Group Forming Networks & The Power Of Community Building

I am not particularly fond of various laws – Be it Moore’s Law, Gilder’s view or fore that matter even Metcalfe’s Law ,however profound they may sound to be. I do believe that these help in relating practical happenings to abstract higher order thinking – To this day am not sure what comes first the theory or the practice in the emerging technology/social phenomenon. Patricia Seybold in my view was amongst the pioneers to talk about the power of networking and community building, which we now see many web centric enterprises capitalize on). The guidelines she set out for how to succeed in eBusiness - build community, deliver personalized service, streamline your processes, and more - apply as much today as they did in the 1990s. Having said that I came across what is called as Reed’s law – an idea that proponents of social networks and the new generation web people are beginning to discuss often.

Reed's law is the assertion of David P. Reed that the utility of large networks, particularly social networks, can scale exponentially with the size of the network.(It was first cited in "The Law of the Pack," HBR years back). Even if the utility of groups being available to be joined is very small on a per-group basis, eventually the network effect of potential group membership can dominate the overall economics of the system. Reed’s idea is based on the assertion that business participates in many networks—perhaps the most important are supply networks that allows access to and bidding among suppliers and distribution networks that allows access to and competition among customers. The structure of these networks or market spaces, especially the value of the connectivity and relationships produced in these networks, can play a crucial role in defining the value of your business. If one can manage or influence the networks that connect to suppliers and customers to create more value for all concerned, that extra value can be used as a competitive weapon.Read here for a detailed overview.I particularly liked what Reed has written several years back -
Scale driven value shifts have already caused IBM subsidiary Lotus, the pioneer of enterprise groupware, to incorporate features into Notes/Domino to interconnect in a limited way with the faster-growing Internet. But Notes' enterprise focus makes it difficult to support ad hoc groups that live outside large enterprise boundaries or span multiple enterprises. Though the email capabilities of Notes can easily interconnect with other Internet email systems across boundaries to capture a fair share of Metcalfe's Law value as the Internet grows, Lotus has chosen an enterprise-oriented model for sales and an enterprise focused security model. That choice effectively limits GFN (Group Forming Networks) reach to a few islands scattered throughout a vast Internet. Thus scale driven value seems likely to shift dominance to new groupware products and business models that can capture exponential value growth by enabling all Internet users to affiliate flexibly. By facilitating easy ad hoc creation of "teamrooms", big shares of a scale driven value shift from email to ad hoc project team collaboration can happen better..