[MUSIC] So now we're going to get into some very, very interesting material that relates to what we were discussing earlier about lead users and people who are important to reach out to. We're going to examine that issue in more detail by trying to understand how information spreads from one person to the next, either in an offline environment, or an online environment. And what it means for influence and contagion to take place. So let me just give a little bit of a road map of where we're going to go with this material. So first of all, I'm going to show you a very, very controversial study. And I'm going to ask you to click on the link to play it yourself. It's about a minute 45 seconds. It's a study on the spread of obesity through a network of people in Boston. I think you'll find it interesting just in terms of understanding what a network really is and what the elements are. I'm making the summarize by definition what things take place in networks, do you need individuals, do you need them to be connected and so on. And then I'm going to talk about neighborhoods. So a neighborhood is just another unit of analysis. Instead of the individual, we're going to think about locations. And then we'll wrap everything together with four examples of research that have been done on the following topics. The first example is going to be some of my own research on Internet retailing. And we're going to look at how a company called netgrocer.com spread itself throughout the United States through a process of word of mouth, contagion, and so on. Secondly, we're going to look at another study done by some colleagues at UCLA that tried to examine who's influential in the social network, and who's not. So think of that as being in Facebook, or one of those other social networking environments. The third study is again going back now into the off line world. It's going to be looking at a network of physicians in Los Angeles. And what influences who prescribes what drugs to their patients. So, if I'm friends with Chris, Chris now is the doctor, he's our all-purpose videographer and he's prescribing a certain kind of drug to his patients, maybe because he and I are friends or he's influencing me, I'm going to prescribe the same drug. That's a study done by some colleagues here at the Wharton School in conjunction with another professor at USC. Then the final study is another one of my own. This is also going to look at diffusion for an Internet retailing company. But this time, the company's called Bonobos. It's a fashion retailer. So let's begin. here's the controversial study. And it's actually out of a book by some professors at Harvard. And I'd like you just to click on the link and go through it. But I'm just showing a visual here on the screen. Basically, what the study proports to show is that obesity spreads almost like a, a virus. Like a flu, or something else, that's why it's controversial, from people who are in a network. And what that means is if I'm a friend of somebody. Who's perhaps struggling a little bit with obesity then I'm more likely to become obese than somebody who's not in that social network. That's why it's a little bit controversial because it's hard for us to get our heads around the idea of something like obesity, which is a physical thing, really spreading more like a virus which is a cold and we can imagine that being transmitted. So just play the video because I think it's a good way to understand some of the basic concepts. Again it's about a minute and 45 seconds. Now that you actually watched that, let me just sort of reiterate what the elements of networks are. And share what I think are some of the most interesting research findings here. So one of our colleagues at NYU, Sinan Aral, who does a lot of work in the area of networks, he says, really what a network is, is, involves pathways through which information and resources and support flow between people. So you've got to have a flow of something. You got to have a connection. And you must have people. Or, we could also extend this to, to neighborhoods. Now networks can either be physical. So it could be a social network of people who are going to the same church or the same club in Philadelphia. Or it could be virtual, like Facebook, LinkedIn, Twitter, and so on. Now what's really interesting here and what's written at the bottom of the slide is that networks usually exhibit something called homophily. Now, that's a buzzword. I don't like to be giving you guys too many buzzwords. But that's a good one to hang on to. If you mention it at the next party you're at, you'll be very popular. Trust me. So homophily means, birds of a feather flock together. So people who are using friends, people who are your close associates. Probably on average, are more like you, than they are just like random people. So people have similar cultural backgrounds, similar tastes, similar income levels, tend to kind of flock together, whether it's in a virtual neighborhood, or whether it's in a physical neighborhood. And we'll say more about this later on, because when we get to our third week, we're going to be looking at various forms of advertising and communication, including advertising over Facebook and we're going to take advantage of that principle of homophily to send advertisements to people who are friends of particular brands. So just bear that in mind. We'll be coming back to that later on. So, here's some of the definitions of the elements that you need to know when you think about what a network is. So a network can be really, really simple. It could be just two people. Chris and I, we're friends. That could be a simple network. So it could also be hundreds, or thousands, or even millions of people. I guess, by now, at least a billion people are connected in one big social network. And Facebook, I think even LinkedIn now is over 225, 250 million people. So in order for a network to exist you have to have nodes. Nodes can be either people or neighborhoods or some other unit. Normally we're thinking