INCREASING RETURNS

One more biological insight can be gleaned…

…from the success of Microsoft, FedEx, and the internet. In retrospect one can see that at some point in their history the momentum toward them became 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. Take the arrival of the phone network. How long can you hold out not having a phone? Only 6% of U.S. homes are still holding out.

In epidemiology, the point at which a disease has infected enough hosts that it must be considered a 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 be triggered at much lower points.

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 depresses tipping points below the levels of industrial times; it is as if the new bugs are more contagious–and more potent. It takes a smaller initial pool to lead to runaway dominance, sooner.

 

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This is a blog version of a book of mine first published in 1998. I am re-issuing it (two posts per week) unaltered on its 10th anniversary. Comments welcomed. More details here.
-- KK