Network Logic - Index of

Network logic
culmination of the cluster of new technologies based on the electric
motor, developed in the late nineteenth century and diffused during
the early twentieth century, as culminating in the Fordist model of
production and mass consumer society.
The economies of scale and high initial capital requirements for
these mass-production plants favoured the emergence of very large
conglomerate companies. The early part of the twentieth century saw
a period of dramatic industrial consolidation, with the number of
firms in most industries shrinking from the hundreds to the handfuls
– most dramatically in the automobile and electrical goods industries
themselves.
Today’s new technologies and the flow of service
It would be an exaggeration to say that these earlier forces shaping
corporate organisation have been swept away. On the contrary,
economies of scale are more important than ever in many significant
industries – more important because if they can be exploited on a
global scale they can give a business a near impregnable competitive
advantage. And more important too because of the network
externalities or initial research and development costs involved in
many important new goods – consider software or biotech products.
In these cases spending on research and development is a kind of
strategic arms race in which it is getting harder and harder for new
competitors to enter the business. Big is definitely better in these
cases.
On the other hand, new opportunities are opening up due to the
fragmentation of demand. There has been an explosion in the choice
offered to consumers thanks to the increased flow of information.
Consumers are better able to communicate their specific preferences
to companies. Companies are better able to collect and act on that
information, through improved logistics and vastly more flexible
networked production systems.
Nobody ever thought quantity was the spice of life. When our basic
needs are met, we seek to meet additional wants in varied ways. So we
have seen in recent years an explosion in quality and variety. Henry
172 Demos