Networks Are Not New

Whenever you think something is new, look at history.  A lot of things that seem new are just different ways to enable the same thing.  They might be utilizing a new technology to enable an old process.

Networks are like that.

In the old days before online networking, the network was entirely personal.  Duh, right?  But that had real world implications.  Gossip that occurred between two people influenced the network more than it does today.  Isolated individuals were able to wield power.  It was almost impossible to go around them.  Not anymore.

My wife and I watched a documentary on J.D. Salinger the other day.  His total goal was to get published in The New Yorker magazine. For him it was the pinnacle.  Being there meant validation, sacks of fan mail and money.  That paradigm is gone, but the old network has just been replaced by a new network.

Think about the Pilgrims on the Mayflower.  If in 1600, the internet existed, think about how much easier it would have been for them.  When they set sail for Plymouth Rock, they only had their own network silo.  It took someone from their group to become a broker and network with the Indians.  With the internet, they would have been able to bring their existing networks across the ocean virtually.

When I did my MBA at Chicago Booth, I took two classes that teach about how networks operate.  They were Strategic Leadership, and Organizations and Incentives.  The research for those classes was done pre-internet, but it’s amazing how online networks operate very similar to the old people focused networks.

Even in online circles, there are power players.  Once those players are established, it’s very hard to knock them from their perch.  Others continue to rally around them until a new network with a new hierarchy is established.

Networks also function very similarly to markets.  Once a network has “liquidity”, it is just like a market.  Ironically, good networks are very hard to establish, just like new markets.   People are risk averse and afraid to try them.

I think it helps a lot to think of a new network just like you think about a market.  When analyzing it, look at all the forces that will impact it, and pay close attention to how risky it is to join and participate in the network.   Getting to the tipping point is the hardest part, and understanding exactly where the tipping point of a network is becomes a big challenge.


The next time someone tells you they have something radically new, look to history and see where it showed up before.  Then look at the outcomes, and how it developed prior, and I bet you see similarity to how it develops today.


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