised to keep their true self under psychological lock-and-key. At work, we put our institutional self forward. For reasons that remain inadequately explained, and yet instinctively understood, the spontaneous expression of our true identity is considered inappropriate in formal relations. Inside organizations, we repress our social selves as a matter of bureaucratic survival.

Why do personal identities collide so awkwardly with institutional values? The answer resides in the conflicting internal logic of social networks and institutional structures. Social networks are spontaneous, informal, horizontal, heterarchic, dynamic and shifting. Institutions, by contrast, are constructed, formal, vertical, hierarchic, static and rigid.

Grasping this fundamental tension - between horizontal networks and vertical institutions - will lay the conceptual groundwork for much of what follows in this book. We believe the inherent conflict between networks and institutions provides surprising insights into why social networking sites like Facebook have been so controversial. Web 2.0 social media are perceived as threatening because they challenge core assumptions - not only about social interaction, but about organizational behaviour, corporate management and democratic governance. In a word, power. Power is shifting, for better or worse, from institutions to networks, from vertical structures to horizontal systems, from hierarchies to heterarchies, from bureaucracies to individuals, from centre to periphery, from bordered territories to virtual cyberspace. This book examines that power shift.

Let′s begin with a definition of terms. The term ″Web 2.0″ was coined in the aftermath of the dot-com meltdown in 2001 when disillusionment about high-tech tulip-mania was pervasive. In Silicon Valley, there was a widespread sense of defeat after the irrational exuberance of ″Web 1.0″ ended in meltdown. The Web had to be reinvented. Fortuitously, search engines like Google were emerging, phoenix-like, from the ashes of Web 1.0 and transforming the Internet into a networked platform. No longer a ″push″ medium to post information, send emails and sell books, the Web was being radically transformed into a dynamic network harnessing creativity and collective intelligence.

Most agree that the term ″Web 2.0″ was coined in 2004 at a San Francisco new media conference attended by a high-profile roster of Web entrepreneurs including Amazon′s Jeff Bezos, Yahoo′s Jerry Yang and Netscape founder Marc Andreessen.¹ This event was a catalyst for a wave of techno-optimism about the potential of an emergent social Web. On the vanguard of this Web 2.0 movement was the California geek subculture hovering around events like the annual Burning Man festival. Burning Man′s survivalist ethos was based on ten founding principles: radical inclusion, gifting, decommodification, radical self-reliance, communal effort, civic responsibility, radical self-expression, leaving no trace, participation and immediacy. Among early Burning Man devotees were Google founders Larry Page and Sergey Brin, who in 1998 unveiled the company′s famous logo (or ″Google Doodle″) at the summer solstice event in the Nevada desert. These counter-culture values were in the air at the 2004 conference where Silicon Valley heavyweights heralded the advent of a new Web 2.0 era in which ″social computing″ would transform corporations and business models.

The first wave of Web 2.0 hype took ideological inspiration from The Cluetrain Manifesto, which in 1999 had declared ″the end of business as usual″. Cluetrain contained ″95 Theses″ that were an unmistakable reference to Martin Luther ′s famous tract which, nailed to the door of the Wittenberg Castle Church in 1517, triggered the Protestant Reformation. The Cluetrain tract, rejecting a commercial vision of the Internet as a vast online shopping centre, conceptualized the Web as an ancient Greek agora, an essentially social place where people converge to trade goods and tell stories. Cluetrain was an unambiguous attack on the traditional vertically structured corporation burdened by the weight of the status quo. Cluetrain advocated flat, nonhierarchical organizations in which ″respect for hands-on knowledge wins over respect for abstract authority″. Thesis 51 asserted: ″Commandand-control management styles both derive from and reinforce bureaucracy, power-tripping, and an overall culture of paranoia.″ For senior managers in big corporate bureaucracies, Cluetrain was revolutionary stuff.² Yet for the early Web 2.0 enthusiasts in Silicon Valley, Cluetrain was their bible.

