Last week, prompted by pressure from my son to be more clear about networks in my upcoming book - You Don't need a Job - You need a Need a Network - some new thoughts pushed their way to the front and I wanted to share them with you in sketch book form.
Please help me get them more clear.
The Network Effect and the Trust Network Effect - There is a difference that is important. In the standard network effect, the value of the network to each member is linked to the growth of the connections. It is transactional. So the more phones that are connected to the network, the more valuable the network is in utility to each member. This is the mechanical approach to networks.
For many people that I see using social media, this is their only goal. Many try and get as many "friends" as possible. If you are a real A lister - this works - you have influence. But for most people, having 7,000 friends on Facebook or Twitter doesn't mean a thing - IF YOU NEED SOMETHING.
I have been working a lot recently using Indiegogo and observing people who seek to raise money using crowd sourcing.
In every case that I have seen so far, the campaigns that worked had activated their core circle of trusted people who themselves had such a circle - who had such a circle and so on. It was this inner circle that did the work. The campaigns that just threw the ask out to the general network, tended to fail. There was no power to the general ask for help.
Why is this? If I have 3,000 friends on facebook - why don't they help me - they say they are committed but they don't act?
I think of my own behaviour. I will only act if a few people that I know well and trust ask me. For the rest, the answer is always no. How small is this group? Maybe 8 and no more that 30+ depending on the context.
This is my real network. I only act on strong ties not weak.
It may extend further on occasion to people who used to be in the inner circle but for whom time has passed and they have moved further out. So an ex close colleague or friend can call out of the blue and I will be ready to act. They remain people who have been trusted, Any of you who have served in the military will know this. When a ex shipmate or buddy calls, you go back immediately to where you used to be in trust.
I am seeing that this inner circle of trust is the "leverage". You have to pay attention to your reputation and to your inner network. To get you have to give. It's all barn building.
A high quality inner network is the goal.
This quality is all based on trust. So if I am right, then the drive for many friends is a waste of time and is based on the simple view of the network. We are not simple, we are complex humans! No Trust - No Commitment or Action.
The New Super Trust Leverage - Trust Platforms - What is new then and what I think is the Highland Park Game Changer - are platforms that create this level of trust among people who have never met!
Airbnb is a good example. Here is a platform that enables you to offer your place for rent to strangers. Etsy is another. Here is a platform that enables you to sell your crafts to strangers. Amazon is enabling a new publishing system for the "small" author. Visa is another. Visa is a platform that enables a retailer to take your money safely.
They key to all of these platforms is that they mediate and maintain high levels of trust. Thus enabling us to DO THINGS with small vendors and to be small vendors on a global scale.
They also do this at a very low cost. No Budget hotel chain can compete with Airbnb in price and value. No storefront with Etsy. No publisher can do what Amazon is doing for the small author. This trust mediation gives both sides of the transaction a deal that is impossible for the Factory model to replicate.
There is also a huge secondary impact. That is, as each of us buys from another in trust platforms, the trust that was at first mediated, becomes real. We tend to go back to the same places on Airbnb because we get to know and like each other. We get in touch with authors who use Kindle and start to have a real relationship with them.
So what I see is that the product of each successful transaction in trust platforms is the exponential increase in trust. This in turn increases the utility for all. The line between provider and consumer becomes blurred. This then is when an author can get crowd funding to help him write the new book! This is when the farmer can pre-sell his crop or meat in the spring for delivery in the fall.
The value is not confined to the connections alone but to the overall trust in the system.
This is the game changer. This is a much much better deal for all than the Highland Park system. It was Highland Park that overthrew the old local and artisan system because it was then a better deal for all. So I think Trust Platforms will overthrow the Highland Park world.
Highland Park was the new factory that Henry Ford opened in 1910 that had all the new features of the Production Line installed. It was the DNA of the process that would be at the heart of all modern institutions. Mass Production killed the small and the local because it could offer a car for much less money than one made by hand by artisans. It also gave a large unskilled work force much more money than a day labourer job could. Both sides of the mass market were created.
This better deal meant that The small and the local got pushed to the fringe. The family farm nearly died. The local paper died. The bakery, dairy, butcher, general store, iron foundry all died. The local banker who knew everyone was no longer needed. The local doctor who had a stake in the health of his community was no longer needed. The local diner that held the community together was no longer needed. All were replaced by Highland Park. And so we ended up Bowling Alone - for as community died, so did Trust.
All became simple transactions.
We all came to depend on a few vast organizations for all that is important for us. Vast organizations that not only do not care for us but work only for their own needs now. For the Highland Park Contract has been broken. Now most of us have the wages of day labourers, if we are lucky! Now most of the products and services are of low quality or worse, hurt us.
We are ready for something better and something better is here.
It's early days. It is maybe the equivalent of 1920. But I see Trust Platforms taking over the role of Highland Parks. They will do this because they are a better system. They offer more value to all. The evolutionary Tipping Point is 20%. Each time the trust platform takes 20% of the gross out of the sector, the Highland Park alternative will fall. 20 employees at Craigslist did this and look what happened to the mass production newspapers.
When 20% of kids choose the Platform rather than school, most of the universities will fold. When 20% of us stop going to the doctor for our chronic illness, how will they and big pharma cope? Coming will be a local food system that is based on trust and real food. When 20% of us buy all our food locally, how will Big Food cope?
Highland Park is trapped by their fixed process costs. With a 20% loss of gross and a trend of lower gross as the network grows, they cannot stand.
Evolution will work quite well and has a good chance of solving what seems to be the impossible world situation in front of us.