Structural Holes And Life Sciences 4.0: A Social Network Analysis

This blog uses social network analysis to investigate how the life sciences industry is evolving to harness the power of data.

What is social network analysis?

Social network analysis examines the structure of social networks, where networks are characterised by nodes (people) and edges (the relationships that connect people). Social network analysis has emerged as a key technique in modern sociology, traditionally focussed on analysing friendships and acquaintances.

However, with the explosion of information in the 21st century, social network analysis is now used for a wide range of purposes including analysing social media networks, memes spread, disease transmission, money laundering, terrorism, organisational studies, and search engine page ranking.

What are structural holes?

Structural Holes was a concept originally developed by Ron Burt, Professor of Sociology and Strategy at the University of Chicago, in an attempt to explain the origin of differences in social capital. A structural hole can be understood as a gap between two individuals who have complementary sources of information.

Burt’s theory, outlined in his paper: “Structural Holes and Good Ideas” (2004), suggests that individuals hold certain positional advantages/disadvantages from how they are embedded within a social network.

Most social structures tend to be characterised by dense clusters of strong connections, also known as network closure. The theory relies on a fundamental idea that the homogeneity of information, new ideas, and behaviour is generally higher within any group of people as compared to that in between two groups of people.

An individual who acts as a mediator between two or more groups of closely connected people could gain an important comparative advantage. These individuals act as “bridges” over structural holes. 

Bridges enable the transfer or gatekeeping of valuable information from one group to another. In addition, the individual can combine all the ideas he or she receives from different sources and come up with the most innovative idea among all. 

At the same time, a bridge occupies a precarious position, as ties with disparate groups can be fragile and time-consuming to maintain.

In Burt’s research the individual who benefitted from structural holes was considered an entrepreneur. Application for this theory can be found in one of Burt’s studies of 673 managers at a large multinational.

The results showed that valuable ideas corresponded to the degree that the individuals were measured as bridges, whilst the wages of individuals corresponded to the degree that they were measured as bridges.

By taking this theory, and changing the nodes from individuals to organisations, it can be used to understand how certain organisations act as bridges between traditionally closed groups. 

Life sciences 4.0

Health is being reimagined as a result of scientific advance, technological change, and rising customer expectations.

The disciplines of healthcare and technology are merging to create life sciences 4.0: A customer-focused, collaborative, data-driven approach to product and service development in which life science companies interact within a network that includes traditional health incumbents and new entrants.

The ubiquity of mobile and peer-to-peer sharing tools has transformed consumers into super-consumers who are now demanding more of the same from their interactions with the health ecosystem. These demands include experiences with products and services customised to individuals’ genomes, microbiomes and meta-biomes.

Increasingly, consumers will require the integration of these point solutions into more holistic, data-driven platforms of care. Sensing an opportunity, digital health and technology entrants are already moving to meet consumers needs.

To gain positional power, life sciences companies must invest strategically in the capabilities that create future value. Future value will be driven by improving individuals’ health outcomes by unlocking the power of data that has so far resided outside the traditional health ecosystem.

Life sciences organisations are in effect looking to bridge structural holes created by ecosystem evolution. The following analysis is an attempt to snapshot who has started building these bridges:

Social Science Graphic
Network graphs are always visually challenging when representing large complex structures, in this case the analysis included 148 individual organisations with 178 connections.

The analysis focusses on partnerships formally published in the life sciences industry, specifically looking for organisations who have bridged structural holes.

Organisations have been clustered using a community detection algorithm based on edge betweenness (Newman-Girvan) where high-betweenness edges are removed sequentially (recalculating at each step) and the best partitioning of the network is selected. 

Organisations are sized according to their “betweenness” (a centrality measure based on a broker position connecting others, i.e. the number of geodesics that pass through the node).

This should highlight organisations which have successfully plugged structural holes, with the bridges they have created outside of their own cluster represented by the dark thick connecting lines. 

Platforms enabling Life Sciences 4.0

A platform is a mechanism to connect different stakeholders in order to combine and share data easily and securely to deliver a shared goal: improved health outcomes. 

Platforms are the embodiment of the connectors that fill the structural holes. We have seen many platforms bridge such divides over the past two decades, UBER, Facebook, Lyft, Amazon & AirBnB are all well-known examples. 

We are now seeing the emergence of such platforms for health such as PatientsLikeMe, connecting highly disparate contributors: consumers, physicians, payers, tech players and product makers.

Successful platforms will combine these diverse data streams to create exponential value. However, this will only be possible if this data which is currently stored in incompatible systems can be aggregated and structured in ways that allow them to be shared in real time. 

Interestingly platforms in other industries have significantly benefited from “first-mover” advantage by creating positive network effects that can result in market dominance. 

This is going to be a hotly contested area that will integrate markets and create significant outcomes for healthcare users. The Anmut view is that platforms form a key step to the patient-centric model and they are already developing. 

The players that have an understanding of their data and are able to manage and augment it will be in an advantaged position to serve the new market and create value.

At Anmut, we help organisations understand the value of data and its strategic significance. Contact us, if you are interested in learning more about what we do.