We are members of various communities. Some like our family, school friends and alumni networks have been with us for many years, while others (especially at work) may be more transient and built around specific tasks. In all of these networks, the need to communicate and share is universal. In many cases, email has been the only binding glue connecting everyone together.
What the Internet now makes possible is a move from conversation to conference. By being able to create spontaneous groups in social and work lives, we can begin to leverage the collaborative power of the Internet. As our interests change, so can our groups. The Net makes it easier to join and leave groups, especially across organizations and geographies. David Reed on the power of communities:
The obvious conclusion is that whoever forms the biggest, most robust communities will win. But the Group-Forming idea can be used to look well beyond the obvious and discriminate among strategies that are all billed as building communities. For instance, Internet auction pioneer Onsale, which buys closeout products and auctions them on its Web site, will see its value rise only in proportion to the number of users. On-line classifieds, which connect buyers to sellers on a peer-to-peer basis, should see a stronger, Metcalfe effect.
Ebay, which began as one person’s attempt to establish a market for Pez candy dispensers, should get an even more powerful Group-Forming effect because it helps members act in groups as they auction off and bid for products on-line. (Other economics work in favor of Ebay, too.
Because the Group-Forming effect will give it enormous volumes of business, it can charge a lower commission on sales. The low fees will attract more users and produce a virtuous circle. Also, because it’s Ebay’s customers who do the selling, Ebay doesn’t face any inventory or product-development issues.) The community idea applies to every company, because every company can establish powerful communities by sharing information among its suppliers, distributors, and customers and can figure out ways to collaborate with them on new products and services.
Why are these community networks so important? David Reed again:
Supply networks allow access to and bidding among suppliers and distribution networks that allows access to and competition among customers. The structure of these networks or market spaces, especially the value of the connectivity and relationships produced in these networks, can play a crucial role in defining the value of your business. If you can manage or influence the networks that connect you to suppliers and customers to create more value for all concerned, that extra value can be used as a competitive weapon. So paying attention to network value is a crucial strategic issue, especially as businesses move their customer and supplier relationships into the Net.
Over the next few columns, we will explore how the Internet can make a difference to an enterprise and its communities – customers, employees and suppliers.