David Berlind’s recent discussion of the merits of LinkedIn versus other services like Plaxo (David thinks LinkedIn is “winning” — and I agree) inspired me to surface a recent experience I had with LinkedIn that illustrates the importance of old-fashioned offline personal relationships — not just the direct personal relationships you are explictly aware of, but the implicit networks that are created by the associations you specify in an online profile. When this kind of information is laid bare and made easily searchable in the context of defined relationships, the brutal efficiency with which personal and professional networks can be navigated by connections outside of your first-degree network can be breathtaking.
In my particular case, I was contacted by someone who shared a trusted mutual connection with me who just happened to be interviewing someone who I had worked with in the past. I’m not even sure if this person is even on LinkedIn. I wasn’t this person’s boss, and I would have never been offered as an actual reference on a resume, but the person who contacted me for a reference noted that we worked for the same company and wanted to know my thoughts. Unfortunately, my comments weren’t positive. I just couldn’t give a positive reference without feeling like I was compromising myself and the trust of our mutual connection (this was kind of an extreme case — not much of a gray area on this one, which is rare in a world where I think almost anyone deserves a second chance and the benefit of the doubt).
Like your parents probably told you (or at least should have), reputation is your most important asset, and what people think about you can make or break opportunities in life. No technology will ever change that — but services like LinkedIn can be a mercilessly efficient means for a bad rep to follow you.
Chad Dickerson's blog 
Scary thought in a way unless you’re a saint. Then again, how many of us really are?
Yes, we like to think of it as a self-cleansing mechanism. People who’ve done good work and maintained good relationships will get rewarded. A positive independent reference will seal the job. And I hope that many people who have done good work, but are not good at selling themselves, will get rewarded.
People who have not done well will probably avoid being on LinkedIn. But even that may not help since the reference feature can be used whether or not you are on LinkedIn–as long as one of your past bosses, reports or co-workers is on LinkedIn (and isn’t that true of virtually everyone with 5+ years of work experience?), you can get reference-checked through LinkedIn.
I think we just make it clear how small the (business) world really is, and I hope people will behave more in business as if they lived in a small town (where crime rates are low) rather than in a big city where they can hide behind anonymity, focus on short-term gain and hope to get away with it.
I think too much was expected of LinkedIn in the short term (behavior change is slow), but most people now understimate it’s likely long-term impact on business as we know it.