Thursday, December 20, 2001

That Sneaky Exponential ::: What

That Sneaky Exponential ::: What if Metcalfe’s Law is wrong? That is, what if the value of a network isn’t proportional to the number of users, but actually exponential?

The idea behind Reed’s Law is that within a network of N users, users will naturally form groups from N-(N-1) to N-1 in size. That’s a big shift from Metcalfe’s Law, because it starts to get at the value represented by what the users know – and what they can accomplish when they aggregate their knowledge. Metcalfe looked at value as roughly equal to the number of connections in a network, while Reed is focused on the actions the users make – and the dynamics of the groups formed.

The implications of Reed’s discussion are far-reaching. If you buy into his assertions, it would suggest that the goal of a senior exec at a corporation ought to be to encourage (mandate?) the sharing of information. It is through this sharing that groups form, and through these groups that value will start manifesting itself to the organization.

Most interesting is that this starts to explain why truly large, distributed organizations will have the most to gain by encouraging these interactions.

More on this as I flesh these thoughts out…

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