Succeeding in business used to be a matter of how much your company could produce, how well it could distribute or sell those wares, and what price those goods or services could command. The contemporary business world is different; networks are everything.
Understanding the Impact of Connectedness
Several decades ago, manufacturing was king and producers like Ford and Chrysler held massive market shares — but that was then. Technology has made it possible to draw connections, even unlikely or indirect connections, across demographics and borders. Today, just four companies lead the way: Apple, Facebook, Google, and Microsoft. Together, they serve over one billion users — and it’s not like there is a second place. These companies fully dominate their spaces in a way that the great auto giants of yesteryear did post World War II.
“This dominance is possible because our highly linked systems of communication and data, and their users, crave efficiency and speed,” explains Joshua Cooper Ramo, co-CEO of Kissinger Associates and author of “The Seventh Sense.” “As more people post and probe and share their lives on YouTube and Instagram, they attract still more people to do the same.” It is called a network effect — “A system of any sort becomes better, faster, and more efficient for everyone as more people use it” — and it is what makes these new business leaders so powerful.
Choosing Networks Over Hierarchies
The key to this digital transformation is to abandon traditional hierarchical ways of thinking and embrace the architecture of your networks. “The prime distinction between hierarchies and networks is that hierarchies are designed to leverage the power of one, while networks naturally enable the power of many,” explains Rod Collins, Innovation Sherpa at Salt Flats, to the Huffington Post. “Hierarchical structures leverage the individual intelligence of the elite to organize the work of large numbers of unconnected people. In networks, however, power belongs to the connected and things get done through the application of collective intelligence dynamics that enable the self-organization of work among large numbers of people.” Effectively, networks are more effective than hierarchies because two heads are better than one.
Using Networks to Your Advantage
Once something is connected to a network, it changes and starts to evolve — or it should if it wants to be part of the evolution. That’s true of databases and software platforms as well as information flows and people. Aaron Frank of Singularity University provides a good example: “A bedroom is just a bedroom, until it’s connected to a network of travelers on Airbnb and becomes a hotel room. Your car can be transformed into a taxi when it’s connected to Uber’s vast community of riders.”
With each connection comes greater complexity and the network itself becomes increasingly entwined. Sometimes the interactions are surprising and the results can be unexpected, but understanding this connectedness is a sort of seventh sense in modern business. From online networks such as LinkedIn and Twitter, as well as personal branding, trade, finance, and more, the network is what matters most. You company needs to pay attention to its network and evolve with it if your brand is going to become (and remain) relevant.
Some companies are rooted in the old hierarchical ideas, but to succeed in today’s world, you will need to change the way you think. As a business owner, it is your responsibility to take advantage of these connected systems rather than being left behind by them.