Concept · Strategic Frameworks
Network Effects
Origin: Theodore Vail (early), Metcalfe, Shapiro & Varian
Biological Parallel
Network effects: value increases with network size. Mycorrhizal networks connecting forest trees become more valuable as more trees join—each additional member shares nutrients, chemical signals, and warning messages, strengthening the whole. Herding animals exhibit network effects: a herd of 100 detects predators better than 10 individuals, dilutes predation risk, and creates collective defense. But networks have coordination costs and congestion limits. Once mycorrhizal networks get too dense, fungal parasites exploit the connectivity, turning the network into a transmission highway for disease.