The traditional methods for driving operational excellence in global organizations are not enough. The most effective organizations make smart use of employee networks to reduce costs, improve efficiency and spur innovation.
As information technology becomes increasingly critical within large, global organizations, chief information officers are being held to ever-higher performance standards. A recent survey of 1,400 CIOs illustrates this mandate, with streamlining business processes, reducing enterprise costs and improving work force effectiveness at the top of their agendas.1 But beyond providing efficient operational support, top management increasingly expects the IT department to be a strategic business partner — to forecast the business impact of emerging technologies, lead the development of new IT-enabled products and services, and drive adoption of innovative technologies that differentiate the organization from competitors.
CIOs often try to address these challenges by relying on the same managerial tools they use to pursue operational excellence: establishing well-defined roles, best practice processes and formal accountability structures. However, our research shows that such tools, though valuable, are not enough. The key to delivering both operational excellence and innovation is having networks of informal collaboration. Within IT organizations in large global companies, we have seen that innovative solutions often emerge unexpectedly through informal and unplanned interactions between individuals who see problems from different perspectives. What’s more, successful execution frequently flows from the networks of relationships that help employees handle situations that don’t fit cleanly into established processes and structures. (See “About the Research.”)
Winner of the 2012 Richard Beckhard Memorial Prize
The Richard Beckhard Memorial Prize is awarded annually to the authors of the most outstanding MIT SMR article on planned change and organizational development from the previous academic year.
CIOs who learn to harness and balance both formal and informal structures can create global IT organizations that are more efficient and innovative than organizations that rely primarily on formal mechanisms. However, even though individual employees may be able to identify local patterns of collaboration, broader configurations of informal collaboration tend to be far less visible to senior leaders. In the face of this reality, we have found that organizational network analysis offers a useful methodology to help executives do two things: assess broader patterns of informal networks among individuals, teams, functions and organizations, and then take targeted steps to align networks with strategic imperatives.<