Serendipitously, while Cluetrain was proclaiming a disruptive revolution for global capitalism, social networking sites like Friendster and MySpace were starting to take off in the United States and transforming the way people socially interacted. Thanks to the law of ″network effects″ - according to which networks become increasingly useful as they accumulate more members - social networking sites achieved phenomenal global growth in only a few years. MySpace reached 100 million users in 2006. Facebook, for its part, today counts more than 125 million users worldwide. While these figures may plateau one day, it has been almost impossible to keep up with the soaring growth rates of MySpace and Facebook, which have been adding between 250 000 and 300 000 new members every day. Today, their combined membership nearly equals the population of the United States - and may well surpass it by the time you are reading this. MySpace broke a record with 4.5 billion page views in a single day. Meanwhile, Friendster - one of the first social sites launched - boasts 50 million members. Bebo, a social networking site popular in the UK, counts some 25 million users worldwide. Orkut, which enjoys a huge following in Brazil and India, counts roughly 70 million users. In South Korea, Cyworld has more than 20 million members. In Latin America, the hi5 site boasts roughly 50 million members. The Japanese social networking site, Mixi, has more than 10 million members. Many other social networking sites are, similarly, popular in specific regions: Skyrock (France), Mop (China), Badoo (Cuba), Grono (Poland), Hyves (Holland), iWiW (Hungary), LunarStorm (Sweden), Friendster (Indonesia) and Vkontakte (Russia).

The appeal of social networking sites cuts across national boundaries, aggregating networks representing every conceivable community. There are sites for business people: LinkedIn has 20 million members, Plaxo has 15 million and Xing has 4 million. BlackPlanet, a site for African-Americans, counts some 16 million members. There are also sites for doctors (Sermo), green activists (Care2), movie buffs (Flixster), photo-sharing (Flickr), book clubs (LibraryThing), car enthusiasts (CarDomain), dog lovers (Dogster) and gays (OUTeverywhere). Friend and family reunion sites (Classmates.com, Reunion. com, FriendsReunited, MyYearbook) are massively popular worldwide. Other sites focus on highly targeted niche categories. Reuters news agency created a social networking site aimed at hedge-fund managers. Even the global celebrity jet-set has its own exclusive, invitation-only networking site, called aSmallWorld. Presumably, it′s harder for the paparazzi to track you down in cyberspace. Other sites boast funky, alphabet-soup names like Xanga, Tickle, Fropper, Minglebox, Nexopia, Adoos, Cuspace, Tagged, 51.com, Ning, Passado, CafeMom, Jhoom, Yuku, Zorpia, Backwash and Fubar.

Social networking sites can, generally speaking, be put into five broad categories: egocentric, community-based, opportunistic, passion-centric and media-sharing.

First, egocentric networks. These are massively popular ″profile″ sites like MySpace and Facebook that serve as platforms for ″friend″ networks where members ″poke″ and ″throw sheep″ at others in their online social network. They also serve as virtual platforms for identity construction - frequently, as we shall see, the fabrication and management of multiple identities. Egocentric networks are also platforms for personal creativity and artistic expression - songs, videos, photos and so on.

Second, community networks. These sites aggregate members with strong identity linkages based on nation, race, religion, class, sexual orientation and so on. They generally replicate communities that already exist in the real world. Feelings of belonging on these sites are deeply embedded. A good example is the BlackPlanet site for African-Americans. Online neighbourhood sites furnish an example of micro-community social networks.

Third, opportunistic networks. These are socially organized sites like LinkedIn and Plaxo, whose members join for rational reasons such as business connections. They can also include vertically defined professional sites, such as Sermo for American doctors and sites for stockbrokers.

Fourth, passion-centric networks. These sites bring together people who share interests and hobbies. Also called ″communities of interest″, membership to these sites is horizontally defined according to ″passions″ (dogs, cats, cars, movies, etc.). Dogster and CarDomain are good examples of passion-centric sites.

Finally, media-sharing sites like YouTube and Flickr are defined not by their membership, but rather by their content. YouTube attracts people who share videos, while Flickr aggregates users who post photographs. People flock to these sites primarily to access content created by others.

Motivations for joining social networking sites are varied and complex. At risk of oversimplifying, we can classify motivations into two broad categories: rational and nonrational. Professionals who join sites like LinkedIn are primarily motivated by rational calculations related to career development. Teenagers who collect ″friends″ on MySpace, on the other hand, are not likely to be looking for career opportunities. Their social interaction is motivated primarily by a nonrational instinct to forge social bonds. The classic conceptual dichotomy for these two impulses comes to us from 19th century German sociologist Ferdinand Tonnies: gemeinschaft versus gesellschaft . Loosely translated, gemeinschaft describes ″community″ identification based on common values and close bonds. Gesellschaft, by contrast, describes rational forms of association based on self-interest. MySpace is a gemeinschaft site; LinkedIn is a gesellschaft site.

