The Square and the Tower

What made humans great is their social intelligence. We do things together by forming social relationships. Some relationships are hierarchical, and others are not. The author calls the former hierarchy (tower) and the latter network (square).

The author argues that networks have played essential roles in history, although hierarchy, e.g., a king of a time, has been highlighted much more often. Ferguson tried to illustrate the role of networks in human history.

What kind of person do we call “well connected?” According to the author, there are three measures — (1) degree centrality, (2) betweenness centrality and (3) closeness centrality. In other words, (1) how many people is the person connected, (2) how many different networks can the person bridge, and (3) how many influential people is the one connected. The author illustrates that the great people in history are well connected in this sense, e.g., Henry Kissinger. (after reading the book, I now want to study how Kissinger extended his network)

The betweenness centrality plays a crucial role in innovation because innovation takes place when different networks interact. As we often make friends with similar people, the betweenness centrality becomes a rare asset.

Networks never sleep and keep changing. Quite often, networks have self-reinforcing power, as we often see the success of a person generates another success. One innovative thinker generates another. This nature of networks gets stronger as technology advances. Printing technology made significant changes in Europe in the 16th century. Internet brings about another big difference. Networks spread bad things quickly too — the current pandemic would never have happened at this pace if the world were not closely connected like today.

By citing many examples, the author argues the advantage of network-based organizations. Some interesting examples are:

  • East India Company: Ship’s captains often made illicit side trips, buying and selling on their own account. These private trading provided the weak links that knitted together otherwise disconnected regional clusters. It was one of the keys to the success of the EIC — it was more a network than a hierarchy. Significantly, its Dutch rival banned private trade by its employees. This may help explain why it ended up being superseded.
  • Rothschild: Its success is based on its network in Europe. They built the network with not just of agents and associated lesser financiers around Europe but also with politicians and high-ranking officials. Their own courier network made Rothschild the first company to know any news.
  • The British Empire: “A key reason for the British Empire’s scale and durability, then, was the relatively light touch of the central authority. Though its theory was hierarchical, its practice was to delegate considerable power to local rulers and private networks. Unlike Napoleon’s short-lived European empire, the British Empire was not run by a micro-managing genius, but by a club of gentlemanly amateurs, whose seemingly effortless superiority depended on the unsung strivings of local agents and native collaborators. The ‘head office’ was in London, but the ‘man on the spot’ enjoyed considerable autonomy, as long as he showed no signs of ‘going native’.

The persistence of network-based organizations also explains why the US and all empires in history failed to conquer Afghanistan. The country is fragmented into many ethnic groups and religious sects, so there is no “head.” It also explains the difficulty of abolishing distributed terror networks in the world.

The relative success of the British Empire tells a lot about the successful and long-lasting governance model in the world. Although certain discipline is necessary, too much aggression and oppression cause resistance, deteriorating the organizational performance. It is the fundamental philosophy of Gojo’s global governance model too.

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Founder & CEO, Gojo & Company, Inc.

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Taejun

Taejun

Founder & CEO, Gojo & Company, Inc.

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