(Dan Patino, the VSNBlogger and fellow Okie, sent us this guest post on networks. Thanks, Dan!)
Linkedin.com: 20 Million experienced professionals from around the world
MySpace.com: 100 Million Accounts
Ning.com: 100,000 social networks
It is amazing how exponentially sites like Linkedin.com, MySpace.com, Ning.com and many others have grown over the past 2 to 5 years. It is almost as if someone turned the switch on the social networking button, and they all appeared before our eyes.
Well the truth is that they didn’t, but almost every product launch and business grows using the same strategies that these social networking sites have utilized to grow the users and accounts into the millions, or as some would say to go ‘Viral’. There strategies are not new, but it is something that every business should look to learn and utilize to their advantage. You see the new economy is driven by economies of network. In the end your network is what will make or break your business.
What are Network Effects?
A network effect is the value a person applies to a good or service by the number of users. Think of AT&T Wireless in Network service. Anyone you call within the AT&T Wireless network is not counted towards your minutes of use. So, the more people you see that are on an AT&T Wireless service plan, the more you will want to be apart of that network. You see the value of any network, whether it be AT&T Wireless, Linkdin.com or Ning.com, it is all about the population of people connected into the network. Size does matter.
The Key to an Economy of Network…Positive Feedback
So, now that we understand what Network effects are and how they play a big part in our information age economy. Let’s get down to the key that makes this engine run – POSITIVE FEEDBACK. Again, positive feedback is not a new concept in any market. I would imagine that when the first wheel was created one guy made an oval wheel and the guy next door made a perfectly round wheel, the guy with the positive feedback –the perfectly round wheel guy- probably beat out for market share in the wheel department. He won out all due to positive feedback from all the wheel buyers. Fast-forward to today’s environment, never has positive feedback been more important. Without it you might as well not exist. Look at e-Bay for example. The entire site is built upon getting positive feedback from people that have procured from you. If you don’t get positive feedback you soon will find yourself with the inability to sell on their site.
The Positive Feedback = ‘Viral’ Growth
The reason people say a product or site or blog has gone viral is because when one of these goods/services “takes off” and begins to grow it’s network of users takes on the same growth pattern as the spread of viral diseases, like the flu. There are basically three stages of viral growth:
Launch Stage: Market is learning about the product and there is very little growth;
Take-Off: This where the market catches on to the positive feedback and the product/service grows exponentially;
Level-Off: The market is now taken over by product and service and room for growth either through your domination of the market (think Microsoft) or your competition (think mortgage companies) and the room in the market for growth are small.
So Where Do You Focus to Go Viral?
First and last, focus on making people’s life easier, in some way you need to assure that the users of your product or service go away thinking you have added value to their life which in turn will equal ‘positive feedback’.
Robert Taylor, a leader in Information Studies, laid out his thoughts about the (6) areas one should look at to add value for information systems in his book Value-Added Processes in Information Systems, but I believe at their core they are adaptable to almost any industry. His (6) value-add areas are:
1. Ease of use
2. Noise reduction
3. Quality
4. Adaptability
5. Time savings
6. Cost savings
Each one of these will help to generate ‘positive feedback’ from the market and get you on the path towards growth.
Where are you on the S-curve? Are you launching? Wherever you are remember…stay in there, keep trying and always look for ways to grow, learn, and serve your market to the best of your abilities.
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Becky started Small Biz Survival in 2006 to share rural business and community building stories and ideas with other small town business people. She and her husband have a small cattle ranch and are lifelong entrepreneurs. Becky is an international speaker on small business and rural topics.
