Posted by: DrAlanRae | March 30, 2009

How networks operate – 1

In today’s world it’s becoming more important to understand how networks operate.

People have always worked in networks – typically there are 2 approaches, one is to associate with a small group that supports you. This is traditional operating. The family works like this in Asian (or Italian!) communities. Modern versions like BNI and BRX work this way – a small tight knit group of individuals who meet regularly and share leads and breakfast.

However there have always been other types of networkers who join these close-knit groups. They have lots of weak ties to people and fulfil that friend of a friend function. Granovetter established that most job opportunities come through exactly this kind of weak tie.

However if you read into this you find that not all networkers are created equal. The defining experiment was carried out by someone called Stanley Milgram. He it was who established the 6 steps theory – that we are all connected to everyone in the world through 6 other people. He tested this by giving a letter addressed to an individual in New York to several hundred people and asked them to send this letter on a friend- of a friend basis to see what routes they took.

It turns out that the vast majority connected to this individual through just 3 individuals.

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This illustrates the guiding principle of networks – they are lumpy, uneven. Some connectors are very much more connected than others. This applies to networks generally – look at this map of the internet that Lucent produced in the 90s.

What you notice is that it’s very clustery. There are some really dense nodes in there that have loads of connections – while most have very few.

These are the points that lots of traffic goes through. In the traditional world sales agents are like this – they know lots of people and use their connection to do deals and generate money.

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It’s the same on-line – some people are just much more known and connected than others. You can see this in blogs. Here’s the blogosphere (L) as seen by Technorati which shows the power of blogs invading the traditional news network domains. What this says is that there are a mighty few and a million also-rans.

Does this remind you of Geoffrey Moore, the Gorillas and the Monkeys? – it should. We find the same patterns occurring in networks, markets and anywhere that people make a free-ish choice about what they do, read or whom they associate with.

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For the scientists among you it’s called Zipf’s law. What this says is that the second player in a market has half the market share of the number 1 player, the third has a third, the quarter has a quarter etc. If for the sake of argument we say that the leader has a 40% share then the number 2 has 20%, the number 3 has 16% and the number 4 has 10%. These are the chimps – after that you’re in monkey territory. This means you have to decide as part of your business strategy whether you are going to play in the fat-head or the long tail.

From 21 Business stories – notes from a business journey.

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Responses

  1. Yes, im a big fan of the traditional model of networking. Its something that we seem to have lost to some degree here in the UK – perhaps we have never really had this culture. This could go some way to explaining the relatively poor networking techniques that many of our businesses suffer from. They should do themselves and read your post.

  2. FANTASTIC!


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