News Corp. Chairman and CEO Rupert Murdoch made a statement during the company’s annual meeting last year where he said:“We’re only at the beginning of two of the most profound social and economic trends of our age–globalization and digitalization,” rattling off a few of the company’s milestones of the past year.Besides Fox Interactive and all the other News Corp properties, much of Murdoch’s emphasis was on the success of MySpace and the fact that it turned profitable within the past year.Murdoch’s often refers to the success of news Corp being centered around creativity aimed at the globalization and digitalization in the new economy. News Corp has been known and for “breaking away from the traditional and creating the new”
What drives News Corp’s Success?
They understand the “laws of increasing returns in the new economy driven by a networked world”. Metcalfe’s law (“The value of a network increases exponentially as its users increase arithmetically”) and the law of increasing returns (“The more who use social networks, the more attractive networks become”). News Corp’s MySpace illustrates the third corollary of increasing returns: how small signals can suddenly become booms.
The social web encourage the successful to be yet more successful. The social web creates the tendency for those which are ahead to get further ahead; for those which loses advantage to lose further advantage.
Economist Brian Arthur discovered that when technological competitors were modeled in a computer, increasing returns favored one technology over the other—to the eventual demise of the unfortunate one . And “unfortunate” is the right word. According to Arthur’s research, the technology that came to dominate, thanks to increasing returns, was not necessarily the superior one. It was just the lucky one. Or the early one. Arthur writes: “If a product or a company or a technology—one of many competing in a market—gets ahead by chance or clever strategy, increasing returns can magnify this advantage, and the product or company can go on to lock in the market.”
Kevin Kelly writes “Being first or best sometimes helps, but not always. The outcome of competition in a network is not determined solely by the abilities of the competitors, but by tiny differences, including luck, that are greatly magnified by the power of positive feedback loops. The fate of competition is “path dependent” on minor nudges and hurdles that can “tip” the system in one direction or another. Final destiny cannot be predicted on the basis of exceptional attributes alone.”
“The archetypal case of a success explosion in a network economy is the Internet itself. As any proud old-time nethead will be happy to explain, the internet was a lonely (but thrilling!) cultural backwater for two decades before it showed up on the media radar. A graph of the number of internet hosts worldwide, starting in the 1970s, stays barely above the bottom line, until around 1991, when the global tally of hosts suddenly mushroomed, exponentially acting upward to take over the world.”
“The curves of Microsoft, the internet, fax machines and FedEx (I owe Net Gain author John Hagel credit for these four examples) are templates of exponential growth, compounding in a biological way. Such curves are almost the definition of a biological system. That’s one reason the network economy is often described most accurately in biological terms.
“Indeed, if the web feels like a frontier, it’s because for the first time in history we are witnessing biological growth in technological systems.”
A New Order of Things to Come
Individuals from around the world are tapping into the power and opportunities presented by the mediums of social networks. Those individuals who understand Metcalfe’s law, either by chance or by plan, will gain a significant competitive advantage as the “laws of increasing return” are a natural phenomena of biological growth in a networked world. Leveraging the opportunities of the networked world is largely driven by creativity on the fringes of change rather than by application of old knowledge to a new technological system.
Traditional business models and mindsets do not work in the new economy. The old creates conflict with the new because it doesn’t understand the nature nor the medium. A pebble of creativity can create a wave of change. Consider the story of David and Golliath. The giant was taken down by a young boy who used a pebble of creatively.
The global stream of conversational rivers are filled with creativity. What say you?