4 The Law of Tipping Points

Significance precedes momentum

There is yet one more lesson to take from these primeval cases of the Network Economy. And here, another biological insight will be handy. In retrospect, one can see from these expo-curves that a point exists where the momentum was so overwhelming that success became a runaway event. Success became infectious, so to speak, and spread pervasively to the extent that it became difficult for the uninfected to avoid succumbing. (How long can you hold out not having a phone?)

In epidemiology, the point at which a disease has infected enough hosts that the infection moves from local illness to raging epidemic can be thought of as the tipping point. The contagion’s momentum has tipped from pushing uphill against all odds to rolling downhill with all odds behind it. In biology, the tipping points of fatal diseases are fairly high, but in technology, they seem to trigger at much lower percentages of victims or members.

There has always been a tipping point in any business, industrial or network, after which success feeds upon itself. However, the low fixed costs, insignificant marginal costs, and rapid distribution that we find in the Network Economy depress tipping points below the levels of industrial times; it is as if the new bugs are more contagious – and more potent. Smaller initial pools can lead to runaway dominance.

Lower tipping points, in turn, mean that the threshold of significance – the period before the tipping point during which a movement, growth, or innovation must be taken seriously – is also dramatically lower than it was during the industrial age. Detecting events while they are beneath this threshold is essential.

Major US retailers refused to pay attention to TV home-shopping networks during the 1980s because the number of people watching and buying from them was initially so small and marginalized that it did not meet the established level of retail significance. Instead of heeding the new subtle threshold of network economics, the retailers waited until the alarm of the tipping point sounded, which meant, by definition, that it was too late for them to cash in.

In the past, an innovation’s momentum indicated significance. Now, in the network environment, significance precedes momentum.

Biologists tell a parable of the lily leaf, which doubles in size every day. The day before it completely covers the pond, the water is only half covered, and the day before that, only a quarter covered, and the day before that, only a measly eighth. So, while the lily grows imperceptibly all summer long, only in the last week of the cycle would most bystanders notice its “sudden” appearance. But by then, it is far past the tipping point.

The Network Economy is a lily pond. The Web, as one example, is a leaf doubling in size every six months. MUDs and MOOs, Teledesic phones, wireless data ports, collaborative bots, and remote solid state sensors are also leaves in the network lily pond. Right now, they are just itsy-bitsy lily cells merrily festering at the beginning of a hot network summer.

In the Network Economy, significance precedes momentum.

Рубрики: | Дата публикации: 12.07.2010

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