Maxims for the Network Economy
Quotes from New Rules for the New Economy

The tricks of the intangible trade will become the tricks of your trade.

Communication – which in the end is what the digital technology and media are all about – is not just a sector of the economy. Communication IS the economy.

As tremendous as the influence of financial inventions have been, in the influence of network inventions will be as great, or greater.

As the world of chips and glass fibers and wireless waves goes, so goes the rest of the world.

The dynamic of our society, and particularly our new economy, will increasingly obey the logic of networks. Understanding how networks work will be the key to understanding how the economy works.

We are connecting everything to everything.

When we permit any object to transmit a small amount of data and to receive input from its neighborhood, we change an inert object into an animated node.

Dumb parts, properly constituted into a swarm, yield smart results.

The surest way to smartness is through massive dumbness.

The aim of swarm power is superior performance in a turbulent environment.

Complete surrender to the bottom is not what embracing swarm power is about.

Without some element of governance from the top, bottom-up control will freeze when options are many. Without some element of leadership, the many at the bottom will be paralysed with choices.

At present there is far more to be gained by pushing the boundaries of what can be done by the bottom than by focusing on what can be done at the top.

The great benefits reaped by the new economy in the coming decades will be due in large part to exploring and exploiting the power of decentralised and autonomous networks.

Mathematics says the sum value of a network increases as the square of the number of members. In other words, as the number of nodes in a network increases arithmetically, the value of the network increases exponentially. Adding a few more members can dramatically increase the value of the network.

The value of a network explodes as its membership increases, and then the value explosion sucks in yet more members, compounding the result.

In the industrial economy success was self-limiting; it obeyed the law of decreasing returns.

In the network economy, success is self-reinforcing; it obeys the law of increasing returns. The great innovation of Silicon Valley is not the wowie-zowie hardware and software it has invented. Silicon Valley's greatest "product" is the social organisation of its companies, and most important, the tangled web of former jobs, intimate colleagues, information leakage from one firm to the next, rapid company life cycles, and agile e mail culture. This social web, suffused into the warm hardware of jelly bean chips and copper neurons, creates a network economy.

It's a "hits" economy where resources flow to those that show some life. If a new novel, new product, or new service begins to succeed it is fed more; if it falters its left to wither.

A good definition of a network is organic behaviour in a technological matrix.

Everyday we see evidence of biological growth in technological systems. This is one of the marks of the network economy: that biology has taken root in technology. And this is one of the reasons why networks change everything.

Technology has become our culture, our culture technology.

In the past, an innovationÕs momentum indicated significance. Now, in the network environment, where biological behaviour reigns, significance precedes momentum.

In the network economy the more plentiful things become, the more valuable they become.

Every time a closed system opens, it begins to interact more directly with other existing systems, and therefore acquires all the value of those systems.

The value of an invention, company or technology increases exponentially as the number of systems in participates with increases linearly.

The more interconnected a technology is, the more opportunities it spawns for both use and misuse.

The law of plentitude is most accurately rendered thus: In a network, the more opportunities that are taken, the faster new opportunities arise.

A network is a possibility factory.

Because prices move inexorably towards the free, the best move in the network economy is to anticipate this cheapness.

All items that can be copied, both tangible and intangible, adhere to the law of inverted pricing and become cheaper as they improve.

If goods and services become more valuable as they become more plentiful, and if they become cheaper as they become valuable, then the natural extension of this logic says that the most valuable things of all should be those that are ubiquitous and free.

Following the free also works in the other direction. If one way to increase product value is to make products free, then many things now free may contain potential value not yet perceived.

The only factor becoming scarce in a world of abudance is human attention.

The migration from ad hoc use to commercialisation cannot be rushed. To reach ubiquity you have to pass through sharing.

Releasing incomplete 'buggy' products is not cost-cutting desperation; it is the shrewdest way to complete a product when your customers are smarter than you are.

The first thing the network economy reforms is our identity.

Individual allegiance moves away from firms and toward networks and network platforms.

In the network economy a firm's primary focus shifts from maximizing the firm«s value to maximizing the network's value.

In the network economy, ever-less energy is needed to complete a single transaction, but ever-more effort is needed to agree on what pattern the transaction should follow.

As more of the economy migrates to intangibles, more of the economy will require standards.

Eventually technical standards will become as important as laws.

To prosper, feed the web first.

Bit by bit the logic of the network will overtake every we atom we deal with.

Because information trumps mass, all commerce migrates to the network economy.

There can be no expertise in innovation unless there is also expertise in demolishing the ensconced.

Letting go at the top is not an act against perfection, but against short-sightedness.

Because skill guilds constrain (and defend) an organisation, it is often far easier to start a new organisation than to change a successful old one.

To maximise innovation, maximise the fringes.

Not every success needs to be abandoned drastically, but every success needs to be questioned drastically.

People will inhabit places, but increasingly the economy inhabits a space.

In the marketspace of networks, value flows in webs.

Everywhere networks go, intermediaries follow. The more nodes, the more middlemen.

The big will have a different kind of bigness. The network economy encourages the middle space. It supplies technology (which the industrial age could not) to nurture mid-sized wonders.

It takes a village to make a mall. Community precedes commerce.

The net shifts from mass media to mess media.

The network economy has moved from change to flux.

If the system settles into harmony and equilibrium it will eventually stagnate and die.

In a poetic sense the prime goal of the new economy is to undo – company by company, industry by industry – the industrial economy.

To achieve sustainable innovation you need to seek persistent disequilibrium. To seek persistent disequilibrium means that one must chase after disruption without succumbing to it, or retreating from it.

Change comes in various wavelengths. There are changes in the game, changes in the rules of the game, and changes in how the rules are changed.

The central economic imperative of the new economy is to amplify relationships.

When information is plentiful, peers take over.

Outsiders act as employees, employees act as outsiders. New relationships blur the roles of employees and customers to the point of unity. They reveal the customer and the company as one.

In the network economy, producing and consuming fuse into a single verb: prosuming. Since a relationship involves two members investing in it, its value increases twice as fast as one's investment.

As in other technological evolutions, relationship tech will begin its innovation in the avant garde, then work back to the familiar.

Expertise now resides in fanatical customers. The world's best experts on your product or service, don't work for your company. They are your customers, or a hobby tribe.

The net demands wiser customers.

Privacy is a type of conversation. Firms should view privacy not as some inconvenient obsession of customers that must be snuck around but more as a way to cultivate a genuine relationship.

One of the chief chores in the next economy is to restore the symmetry of knowledge.

The network economy is founded on technology, but can only be built on relationships. It starts with chips and ends with trust.

It is not money the Great Asymmetry accrues, nor energy, nor stuff. The origin of economic wealth begins in opportunities.

Every opportunity seized launches at least two new opportunities.

Don't solve problems, pursue opportunities.

There is more to be gained by producing more opportunities than by optimizing existing ones.

Productivity, however, is exactly the wrong thing to care about in the new economy.

The problem with trying to measure productivity is that it measures only how well people can do the wrong jobs. Any job that can be measured for productivity probably should be eliminated from the list of jobs that people do.

In the coming era, doing the exactly right next thing is far more fruitful than doing the same thing twice.

Extracted by Robert Poynton