Why Project Networks Beat Project Teams

Projects that are nonroutine, complex and require sophisticated knowledge are a challenge to managers in organizations today. The required expertise to tackle such knowledge-intensive projects is often unexpected, complicated, subjective and distributed across the organization. Managers in organizations often assemble project teams to work on such tasks, since day-to-day work by an individual employee is less likely to achieve the desired results.

To research the factors that affect the success of teams working on knowledge-intensive projects, we studied an established companywide recognition program for project teams at a large multinational food company. As part of that study, we surveyed 1,304 members of project teams in the company to identify key characteristics that promote success in knowledge-intensive work. We then compared responses from the project teams regarding how they went about their work with the company’s assessment — through the judging of the team recognition program — on the significance of the projects’ outcome.

Based on our research, in this paper we introduce one strategy, the project network, as an important tool for accomplishing knowledge-intensive work. Typically, project networks consist of a core set of team members who bring in noncore contributors (such as other company employees, suppliers, consultants or customers) from their personal networks who can provide knowledge, information and feedback regarding the team’s task. The project network thus takes advantage of both the project team as a whole and the personal networks of the members. Unlike a project team that relies only on the knowledge held by members or a personal network that individuals use to solve their individual problems, the project network combines the knowledge held by the members of a team with the problem-solving capabilities of the team members’ personal networks to achieve a project goal. The integration of project team members’ knowledge with the capabilities from their personal networks is what differentiates a project network from other kinds of individual and team-based work.

To illustrate how the idea of project networks can be applied in business, we contrast finalist and nonfinalist project teams from a team recognition program at the large food company. Empirical evidence based on 177 project teams and more than 1,300 core team members shows how the use of a project network differentiates finalist teams from nonfinalists. In addition, this distinction between nonfinalists and finalists is illustrated using three matched-pair cases in three categories: product innovation, customer service and operational improvement.

The empirical data from the project teams and team members indicate that, on average, there was no significant difference between finalist and nonfinalist project teams with respect to several project characteristics: resources, project membership or changes in the project. Resources included availability of money/finances, personnel/human resources and information/materials. Project membership involved having qualified members, roles and responsibilities properly assigned and work distributed effectively among members. Changes in the project encompassed changes in members or leaders or a shift in focus due to changes within the company. In fact, finalist, semifinalist and non?finalist project teams all reported similar levels of resources and membership as well as limited changes to their projects. On a five-point scale (with one representing “not at all” and five representing “very”), teams reported, on average, having adequate resources (about four out of five), stable membership (about four out of five) and limited project changes (about two out of five).

However, in one area there was a significant difference between finalist and nonfinalist teams: The finalist project teams had more noncore contributors. Nonfinalist projects reported an average of two and one-half unique noncore contributors while semifinalist projects reported an average of three and finalist projects reported about four and one-half on average. (See “How Finalist Teams Were Different.”) After controlling for project characteristics, size of core project team and other factors related to participation, the number of noncore contributors was a positive and significant predictor of success. In summary, the empirical analyses support our argument that project networks are a critical and differentiating mechanism for achieving success in knowledge-intensive work.

The Benefits of Project Networks

The concept of project networks is grounded in a number of research literatures, including research on project teams, social networks and boundary spanning.1 Research on project teams — or teams in general — has addressed the role of team member knowledge and membership in predicting project team outcomes.2 Research on social networks has addressed the role of knowledge in the network and network structure in predicting outcomes for individuals.3 And studies of boundary spanning have examined how individuals bridge different organizations and team members establish linkages outside of the team to others in the external environment.4

Project networks take advantage of the benefits noted by team-focused researchers — such as the commitment and dedication of members — but can overcome the risks associated with a small group’s limited perspective by crossing team boundaries for project feedback. Project networks can also take advantage of the benefits associated with members who cross organizational boundaries for new ideas and broadened access to knowledge, yet the team structure provides accountability that can be lacking in informal personal networks. Project networks thus maintain a stable core of project team members while at the same time dynamically tapping into expertise within the personal networks of members as necessary. Combining the advantages of a project team with the advantages of a personal network can increase the chances of success in cases where the required task knowledge is nonroutine and complex.

Managers are often not given the luxury of hand-picking exactly the members they would like on a project team; they may have to go with who is available at the time. Encouraging project networks allows managers to look beyond the core project team and to take advantage of what noncore contributors outside of the project team have to offer. (See “How to Use Project Networks.”) For example, project team members can reach out to colleagues and stakeholders for advice, information and feedback regarding the project. To illustrate how the concept of project networks works in practice, we contrast finalist and nonfinalist project teams from the team recognition program we studied. The team recognition program considered teams in three categories — product innovation, customer service and operational improvement — so we compare a finalist team in each category with a nonfinalist team in that category.

A Project Network for Product Innovation

In the innovation category, two cross-functional project teams from similarly sized business units were both given challenges that involved designing, developing and commercializing unique food ingredients. However, the teams approached their assignment differently. Innovation Project B, a nonfinalist team, developed a product line extension based on the technical and manufacturing knowledge that resided within the project team core. In contrast, Innovation Project A, a finalist team, developed an entire new class of food ingredients by accessing an extensive project network that included technical experts and stakeholders both inside and outside the company.