Since MySpace and Facebook first emerged globally circa 2005, social networking sites have quickly soared to the top of global Web rankings. According to the Alexa Global Traffic Rankings, the top ten most visited websites in 2005 were largely Web 1.0 destinations: Yahoo!, MSN, Google, eBay, Amazon, Microsoft, MySpace, Google (UK), AOL, Go.com. Only one, MySpace, was a bona fide social networking site. By 2007, the same Top 10 ranking had been completely shaken up: Yahoo!, Google, MSN, YouTube, Live.com, MySpace, Facebook, Orkut, Wikipedia, hi5. In only two years, there were suddenly seven Web 2.0 sites in the Top 10.

Looking closer at this Web 2.0 e-ruption, another pattern comes sharply into focus. In the same two-year period, new media sites were not overthrowing old media online destinations. The old media players - Disney, CNN, ESPN, USA Today, MSNBC - had already been knocked out of the rankings. They were history. The e-ruption that took place between 2005 and 2007 revealed a volatile process of creative destruction among new media players. What′s more, the three non-Web 2.0 sites in the 2007 ranking - Yahoo!, Google and Microsoft - were already investing in Web 2.0 sites to catch up. Yahoo! owned Flickr; Microsoft owned Live.com and a piece of Facebook; and Google owned YouTube and Orkut among other sites. The message for the two sites that got booted off the Top 10 list in 2007 - Amazon and eBay - was unequivocal: build more social features into your platforms. And that, not surprisingly, is precisely what they have been doing.

Today, Web 2.0 social sites have passed the tipping point. It′s estimated that more than 600 million people will be logged onto social networking sites by 2012. No wonder media moguls, scrambling to re-aggregate shrinking customer bases (eyeballs, audiences, readership), are launching or buying Web 2.0 properties to climb back up the value chain. In 2005, Rupert Murdoch′s News Corp paid $580 million for MySpace - a bargain price when compared with later valuations. Google meanwhile bought YouTube for $1.65 billion. And Microsoft, for its part, paid $240 million for a tiny 1.6% slice of Facebook - valuing the social networking platform at an eye-popping $15 billion. The stakes were ratched up further when, in early 2008, America Online bought Bebo for $850 million. At the same time, Microsoft made an unsolicited $45 billion offer for Yahoo!

Make no mistake, this is big business. Big payoffs. Even bigger risks. There will be further creative destruction - more winners and losers.

Beyond the high-stakes gamesmanship of corporate takeovers, Web 2.0 e-ruptions threaten to sweep away old business models, management methods and bureaucratic cultures. If so, the consequences for consumer markets, organizational behaviour and democratic participation will be far-reaching. In the chapters that follow, we describe these new dynamics with terms that have been employed elsewhere: Markets 2.0, Enterprise 2.0 and Democracy 2.0.

Sounds fascinating. It′s hard to argue with the ″power of us″ - mass collaboration, cooperation and participation.⁴ But the positive spin on Web 2.0 overlooks a powerful human instinct: the fear factor. In highly structured organizations, social media threaten to destabilize entrenched hierarchies, challenge existing arrangements, shake things up. For many, their first instinct is not how to leverage the dynamics of social media, but how to contain and tame them - if not stop them altogether.

Scarcely a week goes by without a media report about yet another embarrassing incident involving institutional resistance to MySpace or Facebook. If you were living in Michigan in early 2007, you might have read in the local papers about a Catholic high school, St Hugo of the Hills, whose strict principal, Sister Margaret Van Velzen, banned pupils from using MySpace under threat of expulsion. The interdiction, predictably, prompted a student rebellion - not in the school corridors, but in cyberspace. Cheeky MySpace pages suddenly began popping up with jeering satires of stern Sister Margaret. Needless to say, the kids were all right. The schoolmarm nun came off as preposterously archaic and, worse, just plain silly.

