Paul Leonardi, a professor at University of California, Santa Barbara, says that when businesses use Facebook-like internal social networking sites for employee interaction, employees learn things about each other that can pay off in big ways down the line.

“We’ve all played the telephone game before, right?” asks Paul Leonardi, the Reece Duca Professor of Technology Management at University of California, Santa Barbara. “As information moves across so many different people, it gets atrophied, and there’s a selection bias that occurs every time someone is listening and saying, ‘I think this is important, this is what I’m going to pass on.’”

Leonardi says that this kind of information sharing — typical for so many companies today — wastes a lot of talent.

“We end up in a situation,” he says, “where we have very complex organizations that are hiring smart people who have tremendous amounts of knowledge and insight in particular areas, who just don’t get the opportunity to share that with one another very often or directly.”

Leonardi is out to help companies avoid that. He is trying to figure out better ways for employees to share knowledge and information. The goal, he says, is to help employees know what and whom their colleagues know — so that they can move more quickly and smartly in all their work.

Leonardi’s research focuses on the use of social tools. “I devote my time to thinking about how managers can implement new technologies and leverage the informal social networks within their companies to make knowledge sharing happen more effectively,” he says.

In a conversation with David Kiron, executive editor for MIT Sloan Management Review's Big Idea Initiative, Leonardi details one of his projects — an experiment he did with employees at Discover Financial Services. That experiment showed an extraordinary upside to making conversations transparent by moving them away from emails and onto a Facebook-like internal social networking site.

Let’s talk about informal social networks and technology-enabled social networks, and what you’ve seen work for companies.

Let me start by making a distinction between networking, social networks and social networking sites. Because I think they get jumbled in people’s minds, and they’re key to what I want to talk to you about.

Networking, in my mind, is meeting people. It’s schmoozing. We go out and we meet people, and we figure out what it is we’ve got in common with them.