Sheryl Sandberg, COO of Facebook and co-chair of the World Economic Forum’s Annual Meeting in Davos, explains how social media is changing everything from political protest to buying baby shoes.

The 2012 Annual Meeting will focus on the “Great Transformation” reshaping communities, companies and countries.  What is the most interesting transformation that you are experiencing or about to experience?

2011 proved to be a year where social media and services like Facebook became part of the fabric of everyday life around the world. People have embraced social media in both simple ways – from the chance reunions to staying in touch with family to sharing photos of new children – and the more profound – from New Zealanders and Japanese supporting the rebuilding after devastating earthquakes, to Iceland’s drafting of a new constitution online with citizens.

Social technologies are transforming communities, companies and countries in several ways. First, we are seeing a huge shift in the way technology is powering us as human beings. Today on the internet, people can know who you are if you want them to. You are yourself online for the first time. This has impacted the way we share and connect as people and communities.

Second, the way we are harnessing collective wisdom is different.  The internet promised to change everything about our lives, and it did change a lot – especially access to information. Being able to search the internet through search engines moved us leaps forward, as links and rankings by crowds of people helped everyone navigate the web and access information in a different way.  Now, due to social technologies and the way people are connected, we are moving away from this wisdom of crowds to the wisdom of friends. When I am in Europe for the World Economic Forum, I might find it interesting to know what the most popular restaurant is in Munich or Davos, but I am more likely to go to the restaurant my colleagues and friends recommend. This is a different way of finding information, and one that represents huge opportunities for us to get to know each other as people, as well as opportunities for businesses and developers. And we are already seeing businesses leverage this transformation to connect with their audiences and customers. We are also seeing small businesses use social media to grow, even in tough economic times.

Finally, social technologies and authentic identity are giving everyone, no matter who they are, a powerful individual voice. It used to be that in order to have that kind of voice – to reach more than the people you could see in a day – you had to be rich, famous, powerful, own a newspaper, or be a politician or celebrity.  Last year we saw that in Egypt, Wael Ghonim used his voice to help a country. Old rules no longer apply. Today new are rules being written, sometimes by people who know they are writing them but more often by people who don’t.

The second major area of focus for the Annual Meeting will be “shaping new models” in such areas as business, politics, economics and sustainability.  What is the new model that is foremost on your mind as you prepare for Davos?

The proliferation of social media and mobile technology applications has spawned an entirely new industry – dubbed the “App Economy”: the developers, creative people and entrepreneurs who are making the web more social.  The social model is one that is focused on innovating and building new things that people can use.  And this industry is booming.

From the biggest brands in the world to the smallest businesses, companies are redefining how they connect with their customers using social media.  And entire new enterprises are being built by the power of social. Using “social by design”, companies like Zynga and Wooga are remaking the way we play games online. Other companies like Spotify are reaching brand new audiences by leveraging the power of the social web. We see social companies becoming big and big companies becoming social.

What transformations are taking place in terms of job creation in your industry?

The role of the social media in supporting economic growth around the world has been underreported and underappreciated. In the US, the Facebook “App Economy” alone added some 235,000 new jobs and contributed more than US$12 billion in wages and benefits to the US economy in 2011, according to research from the University of Maryland’s Robert H. Smith School of Business.

Driving business growth through the social web is happening all over the world, not just in the US.  Milford Nissan, a small car dealership near Boston that started using Facebook in 2009, was able to open an additional location and hire a full time person to manage their Facebook pages, while the owner of BabyShop shoes, a kids’ shoe store in France, estimates that half of their new customers come from Facebook.

Business of all sizes are connecting with customers and driving sales in new and social ways.  And in all parts of the world that means more jobs.