Network Analysis can be applied to important departments or functions within organizations. However, many strategically important networks do not reside on the formal organization chart. The following sections illustrate use of ONA to address various organizational issues:
1. Introduction to Network Analysis
| 1. Introduction to Network Analysis
Over the past decade or so significant restructuring efforts have resulted in organizations with fewer hierarchical levels and more permeable functional and organizational boundaries. While hopefully promoting efficiency and flexibility, a byproduct of these restructuring efforts is that coordination and work increasingly occur through informal networks of relationships rather than through formal reporting structures or prescribed work processes. These seemingly invisible webs have become central to performance and strategy execution. Research shows that appropriate connectivity in networks within organizations can have a substantial impact on performance, learning, and innovation, and benefits also accrue from well-connected networks between organizations.
Organizational network analysis (ONA) can provide an x-ray into the inner workings of an organization --- a powerful means of making invisible patterns of information flow and collaboration in strategically important groups visible. For example, we conducted an ONA of executives in the exploration and production division of a large petroleum organization. This group was in the midst of implementing a technology to help transfer knowledge across drilling initiatives and was also interested in assessing their ability as a group to create and share knowledge. As can be seen below, the network analysis revealed a striking contrast between the group's formal and informal structure.
Three important points quickly emerged from the ONA:
| 2. Supporting Partnerships and Alliances
Executives increasingly employ cross-organizational initiatives such as alliances or other forms of strategic partnerships to leverage their organizations' unique capabilities. However, leaders in one organization usually have minimal insight into their counterpart's organization, and collaboration can be heavily conditioned by legal restrictions, cultural and leadership differences as well as differences in each company's level of expertise. ONA can tell executives whether appropriate points of connectivity exist across organizations and whether governance is restricting collaboration.
Challenge: Consider the network below of an alliance between two well-known organizations that came together to bring a product to market. One organization held a patent and understood the science behind the product. The other had manufacturing and distribution expertise. It was presumed that the product could be introduced much more effectively and efficiently if the two organizations worked together. Of course this required effective collaboration, which our ONA showed to be less than desirable.
Key Findings: The network diagram reveals that the healthcare distribution company was very much dominating the alliance with most members of the pharmaceutical company peripheral to the network. There were a couple of exceptions to this, in particular TC and PT, who were playing boundary-spanning roles between the two organizations. In general though the analysis revealed a very hierarchical network that was not enabling collaboration at the appropriate points across the organizations. Further, while we did find effective collaboration between the organizations' sales and technical groups, minimal connections existed between people in the two marketing groups, who desperately needed to collaborate to attain the alliance's billion-dollar sales goal.
Changes: A variety of actions helped promote better collaboration. First, decision-rights were re-allocated within the group and the governance agreements restructured to promote network flexibility. Second, tasks were re-allocated from several senior members who had become over-loaded and, through no fault of their own, bottlenecks. Third, face-to-face meetings and virtual forums were put in place to develop connectivity at key network juncture (e.g., across marketing groups in each company). These and other relatively simple changes had a substantial impact on the speed with which the alliance delivered the product to market as well as innovations identified for future collaborative endeavors.
| 3. Ensuring Strategy Execution
Core competencies or capabilities in knowledge-intensive work are usually a product of collaboration across functional or divisional boundaries. ONA allows executives to determine if the appropriate cross-functional or departmental collaborations are occurring to support strategic objectives.
Challenge: We conducted an organizational network analysis of a large health services organization. This was an organization that had grown by acquisition over several years with the intent that acquired companies combine their expertise in developing and taking to market new products and services. The CEO of this organization had become acutely aware of the need to create a leadership network that was able to recognize opportunities in one sphere of the network and know enough of what others in the conglomerate knew to combine appropriate resources and expertise. As there was some evidence that this was not happening, we were invited to conduct an organizational network analysis of the conglomerate's top two layers of leadership (114 executives).
Key Findings: The table above is an alternative to the diagram format. Each cell indicates the percentage of connections that exist out of a possible 100% if all people within a given cell were connected. This simple summary of collaborative activity within and between divisions provided a great deal of insight into the inner-workings of the organization. The company had acquired various organizations with the intent that they collaborate in bringing their offerings to market. However, the organizational network analysis showed that there was only limited collaborative activity in pockets of the organization. For example, a quick review of the table shows that divisions 3 and 4 had reasonable levels of collaboration, whereas divisions 1 and 7 did not.
Changes: Various reasons existed for this. In some settings members of the executive team were not sure what a given division did and so did not know how to even think about involving them in their projects. In others, cultural norms or incentives kept people from seeking information outside of their own division. And in some the complementarity of product offerings that was presumed when an acquisition was made did not exist. As a result, different interventions were applied as appropriate throughout the network; however, it was the view of collaborative activity afforded by the organizational network analysis that allowed the organization to intervene appropriately at each of these strategic junctures.
This kind of cross-boundary view is powerful for identifying points where collaborative activity is not occurring and providing a targeted approach to interventions. It is often not the case that you want high collaborative activity among all departments within an organization. People have a finite amount of time to put into developing and maintaining relationships. ONA provides a portfolio approach to considering the constellation of relationships worth investing time and energy to develop and maintain. For example, it was not critical that Division 1 be tightly connected to all other divisions to help the organization meet strategic objectives. To provide strategic value to the organization, Division 1 really only needed to be well connected to Divisions 3, 5 and 6. Rather than engage in a company-wide initiative to improve collaboration, more targeted and ultimately more successful interventions were employed to facilitate collaboration at specific junctures.
| 4. Collaboration and Decision Making in Top Leadership Networks
A core function of top executive teams is to acquire information, make sound decisions, and convey those decisions effectively to the broader organization. ONA, when done with both the top leadership team and the next layer down, can provide valuable diagnostic information to leadership. Not only can it help assess connections within a top leadership team, but also it can reveal how information is entering and leaving this group.
