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Why is network anatomy so important to characterize? Because structure always affects function.

– Steven H. Strogatz

Networks that seek commercial success must develop and maintain the ability not only to change in the face of highly competitive environments, they must also be able to adapt in ways that influence that environment.

– Robert Rycroft

“Everyday inventors don’t let themselves be limited like the rest of us do. They open their minds to the possibilities.”

– Rini Paiva, US National Inventors Hall of Fame

Yet the secret of evolution is the continual emergence of complexity. Simplicity brings a spareness, a grit; it cuts the fat. Yet complexity makes organisms like us possible in the first place.

– W. Brian Arthur

Natural selection may explain the survival of the fittest, but it can not explain the arrival of the fittest.

– Hugo De Vries

Key Definitions

Details
  • Network Effects: Network effects exist when the value of being a member of a network increases with the size of the network.
    • Direct Network Effects (DNE): Direct network effects are a form of network effects in which members of the network gain value from interacting or sharing resources  with other members of the network.
    • Indirect Network Effects (INE): Indirect network effects are a form of network effects in which content availability creates value.  Since larger networks attract greater supplies of content, they indirectly provide users with more value.
  • Externality: An externality is created when one person  takes an action that (inadvertently) has an impact on another person, and where the person making the decision does not take this additional impact into account.
  • Switching Costs: Switching costs include all the costs users incur when they leave old systems and suppliers and reestablish themselves with new ones.  Switching costs include:
    • Penalties incurred buy users to break contracts or end agreements with existing suppliers
    • Un-installation and/or disposal costs associated with removing old systems
    • Equipment and installation costs associated with installing new systems
    • Time and money costs associated with training users for the new system
    • Costs of downtime during the transition from the old to the new system
    • Costs of losing connectivity with members of old networks
    • Risks that new systems will not live up to expectations
  • Tipping Point or point of Critical Mass in technology adoption lifecycle: The point at which adoption becomes self-reinforcing.
  • Period: The length of time during which prices remain fixed and cannot be changed by providers.
  • Content Complementarity: Content complementarity is the degree to which later content complements or enhances the value of, as opposed to substitutes for, earlier content.