Beyond Network Economics

Written By Mikkel Krenchel

Strategy 3.0

The Cultural Dividend and why the
leading theory of value creation needs an update

Roger Martin, Roger L. Martin Inc.
Mikkel Krenchel, Partner at ReD Associates

As Thomas Kuhn admonished us, when application of the dominant theory turns up important anomalies that it can’t explain, it’s time to consider other theories. Network economics has been the dominant theory of winning in business for

at least 40 years. But important anomalies, including TikTok and Hermès have arisen suggesting that we need a theory that goes beyond network economics, and its core premise that the key to winning is accumulating more customers or users than the competition. We call the theory the Cultural Dividend.

Read the full article below.

Acknowledgments:

This article is the outcome of in-depth discussions with a wide range of executives and thinkers including colleagues at ReD and participants in our Strategy 3.0 roundtables – hosted in New York, Paris, Copenhagen, and San Francisco – who pro- vided input on early drafts. Special thanks to Matthew Janney for editing the piece and to Charlotte Vangsgaard who, among other contributions, coined the term Cultural Dividend.

Mikkel Krenchel

As leader of ReD’s technology, communications, and media practice in North America, Mikkel has advised lead executive teams at the world’s largest social media companies, telecom providers and electronics manufacturers. He also has a variety of clients across the finance, energy, and industrials sectors on product development, sales/marketing, M&A and organizational change.As head of ReD’s emerging practice in integrated social science and data science, brings expertise in applying both qualitative and quantitative research methods to uncover patterns in our social fabric and drive adoption of new ideas, technologies, and offerings. In particular, Mikkel has spearheaded many business-to-business projects, building the practice of using the human sciences to understand what actually goes on when companies and other groups of individuals make decisions. His work has been published in Wired, Foreign Affairs, and VentureBeat. Mikkel has a degree in Sociology and International Studies from Yale University and is a former national team rower.

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