Oxford University′s aquatint facades and gothic spires are a long way from Middle America, but in cyberspace the same e-ruptions are breaking out with similar outcomes. During the spring term of 2007, administrators at the venerable English university decided to crack down on so-called ″trashing″. At Oxford, trashing is an undergraduate ritual that entails rushing fellow students emerging from their final exams and covering them with a mixture of flour, foam, champagne and broken eggs. It′s a messy business, but it′s little more than a posh version of the usual campus hi-jinks. No matter, meddling Oxford officials wanted to put a stop to it. So they began systematically spying on student Facebook postings to catch the ″troublemakers″ who were posting incriminating photos of their harum-scarum trashing antics. The guilty students, moreover, were given stiff fines ranging from $80 to $1000. When the press got wind of the story, however, Oxford quickly found itself, like Sister Margaret Van Velzen, with egg all over its face - without the flour, foam and champagne.⁵

Many governments, motivated by like-minded conservatism, have banned access to MySpace and Facebook - not only to their employees, but to their entire populations. China′s state censors routinely monitor and block access to the Internet - though, curiously, they are decidedly more indulgent towards the pirating of music and movies. Copyright infringement is one thing, but free speech is something else. Syria, too, has banned Facebook in an effort to thwart what the autocratic regime calls ″Israeli penetration″. Despotic states fear MySpace and Facebook because they promote the emergence of robust civil societies with open access to freely shared and disseminated information.

Not only dictatorships fear the power of online social networking. In the United States, where the CIA is using Facebook as a recruitment tool to scan for future spies, the Pentagon has banned MySpace for army personnel. Congressional legislators in Washington meanwhile have proposed a law that would ban social networking sites in schools and libraries. To the north in liberal-minded Canada, the government has brought the hammer down on Facebook, albeit for bureaucrats only. Canada′s biggest city, Toronto, has decreed Facebook off-limits for municipal employees. Ditto in the provincial government of Ontario. And the same ban is in place for national government employees in Ottawa. For Canada′s state bureaucrats, Facebook is in the same category as online gambling and hardcore sex sites. It′s a no-go zone.

People are getting the message: Facebook may be great for your social life, but it can hurt your career. Look at what′s happening in Britain. Figures released under the Freedom of Information Act at the end of 2007 revealed that British government departments had disciplined hundreds of employees for using Facebook and similar sites at work. The Ministry of Justice had dismissed 30 employees, while the Department for Work and Pensions had reprimanded 313 staff members. London′s Metropolitan Police, for its part, had disciplined 187 employees. In Hertfordshire, the police department disciplined 140 officers and civilian staff for circulating an online video clip deemed racist (it showed a black man, pursued by police, being decapitated on railings when jumping from a flyover). In total, 132 British government bureaucrats had been sacked over the previous three years, 41 had been forced to resign, 868 had received formal warnings and 686 had been demoted or punished. All for the same crime: logging onto social networking sites at work. When King′s Mill Hospital in Nottinghamshire banned Facebook for staff members, more than 100 hospital employees protested by starting an online ″Bring Facebook Back″ campaign. In Kent, the Medway NHS Trust imposed a similar ban on its health workers on the grounds that they were using Facebook to ″throw sheep″ at one another while at work, prompting a crackdown on frivolous online ″time-wasting″.⁶

The fear factor is equally widespread in private-sector corporations. In London′s financial district, more than two-thirds of City firms have banned or restricted access to Facebook. The clampdown has been spearheaded by Credit Suisse and Dresdner Kleinwort, which use security systems to block access to social networking sites. British Gas and Lloyds TSB use firewall software.⁷ In New York, financial powerhouses Citigroup, Goldman Sachs, JPMorgan, UBS and Lehman Brothers restrict access to Facebook. Barracuda Networks, a leading maker of software security systems, reported at the end of 2007 that more than half the companies using its Web filters were blocking either MySpace or Facebook. Barracuda′s chief executive, Dean Draco, declared confidently: ″You won′t see a lot of financial institutions running to get their employees on Facebook. Maybe someday, but not now.″⁸

Why so much fear, distrust and paranoia? The hostility towards Web 2.0 finds justification in many plausible rationales. Social networking is dismissed not only as a wasteful employee distraction, but as a threat to personal privacy, an open invitation for slander and defamation and a danger to the security of competitive information. These concerns are not without legitimacy. But behind every official rationale lurks a deep-seated fear of potential threats to something much more important in most bureaucracies: the status quo.

Tension between network dynamics and institutional structures is not new. It has, in fact, been playing out since the beginning of civilization.

Networks are horizontal expressions of dynamic social power; organizations are vertical constructions that represent formal institutional power. Networks and institutions can co-exist, interstitially, without decisively producing winners or losers. But the inherent tension between them produces inevitable ruptures at critical points when new forces emerge and threaten established forms of power.

