In the mid-1970s, a loose collection of riders in Marin County, California, started doing something strange with old bicycles. They were combing garages and used-bike shops for vintage 1930s and 1940s Schwinn balloon-tire cruisers, the heavy steel frames that an earlier generation of American kids had grown up on, and stripping them down to ride hard down the fire roads of Mount Tamalpais. They called the modified bikes Klunkers. They raced them on a course called Repack, named for the necessity of repacking the burned-out coaster brake grease after every run. The riders involved, Joe Breeze, Charlie Kelly, Gary Fisher, and Tom Ritchey among them, were inventing what would soon be called the mountain bike.
They were inventing it, and they were inventing it on Schwinn’s own product. The vintage frames they prized were the same balloon-tire bikes Frank Schwinn had pioneered in the 1930s. According to the Marin Museum of Bicycling, the fat tire that Frank had introduced in 1933 had “the same wheel diameter, cross-sectional diameter and carcass construction as the tires used by the Marin County pioneers in the 1970’s.” Schwinn had, decades earlier, built the literal raw material for the mountain bike revolution. They were watching their own DNA get reassembled into the future of the industry.
The leadership in Chicago was not unaware. The phenomenon was visible enough to make national television. And the company’s response, captured in interviews with Judith Crown, co-author of the definitive history of Schwinn’s collapse, was withering. Frank V. Schwinn, then heading the company, “wasn’t interested in change” and “turned up his nose at others using Schwinn frames to make mountain bikes.” Crown’s verdict on the executive team was blunt: “the older executives just pooh-poohed it.” Schwinn’s own marketing department, per the company’s history, “initially discounted the growing popularity of the mountain bike, concluding that it would become a short-lived fad.” The reasoning behind the dismissal, captured in Crown and Coleman’s No Hands: The Rise and Fall of the Schwinn Bicycle Company, is almost charmingly insular. Company executives “had trouble imagining that any adult would spend money on what they thought of as a toy.”
That sentence is worth thinking about for a moment, because it tells you everything you need to know about how a hundred-year-old American institution went bankrupt. The mountain bike was not a fad. It became, and remains, the dominant category in the global bicycle industry. Companies like Specialized, Fisher MountainBikes, and Trek were soon selling hundreds of thousands of mountain bikes at competitive prices to eager customers, setting sales records in a market niche that quickly grew to enormous proportions. Schwinn, meanwhile, kept building the bikes it had always built, in the factory it had always built them in, for the customers it imagined still existed. Sales dropped by half during the second half of the 1980s. Schwinn eventually entered the mountain bike market, but by then companies like Specialized and Trek had seized much of the momentum. The company filed for bankruptcy in 1992.
There are a lot of business school postmortems on Schwinn, and most of them blame manufacturing complacency or globalization or some flavor of management incompetence. All of those are true. But the more interesting question, and the one that matters for anyone in a leadership seat today, is why Schwinn’s leaders made the calls they made. The answer is right there in the Crown and Coleman account, in language that is impossible to misread. “No one but a Schwinn would ever run Schwinn, and few not named Schwinn ever came close to real power in the company.” Daughters were excluded from the business by tradition. Outside investors were repeatedly turned away. When the bankers eventually came to the table in the early 1990s, the family declined private capital again, on principle, because outside money meant outside voices, and outside voices were not how Schwinn made decisions.
Schwinn’s leaders did not fail because they were stupid. They failed because every person they consulted had reached the same conclusion they had, by the same path, from the same vantage point. Their advisory network was a closed loop. The people in the room agreed that adults would not buy mountain bikes because everyone in the room was the kind of person who would not have bought a mountain bike. The data they trusted was the data their inner circle generated. The judgment they sought was the judgment their inner circle returned. By the time the world disagreed with them loudly enough to break through, the world was buying its bikes from Specialized.
This is not a story about a bicycle company. This is a story about what happens to leaders, in any industry, who let the network around them collapse into a single tight cluster of agreement.
The Two Networks Every Leader Has
Every leader operates inside two networks at the same time. The first one is obvious. It is the network of direct reports, peers on the leadership team, the board, the vendors who present quarterly, the consultants on retainer. It shows up on org charts and calendars and Slack channels. It is the network you manage, and most leaders pour something close to all of their relational energy into it. That is reasonable. It is the network that pays the mortgage.
The second network is invisible. It is the lattice of former colleagues, peer group members, friends from a previous role who are now at a competitor, the person you sat next to at a conference three years ago and exchanged thoughtful messages with twice since, the neighbor who happens to be a CFO at a company that does something adjacent to what you do. You do not manage this network. You either feed it or you starve it. Most leaders, without quite meaning to, starve it. It withers quietly, and they do not notice until they need it and discover it is no longer there.
