Why the network effect matters: A refresher for the future

When Alexander Graham Bell placed the world’s first telephone call in the New York spring of 1876, did he fully understand that the greatest thing he invented that day was not the voice call, but the world’s first network?

In addition to extending the reach of one’s voice, could he have foreseen that subsequent networks would someday allow global note exchange, worldwide garage sales, the ability to write history, participate in stock exchanges, attend virtual job fairs, make more informed purchases, or even meet a doctor or college professor “online”?

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Understandably, he couldn’t have. The above benefits wouldn’t have been possible without the millions and eventually billions of people participating, contributing, and shaping the network.

That’s why the network effect is so important, argues Dr. Steven Shepard, a veteran communications expert. “The whole of human civilization is greater than the sum of its parts,“ he says. “When disparate resources are connected, a superset of capability results that has far greater impact than any one individual.”

Consider biometric scanners, for example. Although originally intended to facilitate mobile payments (which facilitates e-commerce, which facilitates all commerce, and so forth), smartphone fingerprint readers might soon be used to authenticate democratic votes, Shepard predicts. “Think about it,” he says. “In countries where voting can result in stigmatization, or worse, physical harm, imagine the extraordinary power of being able to take part in a national election from the safety and anonymity of your own home.”

In other words, when technologies intended for one purpose combine with technologies intended for another, beautiful things can happen. And they often increase participation rates, which is a good thing for not only network participants, but democracy itself.

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But the network effect not only benefits society as a whole. It actually empowers and heightens the voice of individual participants. “We are now entering the era of the individual, in which the voice of a single person can be just as impactful as the voice of a large number or even an organization or country,” Shepard says.

For example, at-risk kids in remote areas that might have previously been ignored can still learn and participate in education and perhaps contribute to society in a big way someday. Similarly, healthcare and even surgical procedures can be delivered via networked devices to that same child, not to mention banking and commerce opportunities without the need for physical markets or infrastructure.

That in and of itself is exciting. But so are the electronic footprints, records, and behaviors we increasingly leave behind while taking part in the network. “Between the beginning of human civilization and 2003, we created five billion gigabytes of day,” Shepard explains. “Today, we generate that every six minutes.”

So not only does the network effect create strength in numbers. It exponentially increases our ability to learn more a lot faster. “These technologies and the resulting ‘big data’ now give us the ability to predict outcomes with a stunning degree of accuracy,” Shepard says, “a capability that further enhances the core functions of human society.”

Of course, the network effect ain’t all sunshine and rainbows. Too many people on not enough equipment leads to crippling congestion. And we cannot disregard the anti-social behavior  that this all empowering network cansometimes result in.

“In our headlong rush to embrace technology, we often miss the basic human interactions that give us so much more,” argues Dr. Tony Newton, co-author of The Network Effect. “The most common would be banging out an email when a phone call or a meeting might not only get a better result, but might take the exchange in an unexpectedly new direction.”

That human spontaneity, Shepard says, is ultimately a reflection of the network itself. Our chosen behaviors will either stymie or abet the network effect. So if we want to further accelerate education, healthcare, transparent government, economic growth, and everything in between, we must look for ways to improve “bright and shiny ecosystems instead of bright and shiny technology,” he says.

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