The Power of Community: Harnessing the Network Effect in Building Successful Ventures

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Glasp

Sep 27, 2023 • 4 min read

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The Power of Community: Harnessing the Network Effect in Building Successful Ventures

Introduction:

In today's digital age, the concept of a network effect may seem outdated, with electronic banking dominating the financial landscape. However, the truth is that the network effect still holds tremendous power in various aspects of our lives, including community building and entrepreneurship. This article explores the lessons we can learn from a successful community-building endeavor and the implications of the network effect in the banking industry.

Lessons from "立ち食い蕎麦放浪記":

In the fascinating story of "立ち食い蕎麦放浪記," we discover several key lessons that are applicable to any community-building venture:

1. Start with Passion and Adaptability:

The author emphasizes the importance of diving into a project with enthusiasm and a willingness to adapt or even abandon it if necessary. Starting with a strong sense of purpose and the ability to pivot when needed can lead to a resilient and successful community.

2. Find a Common Theme that Resonates:

To bring people together, it is crucial to have a unifying theme that resonates with the target audience. Creating content that people can relate to and find familiarity with cultivates a sense of belonging and encourages active participation.

3. Embrace Simplicity and Accessibility:

Complexity can be a barrier to entry, so keeping the content and activities simple and approachable is key. By eliminating unnecessary complexities, you create an environment where people feel comfortable contributing and engaging.

4. Set Clear Boundaries and Guidelines:

Establishing clear guidelines and "rules" for participation helps create a cohesive community. In the case of "立ち食い蕎麦放浪記," participants were required to share their experiences of eating standing soba noodles and check-in when posting. Such guidelines provide structure and consistency, fostering a sense of unity.

The Network Effect in the Banking Industry:

The network effect is not exclusive to community building but also plays a significant role in the banking industry. Research has shown that financial institutions with larger branch networks capture a disproportionate share of market deposits. This phenomenon can be attributed to several factors:

1. Branch Network Size and Deposit Growth:

Financial institutions with a larger branch network tend to experience higher average deposit sizes per branch. This is because each additional branch provides a boost to all preexisting branches, benefiting from the network effect. The positive relationship between network size and average branch size is statistically significant in many markets, highlighting the importance of concentrated deployment strategies.

2. Community Banks and Lending Levels:

While larger banks benefit from the network effect, community banks have their own advantages. These banks often maintain lending levels, even as larger banks focus on resolving problem loans rather than asset growth. As a result, some consumers opt for smaller banks, rewarding fiscal responsibility and boosting their ranking in terms of deposits per branch.

Implications and Actionable Advice:

Based on the insights gained from both the community-building endeavor and the banking industry, here are three actionable pieces of advice for building successful ventures:

1. Focus on Concentrated Deployment:

For smaller banks or community-based initiatives, it is essential to concentrate efforts in specific corridors or areas rather than scattering resources across an entire market. Building a cohesive network in one or two key corridors can lead to increased per-branch deposits, leveraging the network effect to your advantage.

2. Emphasize Relevance and Adaptability:

Continuously assess the relevance of your venture and be open to adapting or pivoting when necessary. By staying in tune with the needs and preferences of your target audience, you can ensure that your community or venture remains vibrant and engaging.

3. Prioritize Customer Experience and Responsiveness:

To foster a strong community or successful venture, it is crucial to prioritize the needs and perspectives of your participants or customers. Actively engage with feedback, provide excellent customer service, and address any issues promptly. By doing so, you build trust and loyalty, ensuring the longevity and growth of your community.

Conclusion:

The network effect remains a powerful concept in both community-building endeavors and the banking industry. By understanding the lessons from successful ventures and the implications of the network effect, we can apply these insights to create thriving communities and build successful ventures. With passion, adaptability, simplicity, and a customer-centric approach, we can harness the power of the network effect to achieve remarkable results.

Resource:

  1. "メンバー1万人超「立ち食い蕎麦放浪記」に学ぶ、広がるコミュニティ立ち上げのツボ|高橋龍征@「カオスマップの森」の主|note", https://note.com/conecuri/n/nf229e00a555f (Glasp)
  2. "The 'Network Effect' Persists Even in the Age of Electronic Banking", https://thefinancialbrand.com/65043/bank-branch-network-deposits/ (Glasp)

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