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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Judith Williams who wrote (32443)	9/27/2000 9:03:44 PM
From: sditto	Respond to of 54805

Some thoughts from the field for your network project... Many management teams have an intuitive feel for some of the business model components which create network effects but few explicitly try to identify and fund programs for creating them. In this regard, I think it will be important for your project to identify and quantify both the potential and actual components found in each company you review. As I've posted previously, the Gorilla Game doesn't just unfold - management needs to play the game. The same holds true for the creation of network effects. In my consulting experience, the most important and difficult part of creating a potential Gorilla is using the impact of network effects to generate not just wide spread adoption but a tornado of rapid widespread adoption. From TRFM, this is the point when the mainstream decides to adopt a technology because everyone else is doing so and the cost of not changing is too high. This is a critical point in identifying what efforts to support and fund. Not many companies/products can get to this point but most won't even come close unless they explicitly try. As one step toward this goal, I often recommend that my clients try to envision and create a business model where their products become an integral part of the personal and professional lives of their customers, where users of the product can't imagine not buying and using the latest version, end users feel personally and professionally disdvantaged if they don't have access to the product, and companies are unable to recruit and retain employees if they don't adopt the products. These issues probably qualify as indirect/virtual network effects in your project model but in my experience they are as important as direct effects in creating a tornado and in many cases the only way companies can create network effects.