People often talk about network effects, but
network effects are slightly different than social networks.
What network effects mean is that a product or service is more valuable,
the more other people that are doing it.
So take, for example, a fax machine.
If you were the first person to buy a fax machine,
it probably wasn't very useful cuz there is no one else to send a fax to.
In fact, even if there were 100 people using a fax machine,
it's still not very useful.
Unless those 100 people were people that you knew well and
were the ones you wanted to send a fax, it wasn't very helpful.
And so the value of the fax machine depends on the number of other
people using it.
The same with eBay for example.
eBay and other services marketplaces where buyers and
sellers come to meet are the more useful, the more people that are there.
Does this help or hurt diffusion?
Well, at the beginning, it often hurts.
At the beginning of a fax machine, it's hard to get it off the ground,
to get it to catch on, because no one wants to be the first person to buy it.
Who wants to be the first person or even the 100th person on Facebook?
If no one else is there, it's not very valuable.
So, at the beginning, network effects often slow diffusion, but later on,
they can actually speed it up because once enough people are in there,
once enough people are doing something, it'll catch on even faster.
Slow at the beginning, but helping later on.
But even beyond the number of others, the pattern of social ties matters as well.
As we've started to talk about, social ties are the bridges that help us get
information and influence off an island.
Imagine, for example, that you live in Singapore and
you wanna get a new product to catch on in the US.
You share that information with someone you know in the US, that'll help.
But what if you don't know anybody in the US?
Well, you might go to one of your friends who knows somebody in the US and
try to use them to help spread the word.
That particular friend, or
the few friends you might have that know someone in the US, will be very useful.
But what if instead you wanna get that information to someone in London?
Well, there, there might be a different set of of people in your social network
that know someone in London and will help the information get there.
It's not just about how popular those people are, or how many friends they have,
position matters as well.
Does that specific person happen to know someone else in the social network
that can get your information there?
It's a little bit like bridges between different disconnected islands.
Cars can cross the different bridges, but only certain cars can go over those
bridges, and if there's no bridge between two islands, it's going to be difficult
for the information and the influence to cross over.
You can see this concretely when you look at smoking over time.
Over the number of years,
smoking has been decreasing in its prevalence around the world.
And when researchers looked at people stopping smoking,
they found that it tended to happen in clusters.
If you take a picture of a social network and you look at the number of smokers,
it wasn't just that individual smokers stopped smoking.
Whole clusters of people stopped smoking at similar points in time.
If one friend stopped,
other people that were connected to them became more likely to stop.
Smokers moved to the periphery of the network, and there were three degrees of
influence, as we discussed at the beginning of this section.
People are not only influenced by people they knew, but
by others they knew who knew others who knew others, and so on.
And so influence can spread through a network,
not just from one person to the other.
One great example of this was a study that was done a number of years ago called
the Small World study.
It was done in the early 60s and
researchers were interested in seeing whether information could go from any
person in the world to any other person in the world.
They sent people a number of packages, people who lived in Nebraska and Kansas.
And they asked them to get that package to Boston.
If they knew someone, the person that received the package who lived in Boston,
they could send to that person directly.
But if they didn't know someone, they were supposed to send it to whomever they knew
who could get the package there as quickly as possible.
Any friend or relative who might speed the package along its way.
And the researcher wondered, well, would any of the packages get there?
And if so, how long would it take?
Well, it turned out that many of the package didn't reach their destination.
It's hard to know whether people weren't motivated to share them or
they just didn't know someone.
But those that did took about five or six hops, and
that's where we get the famous phrase, six degrees of separation.
Given the number of friends that people have though, why were there so
many degrees of separation?
You can imagine, well, if each person has 100 friends, and each of those friends has
100 friends, and so on, that number should get very big very quickly.
It should take less than six ties to get that package to its destination.
So why was it so slow?
Well there are two key reasons, the first we talked about previously is homophily,
people tend to be friends with similar others.
But what that means is that they tend to be friends with a lot of their
friends' friends.
Well you may have 100 friends, and your friend may have 100 friends,
some of their friends are the same as your friends.
The number of ties don't just multiply.
It takes longer for things to get from one side of the world to the other.
And the second is that we don't always know the fastest route.
Just like we talked about previously,
it's not easy necessarily to know what our network looks like.
That in part is the power of social media.
Now social media technologies like LinkedIn can tell us who we know who works
at a company, or the fastest path to get that information there.
It becomes much faster to reach particular individuals.
But importantly, 48% of completed chains went through three people.
You might wonder, who are these people?
Are they more infuential or not?
If we had a new product,
should we target these people in terms of getting that product to catch on?
And that's what we'll talk about next.
