The new web economics and how to take advantage of it: some pointers.
January 20th, 2009 by Talat | Filed under Entrepreneurship, Internet, Mathematics, Short Posts, Technology.
Courtsey : http://www.cindoc.csic.es
Imagine millions of neurons made up of simple chemical substances. And when they are meshed together they give rise to an amazing phenomena what we call as human brain.The magic of human brain does not occur because of the individual neurons but because of the way they are connected. Any system has two parts: component and connections. Almost always it is the type of connections which govern the system’s behavior.And those connections give rise to behavior which none of the individual components perform: something totally novel.
World Wide Web is similar to brain in this regard.We all are neurons and the internet is the emerging brain.Even though the complexity of the connection hasn’t reached a level as to show a distinct emergent characteristic, it still shows some typical behavior of dynamically connected graphs. And those behaviors get translated into the web economy.Typical cycles of boom and bust is one example.So, when web economy has a bubble, which eventually bursts, it shouldn’t be a surprise.Boom and bust cycles are its mathematical properties owing to its dynamically connected nature. It will always be like this and never an equilibrium.
Some of the properties of such complex systems are as follows:
Dynamics: Web is alive. It is ever changing and the system is open.It is non linear, which means that very small changes can sometimes give rise to very big effects. And the most important thing is that it does not have an equilibrium state. The openness of the system ensures that it never reaches an equilibrium. Hence, you cannot rest on your laurels here, because there is no equilibrium, soon the dynamics may change drastically to put you out of the game.
Networks: Due to a large number of nodes and their ability to connect we see the network effect.And all the mathematical rules of network apply here. Hence, network or graph theory is highly relevant to understanding the web market. Social apps give an added complexity and richness to the system, rife for building new marketing models. The possibilities of innovation in economics have never been so high before internet(and so underutilized).Social Networks(like MySpace,FaceBook etc) are good avenue to test marketing and extend it to the larger network that internet is.
Emergence: Self organization is one of the primary characteristics of complex systems.Various agents or users acting on their own self interest give rise to a global emergent behavior of the system. Just like ants give rise to colony from bottom up, without any external supervision, internet also is giving rise to a system behavior of its own, bottom-up. There is a big opportunity to understand it and take advantage of that understanding in propelling the web economy farther.
Evolution: When lots of agents(in this case web apps) compete to rise to the top, evolution kicks in.And it follows all the laws of evolution, just like in biology.The basic algorithm of evolution is dead simple: select, eliminate, replicate. Evolution select the candidates according to its fitness function.It eliminates the losers. And it replicates and enhances the candidates which are the winners, while producing new one for further application of the evolution algorithm.Decoding the web’s fitness function is key to surging ahead in the game.
One of the basic difference between the general economy and web economy is the latter’s extremely high degree of connectivity and the ease of making connections. This gives rise to a whole new science. Studying it will help businesses make even more intelligent marketing plans. The problem is that our present success in the web economy(despite the bust) blinds us to the immense possibilities which are wide open to us. It is like after inventing wheel you lose sight that you can also fly. In the internet business we are on wheels and we are bent on making better and better wheels while the possibility of flying lies unharnessed.
(PS: The current post was intended to be smaller, but even after editing it a lot I cannot make it even smaller without losing the full message. Nevertheless I will categories it as “short posts”.)
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Tags: Applications, Combinatorics, Complex systems, Connectivity, Emergence, Graph theory, Human brain, Math, World Wide Web
