The Network Effect is the idea that a product or service increases in value as more people utilize it. This is a key concept underlying the rise of the Network Economy. In the Network Economy the number of connections to a product or service drives its usability and value. Airbnb is a flagship member of the Network Economy and a prime example of growth via the Network Effect. The usefulness of the service has risen with the rise in users seeking accommodations and homeowners providing listings. In 2008 Airbnb guests numbered about 20 thousand. In 2017 the total number of guests were 100 million. This service clearly becomes more valuable as more travelers use it and more homeowners list their homes as available. Airbnb now offers more than three times the number of listings Marriott or Hilton offer. These numbers come from a company called Vizlly, (http://www.vizlly.com/blog-airbnb-infographic/) which offers services to hotels trying to fight back against Airbnb. In 2008, it would have been hard to imagine that such a company would even exist. Uber and Lyft are other examples of exponential growth via the Network Effect. If you own a taxi company, you are probably engaged in a desperate search on a daily basis for the transportation version of Vizlly.
The good news for those of us in Business Continuity is that we don’t need to worry about countering the Network Economy or the Network Effect; we need to imagine ways to leverage them. So, what service or product can we offer that can leverage the Network Effect? How can we bring a value to our organizations that will grow organically and improve in value as more people become involved? Our product is often viewed as not having a value. Our activities are seen as a drag on current staff. We ask them for valuable time in completing Business Impact Analyses (BIAs), building and updating recovery plans, and participating in exercises. The most conscientious among our coworkers understand the need and benefit of doing these things, but they would likely rank their enthusiasm for participating in them equal to paying their insurance premiums. The need is understood, but there is a perceived value only if something goes wrong.
The irony is that unless we provide value outside of when things go wrong, we can offer less value when things do go wrong. BIA results and recovery plans are less useful as more time expires between refreshes. What product or service can BC program leaders provide that could leverage the Network Effect? The answer is data. BC should be the great aggregators of organizational data. What is a recovery plan but coalesced information from a number of distinct sources? The potential is there to have assessments and plans receive automated updates from normal activities that are not related to BC. If our coworkers saw that their day-to-day activities would automatically have an update on their BIAs and plans, we would be in position to improve resilience by creating our own Network Economy. Operationalized Business Continuity is our answer. We can be like the leaders of the Network Economy: a transportation service without cars (Uber/Lyft), an accommodations service without properties (Airbnb), or a media service without content (Facebook). BC can be a data service without the ownership of any information. If we can operationalize business continuity, drawing people into our platform to enter information they need to capture for non-recovery related work processes, we can leverage organic updates to recovery plans that would be the seed of our Network Economy. We can provide data related to multiple areas without actually owning any data of our own.
The platform solution is the vehicle for a BC Network Effect. A BC solution that can provide or share an environment with IT, HR, Vendor Management, and other key business areas offers a chance at the Network Effect. Platform applications are devouring the market as companies look to drive ROI from their existing investment in IT and to create synergies that can’t be adequately supported via APIs. ServiceNow is such a platform. It is dominating its marketplace. ServiceNow, Meet the ‘Fastest-Growing’ $1 Billion Enterprise Software Firm, (https://www.investors.com/research/the-new-america/servicenow-salesforce-com-push-saas-frontier-as-rivalry-grows/), and it continues to generate organic growth within its clients’ environments. CEO John Donahoe was recently interviewed as part of the company’s Q4 earnings conference call.
Rob Owens: “So, maybe you can expand a little bit on the low-code, no-code opportunity and what that could mean just relative to the installed base and potential expansion there as well as your opportunity in the end market.”
John Donohoe: “Yes, Rob, I think the short answer is we don’t really know. But I think we have this platform that customers give us feedback that it’s easy to use, it’s fast to build on, it’s extensible. So, in addition to building outstanding out-of-the-box applications, we’re trying to incent the spread of that platform across enterprise. We’re going to do it a couple of ways. One, we’re investing heavily in our platform-as-a-business. And our platform-as-a-business, that is platform as our product line grew, as Mike mentioned earlier, very attractively last year. So, people are buying the platform with the intent of using it outside of our core applications as well as our core applications. Second, we are ceding the third-party development market, both inside companies and outside companies. So, our store, our ISVs in store grew 100%. 100% net new ACV growth from our partners through our store and OEM program last year. It’s still a relatively small program, but it’s a way where we can open up the ability to innovate on top of our platform. And we’re having a number of OEM partners like Nuvolo and Factor5 and Fairchild who have built applications on top of our platform, often a vertical solution or a specific use case that they’re gearing it toward. And then lastly, what the no-code platform is for, the no-code effort is to just make it easier inside the enterprise for non-IT, non-developer employees to extend the use of our platform in ways that even we can’t imagine. So, our goal is to unleash the next wave of innovation. Obviously, the more this happens, the stickier our platform becomes. It both opens up new doors of opportunity and makes it stickier. And so I think it’s too soon to tell to see how much it’s used.”
I should have given you a shameless-plug alert for Fairchild and MaestroRS, but the truth is that ServiceNow and Fairchild are not the only platform – software combination that can help your program achieve the operationalized level of efficiency that is the goal here. There are other platforms that could affect the same change. (They’re just not as good. )
On a serious note, this isn’t going to happen on a stand-alone product. The opposite of the Network Effect is building something on an island that forces users to learn something outside of their normal tool set that dictates a come-to-us approach, rather than a join-up network approach. The success of the platform is that it synthesizes disparate organization operations into a single access point simultaneously creating and sharing value. Standalone tools are not going improve in value, like an Airbnb; because there is just no reason for anyone who isn’t responsible for BIAs or plans to log in. There is no increase in value due to increase in use since the only users who will ever use the tool are only those who have been forced to do so. There is no value in using the tool for non-recovery purposes, so the spread of value is decidedly finite. One defining factor in the Network Economy is how infinite these products/services are. There are no limits for their use. (‘Build Platforms Not Products’ Cloud Elements – https://cdn2.hubspot.net/hubfs/440197/build-platforms-not-products-ebook-source.pdf?t=1519846124246)
ISO22301 encourages BC practitioners to understand the ‘context of the organization’ encouraging us to recognize and make connections to all areas of the enterprise. This understanding, and our efforts to make connections, will drive the creation of a culture of resilience. The idea of the Network Effect is an evolution of this idea. We can drive cultural change by aligning our efforts with the normal efforts of the organization. Look for opportunities to join into your organization, find synergies between their work and yours, rather than forcing them to you. Cloud Elements, cited earlier, offers a distinction between a single-sided business model and a multi-sided business model. Single-sided approaches solve an issue for a customer without thought to the network of the organization. Adopt a platform approach that instead employs a multi-sided model encouraging users to interact in a way that creates additional services in the process. Think of your program as a piece of the puzzle, rather than something that stands outside of it, measuring it, and never finding a place within it.