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Over the past couple of decades, management innovations have pushed companies toward the ideal of the “boundaryless” organization. On the inside, delayering, reengineering and the rise of cross-functional teams have pushed decision making and accountability downward and made functional boundaries more permeable, increasing the flow of information in the process. On the outside, joint ventures, alliances and supply-chain integration have blurred borders between companies.
As a result of these changes, formal reporting structures and detailed work processes have a much diminished role in the way important work is accomplished. Instead, informal networks of employees are increasingly at the forefront, and the general health and connectivity of these groups can have a significant impact on strategy execution and organizational effectiveness.
Informal networks often, for example, provide the glue that holds together cross-functional process-improvement initiatives, alliances and mergers. They can also be significant contributors to new-product development; in the pharmaceuticals industry, for instance, the type of informal network known as a community of practice is critical to reducing drug development costs and to the more rapid introduction of new products. In addition, informal networks are important sources of job satisfaction and retention. Many employees today join and commit to local sets of relationships while feeling no particular allegiance to the corporation as a whole.
Many corporate leaders intuitively understand these facts —put an org chart in front of any executive today and he or she will tell you that the boxes and lines only partially reflect the way things are done in the organization — but few spend any real time assessing or supporting informal networks. Their very invisibility as formal organizational entities, combined with the absence of clear ownership, are major reasons for this neglect. And because they do not receive adequate resources or executive attention, these groups are often fragmented and their efforts disrupted by management practices or organizational-design principles that are biased in favor of task specialization and individual rather than collaborative endeavors.
Informal networks — also known as social networks — are especially important in knowledge-intensive sectors, where people use personal relationships to find information and do their jobs. This fact is supported by our own research and that of many others.
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1. G. Simmel, “The Sociology of Georg Simmel” (New York: Free Press, 1950); M. Granovetter, “The Strength of Weak Ties,” American Journal of Sociology 78 (May 1973): 1360–1380; T. Allen, “Managing the Flow of Technology” (Cambridge, Massachusetts: MIT Press, 1977); R. Burt, “Structural Holes” (Cambridge, Massachusetts: Harvard University Press, 1992); E. Rogers, “Diffusion of Innovations,” 4th ed. (New York: Free Press, 1995); J. Lave and E. Wenger, “Situated Learning: Legitimate Peripheral Participation” (Cambridge, England: Cambridge University Press, 1991); J.S. Brown and P. Duguid, “Organizational Learning and Communities of Practice: Toward a Unified View of Working, Learning and Innovation,” Organization Science 2 (January–February 1991): 40–57; J.E. Orr, “Talking About Machines” (Ithaca, New York: Cornell University Press, 1996); and E. Wenger, “Communities of Practice” (Oxford: Oxford University Press, 1998).
2. Our work with these networks was designed to test several relational and structural models of knowledge creation and sharing in social networks. We typically tested each empirical model in two to four organizations in order to generalize findings beyond a single network analysis (the prevalent mode in the scholarly literature). Just as important, we sought to develop managerial applications of social network analysis, a goal that has not been a central concern of the field. To do that we engaged with each company in four- to six-hour problem-solving sessions in which we fed back results of our assessments to executives and facilitated brainstorming sessions to develop insight into applications of social network analysis. Further, where possible, we conducted follow-up network assessments or in-depth interviews (or both) to get a true understanding of the impact of interventions in support of informal networks.
3. This notion was drawn from scholarly research on transactive memory in groups. For a review, see R. Moreland, L. Argote and R. Krishnan, “Socially Shared Cognition at Work: Transactive Memory and Group Performance,” in “What’s Social About Social Cognition?” ed. J. Nye and A. Brower (Thousand Oaks, California: Sage, 1996): 57–85. Other researchers have since begun to apply social-network techniques to further expanding this notion: S. Borgatti and R. Cross, “A Social Network View of Organizational Learning” (Washington, D.C.: Academy of Management Proceedings, 2001); and R. Cross, A. Parker, L. Prusak and S. Borgatti, “Knowing What We Know: Supporting Knowledge Creation and Sharing in Social Networks,” Organizational Dynamics 30(2): 100–120.
4. Part of this problem also seems to stem from the focus on communities of practice and strong arguments that they must be left alone to emerge. We would suggest that forces we identify also affect the ability of a community to emerge effectively in a given organizational context.
5. For much more depth on these ideas. see R. Cross and A. Parker, “Toward a Collaborative Organizational Context: Supporting Informal Networks in Knowledge Intensive Work,” working paper 43, University of Virginia, Charlottesville, Virginia, November 2001.
6. Other scholarly studies have found only slight relationships between personality characteristics and network position; however, these studies are rare and have not been replicated as this is an emerging area for management scholars. See A. Mehra, M. Kilduff and D.J. Brass, “The Social Networks of High and Low Self-Monitors: Implications for Workplace Performance,” Administrative Science Quarterly 46 (March 2001): 121–146; and R.S. Burt, J.E. Jannotta and J.T. Mahoney, “Personality Correlates of Structural Holes,” Social Networks 20 (January 1998): 63–87.
7. D. Krackhardt, “Cognitive Social Structures,” Social Networks 9 (June 1987): 109–134; D. Krackhardt, “Assessing the Political Landscape: Structure, Cognition and Power in Organizations,” Administrative Science Quarterly 35 (June 1990): 342–369; and T. Casciaro, “Seeing Things Clearly: Social Structure, Personality and Accuracy in Social Network Perception,” Social Networks 20 (October 1998): 331–351.