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The Networks Economy

In the past few months everyone has been talking about the Fourth Industrial Revolution, defined by World Economic Forum Founder Klaus Schwab as the transformation of humankind led by technological innovations in the physical, digital, and biological spheres.

This revolution will indeed change the world, will substitute humans with robots in many professions, and drastically change the way we live and interact with each other. But what is its biggest impact at this stage? Where can we see most of its economic and social value being created today? Networks.

Last week Microsoft bought LinkedIn for $26 billion, and this is much more than a common acquisition. Revolutions are about evolution and the survival of the fittest. The decision by Microsoft, the giant of the Third Industrial Revolution established fifty years ago with the advent of IT and electronics, to buy one of the most meaningful players of the networks economy is a strategic choice made to have a voice amongst the Facebooks and the new behemoths of the Fourth Industrial Revolution. It’s as if the leading producer of steam machines bought Ford. But who remembers that company now? And what will it be of Ford?

Software and services are now nothing more than commodities. Economic value and competitive advantage is now generated by networks and this is why they are growing in every industry. They are taking Adam Smith’s economies of scale concept and applying it from just a single pin factory to entire sectors. Networks allow systems based on trust, such as hospitality and commerce, to scale from local to global with the ease of a click. The success of AirBnb is built on the trust within its network of hosts and guests as well as for Amazon among its buyers and sellers, globally.

Change is happening also in the most risk-reluctant industries, such as pharma and the world of health and medicine. From the United States to Italy you can now contact doctors online, see their profiles and ratings, and trust their opinions and recommendations. The fact that the Third Industrial Revolution’s pioneer is betting on a Fourth Industrial Revolution champion shows they believe that the networks economy will lead their growth. This will happen more and more in every sector, including finance and banking with partnerships between incumbents and new champions.

By Enrica Sighinolfi, Founding Member of Opportunity Network 

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