By Dr. Yossi Sheffi, LinkedIn Influencer
Many of the large companies that dominate world markets owe their strength and continuing growth to their underlying structure: a formidable network. Such networks have special economic characteristics which provide competitive advantage.
We are surrounded by networks: social networks, airline networks, highway networks, wireless networks, and numerous others. These entities contain points (“nodes”) connected by “links or “edges.”
Networks derive their strength from an interesting economic phenomenon known as the “network effect.” This is created when the addition of one element to the network (say a node or a member) improves the utility of all the network participants (nodes/members). In other words, any new element joining the community benefits the connectivity of the network as well as its member organizations.