There's a phrase Reid Hoffman expects to hear tripping from the lips of Generation Y over the next few years. The Net Geners who brag (often to their employers' dismay), "I practically live in Facebook", will start to add, "But I go to work in LinkedIn".

From the founder and chairman of the dominant social networking platform for business, that does not sound like an implausible goal. The migration of even a chunk of today's 250 million active Facebook users to LinkedIn will swell a network that already boasts 46 million registered users and where, every business day, more than 2.4 million people log in to search for talent, share their expertise, pose questions to their selected networks of contacts, and, of course, keep their own job history and achievements record up to date.

"The Facebook generation is going to be much more naturally acclimatised to using all kinds of social media to communicate and navigate situations," says Hoffman. "They'll know how to use these kinds of tools to actually accomplish work, to find information that helps them solve this problem, or find that resource."

But LinkedIn is not waiting for that next wave of users: over the past year, as visitor numbers have risen  by 87%, site activity has reached a critical mass, with groups in areas such as IT, law, accounting and marketing and advertising particularly well represented.

Corporate social networking

The result is that the activity on LinkedIn, and its smaller rivals like Xing and ZoomInfo, is highlighting how corporate social networking is going to have a marked effect on the structure and operation of business - and the working lives of individuals - in coming years.

Most importantly, such interaction is cutting across traditional organisational structures, enabling the formation of project groups, teams, informal and formal peer-networks that span companies, academia, consultants and government, and which facilitate the creation of vibrant communities of expertise.

You might be forgiven for thinking that extension of the business resource-chain confirms the arrival of the much-heralded "virtual corporation", two decades after the phrase first entered the business vocabulary.

But the difference here is that this is not happening as a result of any top-down management vision - in fact, the opposite: there is an innate suspicion among many senior executives that employee participation in freeform networks is taking companies into a security minefield as well as triggering a Facebook-like drain on productivity.

The reality, though, is that the building of expertise, shared experience and knowledge across corporate boundaries is happening with or without senior management approval.

Global connections and flash crowds

Take two (real and randomly chosen) examples. The head of information security for the State of California is hooked into an expertise-sharing network with the IT security chiefs at PayPal, the UK's Royal Mail and the Royal Bank of Scotland, plus others of that calibre, through their LinkedIn-hosted membership of the "Financial Crime Risk, Fraud and Security" network.

A senior managing director at Credit Suisse in New York is linked to the VP of investment banking technology at JP Morgan and the financial director of the Kazakhstan Growth Fund through the "Hedge Fund Risk Management" network.

The permutations of "who's working with whom" are every bit as varied as the professional interests of the network's members. And, as Hoffman points out, the development of such networks is not unconnected to the now borderless nature of business.

As any student of global economics is aware, in a flattened world, businesses need to accelerate every element of their operations, from product development to sales execution, and to optimise their competitiveness. And their ability to do so - across borders, between companies - is increasingly dependent on an ability to assemble special-purpose expertise on projects.

"What you need is to be able to assemble 'flash teams' that can solve a problem in compressed timeframes," says Hoffman. "You might find some of that expertise within your own corporation but frequently a chunk of that - sometimes 10%, sometimes it's 80% - will come from outside the corporation. And that's where your trust network and that of your workforce becomes really useful. When you're trying to work on a certain problem, there are a lot of people beyond the current employee base who are willing to help."

Of course, this is not all down to the altruism of individuals keen to solve business problems more effectively by drawing on extended expertise and experience. Rather it points to a change in the way businesses and the individual regard each other.

Career progression

There is a fundamental shift underway, Hoffman observes. As he was quick to point out in the early days of LinkedIn, the internet world is "transforming every individual into a small business".

"The difference is that your current company isn't what affects you getting to your next gig," he says. "What helps you [progress your career] is your position within your network. If you look at what's happening in employment practice everywhere in the developed world the average job length - even among professionals - is generally two to four years."

There are all kinds of consequences of this: "When individuals stayed with one company for 20 or 30 years, it made sense for their employer to run extensive internal training programmes for career progression, taking responsibility for evolving an individual's expertise beyond their existing job.

"Now that's shifted more to the individual's shoulders and the reality is you've got to carry your expertise with you. So you are not just responsible for finding your next gig but for bringing the resources to bear to increase your own skill set, your level of intelligence about what's going on [relevant to your job], what new competencies you need."

The result is that an individual's value is measured on the level of resources they can contribute to the solution of a problem or the execution of a project. "The expertise you bring to the company justifies your position, your seniority, your competitiveness, and then that both makes the organisation more competitive and raises your brand."