We argue in this book that the ″Facebook phenomenon″ represents one of these critical rupture points. We believe, moreover, that to understand the inner dynamics driving this e-ruption, there is much to learn from the past. Sites like MySpace and Facebook are teaching us a very old lesson: power resides in networks. Yet, as history amply demonstrates, networks have not always triumphed. In fact, their resurgence today comes after a long dormancy of several centuries during which centralized institutions have been the pervasive and dominant forms of social organization. To find the last great epoch of network power, we have to travel back in time nearly a millennium to the Middle Ages.

The mythological image of the Middle Ages that has come down to us from legend and gothic literature presents an heroic tableau featuring armoured knights mounted on satin-draped horses and turreted castles ringed by murky moats. This richly embroidered tapestry woven into our collective imagination evokes historical figures like the Knights Templar and the quest for the Holy Grail. Cultural mythology does not always faithfully reflect historical reality. But the story of the Knights Templar is rich in lessons about the rise and fall of network power.

We know the Knights Templar from chivalrous legends about their heroic exploits during the Crusades. Famous for their white mantles emblazoned with a red cross, they have recently captured the popular imagination through blockbuster movies like Indiana Jones and the Treasure of the Templars and the bestselling novel, The Da Vinci Code. Even videogames - such as Broken Sword: The Shadow of the Templars - have revived the Templar legend.

Popular mythology has focused on their status as a ″secret″ society carrying forward sacred Christian relics like the Holy Grail. Like all legends, the heroic account of the Knights Templar tells only part of the story. True, the Templars were a Christian military order created during the 12th century Crusades to protect the Holy Land from so-called ″Infidels″ - the medieval pejorative for Moslems. The first Templars were chivalrous French knights who selflessly took vows of poverty, chastity and obedience to pursue their sacred mission as Defenders of the Faith. Their austere, matrix-style organizational discipline was famous for its Spartan efficiency.

Beyond the legend, however, the Knights Templar were the Pope′s de facto standing army. During the Middle Ages, all emperors, kings and princes were the Pontiff of Rome′s vassals. Yet for centuries the Pope had no means of coercion - except, of course, excommunication. The Crusades gave the Pope a timely pretext to possess serious fire-power. The Templars thus became the Vatican′s private militia - or ″army of Christ″. Pope Innocent II sanctified the Templars′ official status in 1130, effectively making them accountable only to God. The monastic order was, accordingly, exempted from all earthly laws - including taxes.

You don′t have to be an investment banker to understand why the Templars immediately attracted a great deal of interest. The monastic order effectively enjoyed, thanks to Papal dispensation, the medieval status of a multinational corporation exempt from all tariffs and taxes in every known jurisdiction. When word got out, thousands of wealthy noblemen throughout Christendom began turning over to the Templars their assets in cash and property. The Templars were the medieval equivalent of a modern-day mega-IPO on the New York Stock Exchange. Think gothic Google.

The feverish take-up was overwhelming. The heirless King Alphonse I of Castile left the military knights a third of his entire kingdom. England′s Henry II granted the Templars vast tracts of land, including prime real estate in London; and later the unpopular King John of Magna Carta fame granted the order Lundy Island off the coast near Bristol. By 1300, the Templars were powerful landowners and merchants throughout Europe, controlling a vast network of some 9000 manors and nearly 900 castles. In the Holy Land, they had established their headquarters on Temple Mount in the al-Aqsa Mosque, believed to be the site of King Solomon′s Temple where Christ was crucified, buried and resurrected. It was this connection that gave the Templars a lucrative business opportunity which they did not neglect to exploit: trading holy relics associated with Jesus Christ. The market for holy artefacts - most of which, if not all, happened to be counterfeit - found many wealthy buyers, including kings, throughout Christendom.⁹

The main source of Templar revenue, however, was banking. Economic historians credit the Templars with establishing the world′s first merchant banking operation using the modern-day equivalent of traveller ′s cheques. Like the world′s biggest banks today, the Templar bank gave the monastic order tremendous power. Few crowned heads of Europe were not in debt, literally and figuratively, to the Templar banking operation. When France′s Louis IX was captured and taken hostage by the Infidels during one of the Crusades, it was the Templars who paid his ransom. It was also Templar banking profits that financed the construction of magnificent gothic cathedrals throughout Christendom - including the one in Chartres. The Templar bank was the equivalent of the Federal Reserve, Bank of America, World Bank and International Monetary Fund all rolled into one. The order ′s Grand Master was, ex officio, regarded much like today′s powerful CEOs of global corporations. He could hold his head up in the presence of kings. He was, after all, not accountable to their laws.

