Digital social networks should enhance innovation potential as they create novel combinations of resources, knowledge and ideas in the Schumpeteriansense of innovation. Evaluating the innovation potential of these social networks during this digital revolution is the research question this study seeks to answer. There is no doubt that social networks are a disruptive form of innovation, however do they foster innovation in return and if so, how? To answer this question, both quantitative and qualitative surveys methods have been combined. It appears that the interactive nature of social networksshould foster innovation by enabling diversity and information exchange between a wide variety of groups. Surprisingly, the empirical results from our surveys, both the personal interviews as well as online surveys provided somewhat negative results in regards to the “perceived” innovation impact of social networks. We refer to this as the “Digital Paradox”, an expression coined to illustrate that the diversity enabled by digital is not being leveraged to its full potential. Although a diverse group member is only a click away, thanks to digital, this does not necessarily create heterogeneity. On the contrary, it seems that digital is sometimes counterproductive by promoting heavy clustering between homogenous groups. Respondents acknowledged the benefits of social networks only at the very last stages of innovation, which also seems surprising. Furthermore we understand that the innovation potential of social networks is not fully realized at present within many enterprises due to organizational boundaries.