Design Principles for Open Networks

Digital technologies have significantly transformed human interactions. Initially technology supported communication that enabled human interactions to not only become effective (digital trace via chat/email history) but also efficient (asynchronous collaboration). Today, digital human interactions have progressed beyond communications. There are two noticeable changes that have happened.

First, digital human interactions have become multiway and multi channel. Humans are interacting with robots (bots), digital businesses (e.g. data processors, storage) and more through social media, chat, video and increasingly voice.

Second, digital human interactions are leading to digital transactions. Humans are transacting through digital commerce, transfering value (money, photos) and building social capital.

These two changes were largely fuelled by the rise of platforms. Platforms not only made transactions easier but improved user experience. As a result, stickiness among users increased as did the switching costs to another platform. Platforms amplified the intrinsic instinct of humans to be social in the digital world. Today, platforms have become indispensable.

Everything was fine until platforms became super powerful (read predatory) and exercised ‘platform overreach.’ This happens when platforms digress from their intrinsic purpose of providing a stage to deciding who has to be on the stage. This evolution or devolution, as one might see it, manifested in multiple forms, often under the guise of customer experience and activism. This move forced the technology community to think beyond platforms.

Open network protocols offer a viable alternative by providing decentralization as a feature, therefore, distributing power among the participating entities. This approach drastically minimizes platform overreach.

However, for users, switching from platforms to protocols isn’t straightforward because of the stickiness created by platforms. The transition to a new construct is more often than not a progressive journey that pivots on the design of open networks. The design must provide the benefits of centralization (at a minimum) in a decentralized construct. From my experience of working with platforms and open networks, here are the ten principles that can drive adoption of open networks.

The ten design principles for open networks

1. Foster trust among the members
For an open network to be effective, its members must trust each other so that the trust can eventually lead to transactions. Platforms invest in building trust as trust translates into more customers. Customers trust an Amazon or an Uber. In open networks, endorsement of members by an independent agency can enhance trust.

2. Optimize flow through the network
Networks are susceptible to congestion due to seasonality, high demand, special occasions, etc. Choice of network topology and its ability to transform based on situation (or context) can enable flow. e.g. ecommerce platforms temporarily increase their capacity during the festive seasons.

3. Build for reliability and resilience
Reliability and resilience have a direct impact on the user experience in a decentralized setup. An unreliable network that's not resilient can lower user engagement leading to irreversible consequences.

4. Ease and low cost of entry and exit
Frictionless onboarding has a compounding effect on user engagement, leading to stickiness. While platforms have mastered the art of onboarding, the same can’t be said for offboarding. Open networks must enable seamless onboarding while keeping the costs reasonable. The traditional and prevalent incentivization model of cashback won’t work.

5. Promote permissionless innovation at the edge
Innovation in a platform is fuelled by availability of venture capital(often infinite). In an open network, innovation is scattered amongst the member nodes - at the edge. Tapping and scaling ‘innovation at edge’ should be a network feature sans capital.

6. Incentivize creators who create value for the network
The power of open networks is determined by its members and their engagement with the network. When members in open networks create value for other members, they enhance the network’s power. Members can create value through network services such as digital onboarding and language translation. It's natural to incentivize such creators.

7. Facilitate frictionless user experience
No user likes a broken journey and platforms know this better than anybody else. A typical user journey in decentralized open networks has to jump through multiple hoops before realization. Networks must negate the undesired effect of this ‘change of hands’ to provide seamless, end-to-end user experiences.

8. Enhance discoverability of network members
In platforms, discoverability can be gamified to favor select participants. However, in open networks members have equal opportunity to be discovered. Open networks should have sufficient provisioning in the form of filters, tags and other discovery tools that allow members to enhance their discoverability.

9. Availability of multiple operators and service providers
Any network, whether open or closed, requires operators who run the network. e.g. telecom, internet, road and rail. Network operators may need service providers to either make the network usable or the operations efficient. Availability of multiple such players makes it easier for the members to choose their preferred operator.

10. Safe and secure financial transactions
Open networks that facilitate financial transactions among members must ensure safety and security parity of platforms. Privacy in open networks is much better than platforms. However, complete privacy in digital networks is usually by choice and not by design. A digital network always leaves an unintentional digital trace.

Overcoming the inertia to switch from platforms to protocols is primarily a function of the initial momentum coupled with user experience parity of a typical platform. The design principles, therefore, must be applied in context and in a manner that optimizes user experience in a decentralized construct. The internet and email are examples of completely ubiquitous open networks that we use regularly - internet being the most successful open network. UPI is an example of a successful homegrown open network. Such successful precedents should allay any initial hesitancy that users may have on moving from one construct to the other.