6-28-2011 9-16-26 AMWe come across faulty notions of social networks all the time. Two that pop up a lot are that closed networks are more trusting. The other is that ‘strong-ties’ of like minded people are more productive. Both are false. Both are harmful and dangerous.

A closed network, or autarky, is simply the quality of striving to be self-sufficient. Usually the term is applied to political states or policies. It can be used for other scenarios.

Autarky exists whenever an network entity can survive or continue its activities without external assistance. Closed economies always eventually fail (or open up over time), e.g., Japan prior to 1850, Korea, Romania 1980s, Germany/Nazis 1930s, etc.

Naturally, prosperity depends on perpetually interacting with the environment of suppliers, talent, capital, markets, etc. For example, the enterprise and successful, modern corporations, internally and externally, are radically open network economies. No modern corporation is a closed network, economy or autarky.

Sometimes, families, fraternities, cults, political parties, etc., are perceived as autarkies. On the contrary, more often, these are simply homophilious social networks. They are well-studied and understood. 

6-28-2011 9-19-25 AM

The social network principle of homophily is simply that similarity breeds connection, i.e., ‘birds of a feather.’ It includes structures and network ties of every type, including marriage, friendship, work, advice, support, information transfer, exchange, membership, business and all other types of relationship. The result is that people’s personal networks are homogeneous with regard to many socio-demographic, behavioral, and intrapersonal characteristics.

Homophily can be problematic. ‘Closed’ networks sharply limits people’s social worlds and opportunity space. It has powerful implications for the information they receive, the attitudes they form, and the interactions they experience. Beware. Closed networks can fuel ignorance, poverty and despair. 

Also, there is no presumption of authentic trust in homophilious social network structures. Quite to the contrary, trust and its concomitant prosperity inhabits hetrophilious, open networks. 

Prosperity inhabits open, purposeful networks of ‘weak ties.’ Diverse networks are heterophilious and deliver network patterns to achieve a particular goal. These networks rely on openness to reach their desired outcome. 

Occasional abrogation of trust is a normal expectation of a healthy complex adaptive network. Trust is simply the willingness to be vulnerable. It’s how open economies exist in the first place. Thriving, open networks know how to heal, learn and adjust. As the saying goes, the real strength of networks is in ‘weak ties.’

Such diverse, complex interactions are ‘rich,’ i.e. any element in the system is affected and affects several other systems. Order is achieved by interaction, never by control or being closed. Fluid, open and perpetual interaction drives prosperity.

6-28-2011 9-21-00 AMClosed homophilious networks of strong ties are extremely dangerous. Bernie Madoff served an insidious homophilious social network. It’s called an ‘affinity scam.’ Attracting money into the Ponzi Scheme depended entirely on homophilious network patterns.

Victims inhabited a closed system with tons of false trust. Because it was homophilious there was no due diligence, a profound lack of judgment, poor information sharing, etc. Because it was homophilious it was unable to learn, heal and adjust.

Only Madoff ‘insiders’ could give him money. The affinity network precluded basic business judgment. The rest is history.

Beware of closed networks and homophilious social network patterns. Keep you networks diverse and open. To prosper, to protect yourself and your assets, for the most part, focus on open networks of weak and absent ties.

Finally, it is a perfectly acceptable practice to author, compose and reveal network patterns and structures best suited to creating the most favorable outcomes. This is routine and aids network comprehension and achievement in complex environments.


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