The temptation, especially when work gets busy, is to treat the first network as sufficient. The people in the first network are smart, capable, well-informed, and immediately available. They show up to your one-on-ones. They prepare materials for your offsites. When you ask them what they think, they tell you. The whole apparatus of your professional life is designed to make them feel like the natural and complete answer to the question of who you should consult.
They are not. The first network is necessary. It is also, on its own, dangerous. To understand why, you have to understand what kind of information actually flows through tight social structures versus loose ones. And for that, you have to go back to a paper a sociologist wrote in 1973.
Why Strong Ties Tell You What You Already Know
In 1973, Mark Granovetter published The Strength of Weak Ties in the American Journal of Sociology. Most people who have heard of the paper remember it as being about job-hunting, which was Granovetter’s empirical hook. He found, in a survey of professionals who had recently changed jobs, that their new positions had come overwhelmingly from acquaintances rather than close friends. That finding has been replicated many times since. A 2022 study of 20 million LinkedIn users covered by MIT Sloan’s Ideas Made to Matter confirmed it at internet scale. Weak ties move careers.
But the deeper claim in Granovetter’s paper, the one that matters more for the question of how leaders make decisions, is about information itself. Strong ties cluster. The people closest to you, your immediate team, your closest peers, your inner circle, tend to know roughly the same things you know, because they are embedded in the same network you are. They read the same publications, attend the same conferences, talk to the same vendors, gossip about the same competitors. Their information set overlaps almost perfectly with yours.
Weak ties span what Granovetter called structural holes. They bridge between clusters. The acquaintance who works at a company in a different industry, the former colleague who left to start something on the West Coast, the person you met at a peer group dinner three years ago and have stayed loosely in touch with, all of them sit in different neighborhoods of the network than you do. They have access to information your strong ties literally cannot have, because your strong ties are standing where you are standing. As Granovetter put it, no strong tie is a bridge. The most novel, decision-altering information almost always arrives through somebody you do not know that well.
Now go back to Schwinn for a moment. Schwinn’s leaders had every strong tie a person could want. Brothers, cousins, lifelong colleagues, distributors who had worked with the family for decades. What they did not have, structurally, was a single weak tie inside the room when the mountain bike conversation happened. There was no person in that meeting who had spent a weekend on Mount Tamalpais. There was no acquaintance from a different industry who could have said, the way the data eventually said it, that what looked like a fad to a man in a suit in Chicago looked like a movement to a generation of riders in California. The bridge was missing. The information could not cross.
This is the same dynamic that shows up in every echo chamber post-mortem ever written, from the Bay of Pigs to the 2008 financial crisis. The Harvard Business Review summarized it bluntly a few years ago: the higher leaders go, the more likely they are to find themselves surrounded by people who think like them and agree with them. Affinity bias does some of the work. Hiring patterns do more. The simple gravitational pull of a calendar full of internal meetings does the rest. Without deliberate intervention, the network around a senior leader will collapse, by default, into the most informationally redundant possible shape.
This Pattern Scales From People to Whole Economies
If you want to see what closed networks and open networks look like at the scale of an entire industry, the cleanest natural experiment ever recorded is documented in AnnaLee Saxenian’s 1994 book Regional Advantage. Saxenian set out to explain a puzzle that had been quietly tormenting economists for a decade. In the early 1970s, two American regions were producing the world’s most advanced electronics: Silicon Valley in Northern California and the Route 128 corridor outside Boston. Both had elite universities. Both had defense department contracts. Both had brilliant engineers and venture capital and ambitious founders. And then, over the course of about fifteen years, one region pulled away and one region stagnated.
The conventional explanations, weather, taxes, culture, did not hold up under scrutiny. What Saxenian found, after years of fieldwork, was that the difference was structural. Boston’s Route 128 firms were vertically integrated, secretive, and proprietary. Engineers stayed at one company for decades. Information was an asset to be hoarded. The companies were strong, but the region was a collection of isolated fortresses.
Silicon Valley was the opposite. As Saxenian documented, the region was “distinguished by unusually high levels of job-hopping. During the 1970s, average annual employee turnover exceeded 35 percent in local electronics firms and was as high as 59 percent in small firms.” That sounds like chaos, and from any individual company’s perspective it was. But at the regional level it was something else entirely. Engineers carried what they learned across firm boundaries. Suppliers worked with multiple competitors. People socialized across companies. The network was porous, and the porousness meant that knowledge accumulated faster in the region as a whole than it did in any single company.
