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THE COMPLETE PRODUCT STRATEGY GUIDE — PART 4
How to build your strategy so it has its own network effect
Network effects are a staple of the digital age: the same principles which make them powerful can be applied to strategy and business model design.
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Network effects have become a staple of the digital age, underpinning the value propositions of products as varied as operating systems, eCommerce apps and social networks. Many of the same principles apply to strategy and business model design.
What is a network effect?
Networks are systems of interconnected things. A network effect is when the addition of more things to the network increases the total value of the system.
Network effect: (noun) a phenomenon whereby a product or service gains additional value as the number of participants increases.
The quintessential example is the telephone. A single phone is useless. However, for every additional phone added to the network, the utility increases exponentially. 2 phones have 1 possible connection, while 5 phones have 10 and 20 phones have 190.