This state of affairs did not sit well with France′s Philippe IV, commonly known as ″Philippe le Bel″ due to his famously handsome features. Philippe le Bel would be a media superstar today, followed everywhere by paparazzi and global news cameras. With his square jaw, blue eyes and long blond hair, the French monarch was the John F. Kennedy of his epoch. But looks were deceiving. Even by medieval standards, Philippe le Bel was a cunning and ruthless prince. His calculated propensity for violence inspired the writings of Machiavelli.

A gruesome illustration of Philippe′s cold, unflinching brutality was his reaction upon discovering that a pair of royal courtiers had seduced his two daughters-in-law - including the wife of his heir, Prince Louis. Philippe immediately ordered the arrest and imprisonment of the two princesses. A more gruesome fate awaited their unfortunate Lotharios. Found guilty of lèse majesté, they were dragged to their place of execution and burnt alive. Their roasted corpses were decapitated, their genitals were hacked off and thrown to a pack of ravenous dogs and the remains of their mutilated cadavers were dragged to the gibbets and hung in public. The two adulterous princesses were escorted to this shocking scene and forced to look on, horrified, as their illicit lovers were burnt at the stake and butchered. Philippe le Bel was definitely not a man to be crossed.

Whatever misgivings historians have about Philippe le Bel′s moral character, most agree that he was the first modern nation-builder to emerge out of the chaos of medieval Europe. Centralized power had collapsed in the 5th century with the fall of Rome, and the Church had emerged from its ruins to impose a less structured, horizontal form of networked power throughout Christendom. The so-called Dark Ages were a particularly nasty period. By the early 14th century, Europe had evolved into a rough patchwork of feudal fiefdoms engaged in a continual state of war for territory and legitimacy. As kings struggled to assert their authority over rival barons, power systems were diffuse, multilayered, shifting - located in the volatile alchemy of alliances and networks. Philippe le Bel, surrounded by battalions of legal advisors, was focused on constructing a centrally controlled, territorially defined nation called France. But two powerful forces were in his way: the Pope and the Knights Templar.

The Pope was Boniface VIII, a cunning survivor of many backroom Vatican intrigues. Sixty-two when anointed Holy Father in 1295, the Pontiff must have regarded the 27-year-old Philippe le Bel as a mere pup who could easily be house-trained. He was wrong. Philippe was a fox. The Pope learned this, to his astonishment, after issuing a Papal decree reminding Philippe that he had no taxing powers over Church property. Refusing to roll over, Philippe promptly blocked all gold from leaving his kingdom - thus depriving the Vatican of its income from France. Furious, the Pope excommunicated the French king.

What happened next was an incident that remains one of the most extraordinary events in medieval history. It would not be out of place in one of the more violent episodes of The Sopranos. To put it bluntly, Philippe put a contract on the Pope′s life.

In September 1303, the French king dispatched an army of 1500 soldiers and 600 cavalry to Rome where they joined a condottiere led by Boniface VIII′s enemies from his early days of backroom Vatican plots. Fearing for his life, the Pope - now an elderly man of 78 - fled to his home town of Anagni. But Philippe′s hit men tracked him down, sacking, pillaging and burning the local cathedral with Carthaginian belligerence. The assailants penetrated the Pope′s private quarters, physically seizing the aged Pontiff. Some historians claim the Pope was beaten; other accounts say he was slapped on the face as a gesture of contempt. One fact is not disputed: dragged by his captors back to Rome, Pope Boniface VIII, broken and humiliated, died a few weeks later. Philippe le Bel didn′t stop there. After a brief Papal interregnum, the next anointed Pontiff, Clement V, was a French cardinal name Bertrand de Got - hand-picked by none other than Philippe le Bel. This time, Philippe was taking no chances. He had the Papacy moved - lock, stock and barrel - from Rome to Avignon so he could keep the Church on a tight leash.

Philippe was now ready to make his move on the Templars. When Philippe le Bel had inherited the French throne in 1285, his kingdom was deeply in debt. The Templars, meanwhile, had established their banking headquarters right in his backyard in Paris, which had become the financial hub of Christendom. But Philippe could not control the Templars. Nor could he tax them. In fact, he owed them money. But he was not inclined to make payments to a network of Papal warriors.