about them as people. You then need to have some kind of connection between people. And then also some ability to share information, share resources, and have exchange. So if you want to see some more background on that, again I've provided another YouTube link for you to be able to do so. Okay, so we also decide, when we go into a network what benefit are we going to get from that? So that's an important thing to keep in mind too. Is that entering a network, whether it's joining a local club, going to a local church, or participating in a social network, is a choice and presumably other people have made the same choice. That's why we may get the birds of a feather flocking together. People who have similar interests. we also decide the networks, whether they're real networks or social networks, virtual networks. How many people we want to be connected to. And then thirdly, at the bottom of the slide, an important principle is how embedded we are within a network. So imagine, for example, that I'm friends with Chris and a whole bunch of other people at the University of Pennsylvania. And I'm connected to almost everybody on the campus. Let's imagine that's true. If that were true, then I would be a very embedded person. Because I'd be connected to everyone who's then connected to each other. So in some sense, I might be more central than other people in th network. Okay, so, a little bit of interesting research that's been done I guess over the course of the last 40 or 50 years, about how networks work, and how influence works. And so I'm going to share with you the results of famous study that was done in New York City, that shows that when influence happens, it doesn't just have to happen through conversations, through Chris telling me something. I might be influenced just by seeing what other people are doing. So way back in 1968, some professors at Columbia did the following experiment. They put a person on a street corner in New York City and the person was, like this, looking up at the sky. And what they wanted to see was, would other people around also, upon seeing somebody looking up at the sky, also look up themselves? And they found in that particular instance, when that happened about 4%, or four people out of 100 would also just look up, for no other reason, than that they saw someone doing it. Now when the experiment is put 15 people around, just standing looking up at the sky, then about 40% of the people who weren't part of the experiment also just looked up. So what that tells us is, it tells us often times, there's pressure to do things when people around us are engaging in some sort of behavior. So keep that in mind, that influence can happen either through conversation. Or it can happen through observing things. And this is something that we'll come back to quite a few times as we proceed through our study here. another classic study of influence that was done in the 1960s, really, really helps underly the key concepts here. It was also repeated in 2002. So let me explain what that experiment is. So you might have heard of the phrase Six degrees of separation. It's a very common phrase, and it's often used to indicate that there's no more than six people between you and anyone else in the world. So all of us out there enjoying the Coursera class are connected by no more probably than six degrees. So what do I mean by that? Let me go back to the original study. So in the original study, people in Nebraska were asked by the researchers, the experiment, the experimenters. To write a letter to individuals who lived in a different city in the United States, in Boston. So again, let's imagine they were asked to send letters to people like Chris in Boston. Now the people in Nebraska, were not allowed to take the Boston phone book and look up the individual by name. What they had to do, was to write a letter and send that letter to somebody that they thought was closer to the person in Boston than they were. So imagine I'm living in Nebraska in the 1960s, and I'm scratching my head and I say, gee, I have a friend from college who's now living in New York City. New York City is closer to Boston than Nebraska is. Let me write to that person. And then that person repeats the same process. And what they found was it took about six steps, hence the term six degrees of separation. Now that same experiment was repeated by some professors who did something called The Small World Project, you can look that up on the Internet, in 2002, where they got 98,000 other people to communicate random people around the world, communicate with them. But this time not through physical letters, but through typing and sending emails. So I might be asked to send an email to someone who is an orthodontist who lives in Finland. I'm not allowed to Google that person and email them directly. I have to email somebody who I think is going to be more likely to know that person than I am. And again, it seemed to take about six steps. So isn't that fascinating. We're all connected by about six steps. Now that's connections but connections don't necessarily mean influence. It turns out that for influence, there are really just three levels or three steps that matter. What do I mean by that? So again let me think about my friend Chris in the example here. So Chris and I are friends. We're a first degree connection. So if I tell Chris, hey Chris, you should order all your detergent from soap.com. He might copy me. I might be able to influence his behavior. And then Chris might tell his younger brother, let's say. So now that's two steps outside. I had some influence over Chris's younger brother. And maybe Chris's younger brother's girlfriend starts doing the same thing. But I almost have zero influence over Chris's younger brother's girlfriend's college roommate. So going out four steps is just a bridge too far. So that's another very, very important thing to understand in terms of influence. Influence spreading out from you typically will not go more than about three steps. [MUSIC]
