Expert network
Expert networks refer to a type of business that connects companies with expert resources or subject-matter experts, such as academics, C-levels, founders, and high-level officials to provide valuable information, data, or assistance.
Background
The phrase "expert network" was originally coined by Mark O'Connor of Yankee Group in presentations introducing his August 1997 Management Strategies report, "Knowledge Management: People and the Process".The first known published appearance of the phrase in this context is in the April 1999 Yankee Group white paper "A Knowledge Perspective: The Enterprise Knowledge Management Product and Service Domain." In the December 1999 publication, "Knowledge Evolution: Tools of the Trade", clients were advised to utilize Expert Networks to "Understand who the experts are throughout the organization, and more appropriately employ that expertise within a broader range of business contexts for better decision making."
The first expert networks used internal databases and phone books, just like standard recruitment firms. With the growth of LinkedIn and other online sources, expert networks have become increasingly reliant on custom-sourcing experts online.
Since the early 2000s, a rather large industry has sprung up facilitating "expert" connections, or providing connections to industry or subject matter experts with whom a single individual or organization has no pre-existing relationship with. GLG, one of the oldest and largest expert networks and was founded in 1998.
Business models
There are three aspects of business models for expert networks: revenue models, sourcing models, and operating models. Expert networks may apply two different revenue models: subscription-based and transaction-based.Revenue models
Transaction-based
The most common revenue model is "pay-per-use" where an expert networks invoices the client per hour of expert consultation, times the "credit" price of the expert. The expert network then pays a part of this to the expert.Subscription-based
The traditional revenue model was to offer subscriptions to clients. This model still represents a large share of the industry, notably for GLG and Maven Research. The client pays for a predefined number of "credits" at the start of the contract year, which are run down as expert consultations are made. The network keeps the difference between the subscription fees collected and the hourly rates paid out.Sourcing models
When sourcing experts to connect with clients, an expert network may use either an Internal database, or custom recruiting. Whereas expert networks traditionally relied on internal databases of experts, business models have tilted towards 'custom recruiting' of new experts for each particular case. This was enabled by the rapid growth of LinkedIn in the years following the 2008 financial crisis.Operating models
Expert networks structure internal operations differently, along models that transcend their revenue and sourcing models. These have been classified in five categories, each solving the task of supplying relevant experts to customers:- Standard expert networks
- DIY marketplaces
- Expert Q&A companies
- Crowd-funded expert calls
Commercial expert networks
A primary example of expert networks are commercial networks that are in the business of primary research. These firms connect investors, consultants, and business decision-makers with industry experts. Consultations between expert network clients and experts may be in the form of "face-to-face meetings, phone calls, teleconferences, video conferences, email exchanges." Prominent commercial expert networks include GLG, Guidepoint, AlphaSights, and Dialectica (company).According to a 2009 report by Integrity Research, there are at least 38 investor expert network providers worldwide. Although most expert networks operate across verticals and geographies, recent trends point towards specialized expert networks serving a particular geography or vertical.
In recent years, as sell-side research has become increasingly "scarce and less influential," institutional investors have turned to expert networks to gain "new insights and a competitive edge" within a compliant framework. According to a 2011 report published by TABB Group, 81% of investment professionals believe that "talking to experts" is a legitimate, value-adding part of the investment due diligence process.
Investor expert networks became more widely used after the implementation of Regulation Fair Disclosure in 2000, which made it harder for institutional investors to get market moving information directly from publicly traded companies. Hedge funds were early adopters, but the use of expert networks quickly spread to all types of institutional investors, including mutual funds, pension funds, banks, and private equity firms. The investment community continues to be the largest consumer of expert network services. In 2020, expert network companies generated an estimated $1.5 billion in revenues, according to a report by Integrity Research.