The Innovation Project A team involved a number of functions — sales, marketing, R&D and process development — and was located across six U.S. states in nine different facilities. Through its project network, the Innovation Project A team acquired relevant food formulation knowledge that customers had about their specific applications for this type of ingredient. In addition, the core members of the project team augmented their own knowledge by accessing food production expertise both from other colleagues in the company and outside vendors. While not core members of the team, these contacts were all part of the project network.

The core members of the Innovation Project A team also actively engaged marketing experts to analyze market drivers, positioning statements and potential applications for the new class of ingredients as a way to develop knowledge about consumer acceptance. In addition, Innovation Project A team members used technical experts to conduct clinical efficacy studies and toxicity studies to create the necessary information and knowledge for regulatory reviews. They entered into a joint development program with a leading producer of a raw material they needed, and they organized multiple laboratories in a research program to understand key properties of the raw material. Thus, the project team used the personal networks of members to solve an array of problems and develop the required knowledge to move forward on an ambitious project.

The Innovation Project B team was a collaboration involving European R&D, U.S. brand management, U.S. plant services and U.S. product line sales. The team was able to add to the existing family of products and serve the needs of customers. Project team members approached their challenge by relying on their own technical and market knowledge about the existing product. It is possible that a project network could have generated a qualitatively different outcome, but in the end the team produced a line extension.

A Project Network for Customer Service

A second example of the role of project networks can be seen by comparing two customer service project teams that were each assigned to reformulate existing food products in response to market trends. Reformulating food is a sophisticated and complex process because the original product has already been accepted by consumers. Customer Service Project B, a nonfinalist team, delivered a reformulated food product for a customer in order to retain existing business; to accomplish its task, that team relied predominately on the expertise of its core members, supplemented by information from the customer. In contrast, Customer Service Project A, a finalist team, used a project network of customers, consultants and employees in conjunction with the core team to craft a comprehensive global solution for a customer and garner significant new business.

For Customer Service Project A, the development of an extensive project network was not an accident. For this project, which faced a complicated and complex problem, the company had established a core project team whose members came from seven different business units and two separate divisions on four continents. The executive sponsor for the project communicated the important message that the existing organizational structure was insufficient to address the customer’s request. This executive sponsor set the stage for the use of a project network by identifying a core set of project members, eliminating potential internal conflicts of interest between business units and setting an ambitious project scope that could not be addressed with just the team members’ own knowledge. The project team leader of Customer Service Project A then encouraged and promoted the development and use of a project network. In fact, the team leader identified some of the noncore contributors who had knowledge that the team required to do its task successfully.

Like Customer Service Project A, Customer Service Project B needed to address a customer’s need for a reformulated food product to adapt to changing market trends. This project team was also challenged by the complexities of reformulating the customer’s food product. Moreover, the redesigned product required special manufacturing considerations to meet regulatory compliance standards within the facility. Relying on the customer to provide significant information about consumer preferences, the project team developed this customer’s solution and retained this account for the business unit — but didn’t go beyond that assignment. How a project network might have qualitatively altered this project outcome cannot be known for sure. However, there were likely additional business opportunities that a project network could have identified for Customer Service Project B.

A Project Network for Operational Improvement

Our third example compares two operational improvement project teams from similarly sized divisions that were each charged with solving significant financial issues within the large company. Both had to deal with internal operations and organizational issues that involved undoing existing structures and replacing them with new structures in order to compete profitably. The challenge for Operational Project A, a finalist team, was to transform a channel dominated by resellers, brokers and other third parties into a channel that directly supplies the customer. The challenge for Operational Project B, a nonfinalist team, was to transition from a stand-alone business unit to a department within a larger business unit.

Operational Project A used a project network to augment the project team core with customer, technical, regulatory and geographic knowledge to transform a supply chain and capture new market share. The project team members themselves had vast knowledge associated with the initial business model, which involved utilizing resellers, brokers and other third parties to market a food ingredient from Europe in the United States. But they relied on the project network to provide the required knowledge and expertise around an array of technical, regulatory and geographic issues — including a new supply chain, improved applications for specific customers, regulatory requirements and taxation issues — to create a new profitable business model.

In contrast, Operational Project B made only limited use of a project network as it tackled the integration of a formerly stand-alone business unit. The organizational hurdles for this project team were similar to those encountered in the integration of an external acquisition: business language and vocabulary, loss of status and legacy, and conversion of information technology systems. Everything needed to be accomplished quickly and without incurring new costs or cumbersome infrastructure changes. Operational Project B faced huge hurdles in moving to a new customer service inventory management system and a new automated system to manage laboratory data, as well as a new reporting structure. The team relied solely on the expertise of the project team members to resolve an array of financial, information technology, plant operation and other issues. The project team sponsor commented, “The integration was successful, and it did achieve the primary goal of cost reduction, but it wasn’t easy.” With the benefit of hindsight, the Operational Project B team could probably have used a broader project network to access knowledge and expertise that could have expedited the integration.

These examples demonstrate the usefulness of project networks for developing, identifying and acquiring knowledge in a range of knowledge-intensive tasks. (See “How Project Networks Expand a Team’s Reach.”) More generally, the take-away for business executives and managers from this research is that strategic use of project networks can give organizations a competitive advantage when dealing with complex projects. Learning how to build and manage project networks will become increasingly important as large, complex organizations engage in a greater number of knowledge-intensive tasks.