A Book List for Understanding How Networks Operate
In our book Rules to Break & Laws to Follow, Martha Rogers and I tried to convey our sense that as technology brings more and more "connectedness" to our world, our entire economic and social system is becoming more like a giant network. Whether you are talking about customers who are increasingly connected to each other, or employees and channel partners, or your portfolio of new product innovations, it is vital to understand how networks operate, and why.
Networks form by the rule of "preferential attachment," which means that each participant added to a network is more likely to be added by a connection to another participant who already has more connections. This is why influential customers become more influential at a faster rate than those who aren't influential. It's why the most visited Web sites gain visitors faster than others, and why wealthy people become wealthier at a faster rate than others. One consequence is that a small number of Web users exert an extreme amount of influence at many sites. The Wall Street Journal published an interesting article on this, "The Wizards of Buzz," in 2007.
In my posting a few days ago on this blog, Did Deregulation Cause the Financial Crisis?, one of Graham Hill's comments was that a financial crisis like this is, in reality, the end result of many different networked effects coming together in a kind of perfect storm. And this is a perfect example of the kind of randomness that an increasingly networked world is likely to treat us to.
So, if you really want to understand how networks will impact your business success as we become more and more connected, I'd recommend these books (in addition to ours!), and we've listed them sort of in order of increasing depth and complexity.
If you can read these books all the way to the end of the list it will change your whole perspective on business, and on how our economic system really operates:
• Secrets of Social Media Marketing: How to Use Online Conversations and Customer Communities to Turbo-Charge Your Business, by Paul Gillin. Gillin's latest and best - a series of "how to" check-list chapters with everything a business needs to know to wade in to social networks. There are a number of other books in this genre, but in my opinion this is one of the most straightforward and useful.
• The Black Swan: The Impact of the Highly Improbable, by Nassim Nicholas Taleb. Taleb has an obnoxiously self-important writing style, but what he has to say is actually very important.
• Ubiquity: Why Catastrophes Happen, by Mark Buchanan. Networks dominate nature, too - from weather to earthquakes, from chemical phase transitions to species extinctions.
• Linked: How Everything Is Connected to Everything Else and What It Means for Business, Science, and Everyday Life, by Albert-Laszlo Barabasi. This is for the more mathematically inclined, but you don't have to be a mathematician to understand Barabasi's main points.
• The Origin of Wealth: Evolution, Complexity, and the Radical Remaking of Economics, by Eric D. Beinhocker. The economy operates more like a network of evolutionary innovations than like a system of supply and demand always in equilibrium. (And by the way, just reading the more thoughtful reviews of this book on Amazon is worth a morning of your time.)
• Why Stock Markets Crash: Critical Events in Complex Financial Systems, by Didier Sornette. For this book a math degree really would help, but even if you skip over the equations it will radically alter your appreciation of markets.
• Hidden Order: How Adaptation Builds Complexity, by John H. Holland. Again, there's math involved. But Holland's book, based on a series of lectures delivered to the Santa Fe Institute, is definitely worth going back to school for, if you have to.
That's my list, anyway. Anyone else have a recommendation on this topic?
