Network Society course (III). Enrique Dans: Organizations in the Network Society (I)

Notes from the course Network Society: Social Changes, Organizations and Citizens, Barcelona, 15-17 October, 2008.

Organizations in the Network Society
Enrique Dans, Instituto de Empresa

The evolution from the oral tradition, to writing, to the press is that of making it possible, between people and along time, communication: first, is lasts; then, is can be replicated. And it was put at the service of the society at a “reasonable” cost. Same happened with the media (TV, radio, etc.) revolution. But still it had a cost, and thus, timespan was expensive and not accessible by everyone. The Internet opens the box.

What’s the impact on organizations?

Ronald Coase: firms exist because of transaction costs.

But now, we can see that these transaction costs have dropped and many people can engage in shared projects at lowest costs [see below, Benkler].

Intellectual property rights are, systematically seen as a barrier, as a new transaction cost that seems (a) useless and (b) induces to circumvention.

A Netocracy is arising that demands a reflection about the needs to rethink some long-established conventions, as Tim Berners-Lee de facto did in designing the World Wide Web.

Some examples of new organizations
  • The real innovation of was not selling books online, but rearranging the shelves of the bookshop for each and every customer that “entered” the shop… at (almost) zero cost.
  • Ebay made profitable selling some goods by (a) attracting massive amounts of customers while (b) keeping very low the transaction costs.
  • Google build an index by having people built it for free: when doing links, when doing searches, etc.
  • Napster made music distribution available at low transaction costs.
  • Blogger, making it easy to publish content online
  • BitTotrrent, to distribute huge amounts of data without having to own a powerful server and access to the Net
  • Friendster, to maintain one’s own network
  • Keyhole, to put yourself on the map and get geographically contextualized information
  • YouTube, to share videos
  • FaceBook, making it possible to develop applications and turning the social networking site into a platform

And more and more people are used to work based on the afore mentioned services, plus voice over IP, etc. But still there are different layers of adoption, where early adopters are way beyond the rest of the organizations, that still think about computers. But computer-centric technology/philosophy just does not allow this decentralized way of working, of cutting down transaction costs. Cloud computing is about the opposite of PC-centric computing.

Access to information and the economy of scarcity

We stick to old mental models, based on the scarcity of information, and we tend to collect and store information instead of learning (and teaching) how to find it. The added value is no more in finding, getting, storing the information, but on transforming it.

But it is true that to have changes being done, an added value proposal for that change is to be attached. And evidence shows that it is easier to begin from scratch (i.e. a brand new firm) that bring change on an existing infrastructure.

One added value: peeping through the keyhole. Knowing what’s been told about you / your enterprise.

Access to information and the economy of attention

The amount of information is so huge that it is very difficult to catch anyone’s (e.g. the custormer’s) attention. People shift between media with most ease and at no cost. And not only between media, but between platforms, e.g. from the TV to the Internet.

Some new strategies to catch the audiences’ attention necessarily have to be created: the presentation of the iPhone, the release of Google’s Chrome…

Using social networking software (SNS) might not be a goal in itself where there’s not a natural social network. But using SNS’s capabilities to improve other environments can add value to old or traditional processes.

On the other hand, it well might be a goal in itself, as digital natives will sooner or later enter the organizations and bring with them all the technologies and ways of working of the Generation Y. And, as a matter of fact, this is something that will surely happen.

More info

Benkler, Y. (2002). “Coase’s Penguin, or Linux and the Nature of the Firm”. In The Yale Law Journal, 112(3), 369–446. New Haven: The Yale Law Journal Company.


Network Society: Social Changes, Organizations and Citizens (2008)

If you need to cite this article in a formal way (i.e. for bibliographical purposes) I dare suggest:

Peña-López, I. (2008) “Network Society course (III). Enrique Dans: Organizations in the Network Society (I)” In ICTlogy, #61, October 2008. Barcelona: ICTlogy.
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