Networks 3.0: Defined by digital dimensions

In the third quarter of 2016, the markets cheered a milestone event: The five most valuable public companies (by market capitalization) were, for the first time, all technology companies.

  • Competitive assessment
  • Opportunity and risk considerations
  • Financial evaluation

Thesis

The referenced “top-5” are representative of new networks* with new network effects, launched from a springboard of popular technology, perpetuated by multiple levels of data capture, enabled by (and enabling) multiple related products and applications.

Illustrations

In the five images that follow, a high-level profile of the network evolution of each subject company is presented, seeking to highlight distinct network levels and interrelations, ordered in thematic (rather than chronological) sequence, and organized to underscore a common structure that guides the otherwise individual natures.

Blueprint

While the classification of extensions and depth in the presented images can be an arbitrary exercise — with “extensions” intended to signify additions of a horizontal nature to the original asset, helping to increase market share or share of market attention; and “depth” meant to depict whole new layers, either technologically or by the addition of new products or complexity to the established system — the important thing is the recognition of added dimensions.

  1. First network effect: original product functionality improves with usage
  2. First data wealth: network effects enrich the data sets
  3. Network expansion: related product introductions add to depth of data layers
  4. Second network effect: network reach and data depth enrich the evolving asset and its integrated network products, improving the portfolio with usage and new network dimensions
  5. Optionality: opportunities for growth emerge from the deep new network asset

Commentary

There is a limited life to technologies and products in a software-based, high-disruption environment, leading to the increasing commoditization of both. As business and consumer offerings are increasingly challenged for differentiation, networks and their particular effects are emerging as the most effective and sustainable value creation.

  • Machine connectivity and optimization
  • Multi-sided marketplaces
  • Information exchanges
  • Internet of things (IoT)
  • Software subscription services
  • Mapping and logistics
  • Monitoring and alerts
  • by more mature businesses to branch out or reposition to defend with network effects against product or technology disruption that may occur
  • by strategic buyers to identify long-term needs in building, expanding, or enhancing their networks
  • by strategic sellers to identify potential targets, fit and opportunities to add value
  • by investors and other funding sources to assess upside, sustainability and risk

Investment, finance, strategy, execution in the networked tech economy. https://www.linkedin.com/in/danramsden