By Simon Bond

Today’s leading organisations are network-centric and are creating remarkable economic returns by capitalising on network advantages, such as co-creation with their customers (Facebook); digital platforms (Amazon); shared assets (Uber and Airbnb); and big data insights (Netflix and Google).

Leaders and investors who want to participate in the network revolution need to envision their future, and the future of their industry, based on intangibles and networks, or risk falling behind.  

As recently as 1975, 83% of the market value of the S&P 500 companies was made up of tangible assets. In those days, leaders had to focus on plants, inventory, and production. By 2015, however, the proportions had reversed. In 2015, some 84% of market value was now composed of intangible assets. See graphic below.

As we write exhaustively, networks are subject to the law of increasing returns. The value in networks is found in the connectivity between nodes, and every additional node increases the value of the network exponentially. And when this growth comes at nearly zero marginal cost ... well, that’s why digital networks are expanding at an industry-gobbling pace.  

Networks tap in to the excess capacity of assets that previously were unrecognised (for example, the network’s professional relationships, or its ability to review restaurants) or under-utilised (for example, cars and guest bedrooms). In many cases, the cost to access these previously ignored assets is very low.  

Even more important, digital networks are inherently co-creative and user led. Most of us can’t help build highways, but all of us can post pictures of our children, friends and pets to Facebook. The participants on a network platform contribute the value themselves, whether it is content, art, information, or products.

Not only does contributing lead to a sense of ownership and increased affinity, but also it gives the participants outlets to express their desires, mastery, and talents.

As members of the network, we self-serve by participating in the platforms that best meet our needs.