Network Effects

📄 70 — Network Effects

Definition

A product or system becomes more valuable as more people use it.

When to Use

• Platform strategy • Product design • Market analysis • Growth planning

How It Improves Reasoning

It explains why some systems grow explosively and others stagnate.

Steps

1. Identify the network.
2. Map how value increases with users.
3. Identify tipping points.
4. Strengthen positive feedback loops.

Example

Messaging apps become more valuable as more friends join.

Prompts

• “Identify network effects in this system.” • “How does value scale with adoption?”