Strategies for a discontinuous future.

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Monday, March 12, 2007

Research Note: Ninged Again, Or the Second Fundamental Error of Post-Network Strategy

Dear Ning,

I like your new look.

I don't like your new strategy.

Here's why.

I think that, unfortunately, you have fundamentally misunderstood the economics of markets, networks, and communities - and so your strategy is deeply out of sync with the tectonic shifts in consumer behaviour which are reshaping the mediaverse.

The small world strategy - which is what you are employing - is a fundamental mismatch for the markets you are targeting. You are trying to solve problems that don't exist.

Let me offer you an existence proof, of sorts.

There is already a micro-community for almost everything under the sun.

Savile Row clothing? Check. Tennis geeks? Check. Hyperluxury Japanese denim? Check. Vintage analog synths? Check (and if you're selling a Memorymoog, email me :)

What do all of these have in common? Well, they're communities - not networks.

In short, you have made the second fundamental error of post-network strategy.

You've made it past the first one, which almost killed you last time - which was not understanding that markets, networks, and communities are the natural bottlenecks of the post-network economy. You didn't get this, so you gave prosumers too blank a canvas to draw on.

But now, you've given us a great example of the next great error: choosing the wrong edge strategy. You've chosen networks, when you should have chosen communities.

Now, this might seem trivial. But it's emphatically not.

The consumers you're targeting have already made their choices: they've chosen communities.

The question you should be asking is - why? Why do the economics of communities, rather than the economics of networks, dominate interaction in consumption microniches?

The answer's not that complicated - it has to do with why consumers are defecting to markets, networks, and communities in the first place: to economize on attention.

But we can do so in many different ways.

The, crucially, vitally important point is:Networks are as different from communities as markets are from networks. Each relies on a hugely distinctive - and mututally exclusive - form of collective intelligence, which drives different sources of value creation.

I think your challenge in the next year will be not trying to push networks - but understanding the different kinds of economics that live at the edges of the firm - and, of course, then being able, finally, to master the right ones; which, in this case, are those of communities, not networks.

NB - If you're unfamiliar with the terms/etc, try reading the markets, networks, and communities briefing...link is on the right.

-- umair // 1:44 PM //


It would be nice if you made a better distinction to what you mean by the words Market, Network, Community. It seems throughout your blog you use them and its unclear what you mean specifically.
// Blogger hypermatt // 5:21 PM

Ning = Geocities 2.0.
// Anonymous James // 10:13 PM

We know there are huge strategic changes happening on the supply side...but what about the demand side?

Micro-communities for tennis shoes, Savile Row, etc...and their impact on brands

You said it yourself: the real revolution is redefining inert brands into living microcultures.

To me, this entails brands taking more risk...for them to acceptable, humanistic players in real social interactions, they must inevitably make mistakes. This is an unavoidable side-effect of engaging in the real world...where their control is minimal.

To effectively communicate with consumers, brands/corporations must instill trust by being...non-sociopathic (did you ever see the documentary The Corporation?)

Any thoughts on this?
// Blogger Ethan B // 12:21 AM

Hi Hypermatt,

You can check the piece authored by Umair for Innovaro : http://www.bubblegeneration.com/2006/11/media-innovation-briefing.cfm

Umair : great come back !
// Anonymous Nicolas // 1:33 PM
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