That has always been the situation, to a limited extent, simply through knowing the right people. But corporate social networking takes that influence to a new level of problem solving, information sharing and personal branding.
 

A classic Valley business

Hoffman's leveraging of his own personal brand is a great example of this.
LinkedIn is a classic Silicon Valley story - and one that has been built on its own value proposition. The company started out in Hoffman's living room in late 2002 when he drew on his network of Valley contacts to gather four technology mavens. (Only one still works at LinkedIn: chief technology officer Jean-Luc Vaillant, who, like Hoffman, had worked at Fujitsu before following him to his first social media experiment, online dating site SocialNet.)

Indeed Hoffman draws a close parallel between the model for LinkedIn and the networking that occurs naturally in the concentrated technology ecosystem of Silicon Valley.

In fact, he knows little else: born in Stanford, the Valley's ground zero, he grew up in Berkeley, and graduated from Stanford University with a degree in Symbolic Systems before heading to Oxford in the UK to take a master's degree in philosophy.

Back in the technology hub he joined Apple, then Fujitsu, before founding SocialNet. When that was sold to German rival MatchNet, he was persuaded to extend his board-level involvement at online transaction company PayPal to take on the role of building its relationships with financial institutions - which became a critical factor in the company's ultimate sale to eBay for $1.5 billion.
 

That cross-pollination is part of the DNA of Silicon Valley, running from the coffee shops of Palo Alto's University Avenue to the bars of San Francisco. The idea that took shape on Hoffman's couch was to extend that open network - where collaboration and ideas sharing is part of corporate process - to the global business world.

Participate or die

Openness is critical to the model. What's more, senior management need to relax their traditional concerns about sharing information outside of the corporation's walls, Hoffman argues.

"It's not as if internal corporate plans and secret strategies or acquisitions are being shared: [confidentiality can] always persist there. But there's a participation in this open network that allows an acceleration of the whole ecosystem.

"If your 50 people in the R&D facility are only talking with each other, then with no cross-fertilisation they can't expect to know about new areas of innovation, what works and what doesn't [based on others' experience], what's going on in the ecosystem. Without that new IT generation model, you're basically dead, right?

"The players who are in touch with the world, networking intensively, are going to have a massive competitive advantage. Organisations which adapt will be competitive and organisations which don't participate will lose competitive edge. That's what it really comes down to."

That participation changes the whole structure of innovation, he argues."If you agree that innovation is essential for staying competitive then the question is, how do you drive innovation? You don't drive it by hiring one smart person, paying them a large salary and saying, 'Hey, you're chief innovation officer, go sit in your office, think big thoughts and tell us.'

"Rather the whole organisation has to adapt to being innovative. You drive it by having individuals who are part of operating the business sourcing ideas, figuring out what the current benchmark is. You have to be network-oriented to do this innovation."

Liquidity of ideas

Of course, the generation and sharing of ideas does not have to be a wholly outward looking activity: far from it. There are plenty of companies - from Best Buy and P&G to Adidas and BT - who have implemented their own internal social networks to very positive effect.

But what is clear to Hoffman is that knowledge is amplified by the number of participants in the conversation. Even when the internal network is large, there is still a need for some kind of supra-social network that spans those multiple internal discussion groups and takes them out to a wider world.

The Holy Grail is "a liquidity of ideas", he says. "A good parallel to the value of social networks is the currency market. It's a matter of liquidity: a matter of liquidity of expertise, of ideas, of knowledge. So the challenge is when you do something that's internal-only, can you get to a viable level of liquidity? The answer is, you always benefit from a higher level of liquidity."

Interestingly, one of the most common requests LinkedIn currently gets from companies is when they realise that the details of their employees' experience, skills, interests and activities are captured more accurately in their LinkedIn profiles than in any internal company directory.

"There's often so little liquidity in internal directories that people say, 'Why the hell would I go and put all this energy into updating my internal profile?' So, often, we have better maps of what kinds of expertise exists within the corporation."

The incentive for keeping those profiles up to date, of course, may not always be in the company's interest. For many individuals, LinkedIn's primary purpose is as a notice board for their CV/resume, even if they also actively use the platform as a networking resource.

And that is where the ambition lies. In July, Hoffman reckons about 8 million of the 13 million unique visitors to LinkedIn were "active" - posting and answering questions, running searches, participating in group discussions. "Where we want to be is where professionals check in every day for the kind of information that helps them do their jobs well."

As he has famously quipped: "MySpace is the bar; Facebook is the backyard BBQ; LinkedIn is the office."

Photography: Toby Burditt