Saxenian’s verdict is that Silicon Valley’s engineers “developed stronger commitments to one another and to the cause of advancing technology than to individual companies or industries.” The region became a learning system. Route 128 remained a collection of learning organizations, which is a categorically different and weaker thing. The region with the more open network compounded. The region with the more closed network did not.
The same logic that explains why one regional economy outpaced another is the logic that explains why one leader’s judgment compounds and another’s stagnates. A leader whose network is closed, only consulting people who work for them, only attending events sponsored by their own vendors, only reading the same five Substacks every week, is operating like a Route 128 firm. The information they receive is high-quality but redundant. They will produce smart-sounding decisions for years, right up until the world changes underneath them and the decisions stop working. A leader whose network is open and well-fed, by contrast, is operating like a Silicon Valley engineer in 1975. They are picking up signal from a dozen different neighborhoods of the network. They will sometimes look less efficient in the short term, because they are spending time on conversations that have no obvious ROI. But they will see things their closed-network peers cannot see.
Peer Groups as Manufactured Serendipity
I have written before about peer groups, and at the time I framed them mostly as a source of advice and emotional support, which they are. But I want to reframe them now, because they are also something more important than that. Peer groups are the deliberate, peacetime engineering of the second network. They are how a working leader manufactures the kind of weak-tie infrastructure that Saxenian’s Silicon Valley engineers got accidentally, by changing jobs every two years.
Most of us cannot, and should not, change jobs every two years to keep our information set fresh. Peer groups are the workaround. The New York CTO Club, Venwise, 7CTOs, the various functional roundtables and birds-of-a-feather gatherings that exist in almost every industry, they all serve the same structural function. They put you in a room, on purpose, with people whose information set does not overlap with yours. You leave the room knowing something you did not know when you walked in, and the something is almost always something you could not have learned by talking to anyone on your own team.
This is the part of peer groups that I undersold the first time I wrote about them. They are not nice. They are not optional. They are the closest thing a leader has to a structural defense against the closed-loop problem. Schwinn did not fail for lack of intelligence. Schwinn failed for lack of bridging ties. A working peer group, treated seriously, is exactly the kind of bridging tie that would have put a Marin County rider in the room before the mountain bike got dismissed.
How to Tell If Your Second Network Is Alive
There is no clean metric for the health of an invisible network, but there are a handful of honest questions that will tell you, fairly quickly, whether yours is functioning or atrophying. Of the last five major decisions you made, how many did you stress-test against someone who does not work at your company? Name three people you would call right now for unvarnished input on a hard call who do not depend on you for their paycheck. When was the last time you heard a useful piece of professional information from someone who has no obvious reason to keep talking to you? If you left your current role tomorrow, how many of the people you talk to every week would still be talking to you in six months?
If those questions are uncomfortable, the second network has gone quiet. The diagnostic is not about volume. A leader with five thousand LinkedIn connections and zero weak ties they actively feed is just as isolated as one with fifty. What matters is whether information is actually crossing bridges into your decision-making, or whether you are running, like Schwinn, on the recycled judgment of a single tight cluster of people who already agree with you.
The Challenge
The team you lead will, most days, tell you that you are right. They will mean it. From where they sit, you usually are. That is the gift of a strong, cohesive inner circle, and it is worth protecting. The research on belonging is unambiguous about how much that closeness matters for performance, retention, and trust. Do not give it up.
But understand what it cannot do for you. A strong-tie network cannot give you the one thing you most need from the people around you, which is information you do not already have. For that, you need the people you do not manage, do not pay, and do not see every day. You need former colleagues you have stayed in touch with on purpose. You need a peer group you actually show up for. You need the acquaintance from the conference whose perspective is different enough from yours to be uncomfortable. You need, in short, the network you cannot see.
This week, before the inbox refills and the calendar reasserts itself, pick three people in your second network and reach out. Do not ask them for anything. Do not pitch them on a job or a meeting or a deal. Just keep the bridge open. Send a note that says you were thinking about something they once said, or ask how a project they mentioned a year ago turned out, or share an article and ask what they made of it. The point is not the message. The point is that bridges decay when they are not walked across, and you do not get to build the bridge on the day you need it.
The biggest risk for most leaders is not bad ideas. It is having built a feedback loop so tight that bad ideas come back validated. That’s when they discover, the way Schwinn discovered, that by the time the world disagrees with them loudly enough to break through, the world has already moved on.