Challenge: The professional services division of a global technology organization had grown rapidly and succeeded in accelerating the technology organization's introduction of high-value services. However, after a year and a half of frenetic growth, the top executives of this division had become concerned that their organization was not working the way they had hoped. We were asked to examine the extent to which this group was effectively collaborating as a decision-making body. The executives were responsible for ensuring that all sales opportunities included substantial service components. Their direct reports managed the resources and clients: these were the people who sold and delivered solutions to customers. Thus, collaboration both across practice areas and hierarchical levels was critical to the effective functioning of the division as a whole.
Key Findings: The network map on the left shows information flow in the extended leadership team. Each practice is coded in a different color, with large nodes representing the top executives and smaller ones their direct reports. The network map on the right shows the same network with the top nine executives removed. In this case, despite good intentions and engaged executive leadership, the equivalent of functional silos had emerged underneath each of the executives. Of course this was a problem because people lower in the hierarchy needed to connect across divisions to provide competitive solutions for customers.
Changes: As a result of the analysis, the executives identified seven problematic junctures and took actions to bridge these gaps. For example, one of the key gaps lay between business consulting and the managed services practice. Business consulting provided an exceptional opportunity to sell services, yet the level of collaboration between these two practices was limited to three weak connections. Another important disconnect existed between the enterprise customer group and the business consulting practice. Two weeks following the presentation of the network analysis results, the managers of these two groups agreed to create a position for a senior manager who would work specifically on developing and implementing a sales plan and managing resulting business opportunities. In addition to focusing on the problem points between the practices, managers without exception took an active interest in applying the network analysis results to their own groups. Specific presentations were done for employees in each of the practices to allow them to assess both their internal connectivity as well as opportunities for integrating across business lines. These half-day workshops helped managers understand the importance of networks and of creating grass-roots initiatives throughout the various practices to promote network connectivity.
| 5. Integrating Networks Across Core Processes or Expertise
Informal networks across core processes are often fragmented by functional boundaries. Both cognitive and organizational barriers often keep groups from effectively integrating unique expertise, which can damage quality, efficiency, and innovation. As the process map did for re-engineering, ONA provides a diagnostic assessment of information and knowledge flow both within and across functions critical to a core process.
Challenge: In one global consulting organization we worked with a highly skilled group commissioned to provide thought leadership and specialized support to the organization's knowledge management consultants. This group was composed of people with either advanced degrees or extensive industry experience in strategy and organizational design or technical fields such as data warehousing or information architecture. By integrating these highly specialized skill sets, leadership of the consultancy felt the firm could provide a holistic knowledge management solution that would differentiate it from competitors focusing on solely technical or organizational solutions. However, the partner leading this group felt intuitively that the team was not leveraging its abilities as effectively as possible and asked us to conduct an organizational network analysis of information flow within the group.
Key Findings: It is obvious from the picture on the left that the consulting practice is broken into two different sub-groups with one person acting as a boundary spanner. Interestingly enough the practice was divided on precisely the dimension it needed to be connected, their unique skill sets. The group on the left side of the network was skilled in the 'softer' issues of strategy or organizational design, whereas the group on the right was composed of people skilled in 'harder' technical aspects of knowledge management such as information architecture, modeling and data warehousing.
Changes: A lengthy facilitated session with this group allowed them to assess and discuss the relative isolation of the two specialties. As a result of this discussion various changes were made to the group's operations. First, a variety of internal projects - ranging from white papers to development of a project-tracking database - were jointly staffed with one person from each group. Second, the partner implemented mixed revenue sales goals so that each of the managers were accountable for selling projects that included both a technical and organizational component. Finally, several new communication forums were created --- including weekly status calls, a short update e-mail done weekly and a project-tracking database. The result of these interventions was significant. Over the course of the next several months, the group began to sell more work that integrated technical and organizational skills and a network analysis conducted nine months later revealed a well-integrated group that was sharing information much more effectively.
| 6. Promoting Innovation
Most innovation of importance today is a collaborative endeavor. Whether concerned with new-product development, process improvement or R&D departments, ONA can be particularly insightful in both assessing how a group is integrating its expertise and the effectiveness with which it is drawing on the expertise of others within and outside of an organization.
Challenge: The following group had been formed from highly skilled subject-matter experts drawn from across the organization to develop and disseminate leading-edge manufacturing processes and technologies. In the old structure, these experts were dispersed in myriad functions and business units. In the new, they were brought under one leader to ensure focus and consistency in manufacturing processes and technologies. The network analysis was conducted to find out the extent to which collaboration and innovation was occurring across the new group.
Key Findings: The ONA provided a great deal of insight to the incoming executive. For example, he was surprised by the central role some employees were playing and concerned with the extent to which some of the leading experts were peripheral members of the group. And while he was pleased to learn of practices in some countries that promoted effective collaboration, he was very concerned with clustering in the network, which indicated that the division was not yet well integrated. The employees were still mostly collaborating only with others in their own country. In fact, the only connections across countries were those of the leadership team and a few relationships formed during past projects.
Changes: In this case, an offsite meeting of the division's leaders resulted in some recommendations. First, a meeting of all employees was held that consisted of a series of workshops focused on projects under way in various countries. In these joint problem-solving sessions, people not only found solutions and shared recent successes but also learned about one another's expertise. And to make sure that this was not a one-off event, monthly conference calls were initiated to follow up on the projects discussed during the workshops. Just as important, the firm's leaders began to adopt policies and procedures that encouraged collaboration throughout the network. First, in hiring they began to target collaborative behaviors in interviews rather than focusing too heavily on individual accomplishment. Second, they changed project management and evaluation practices to ensure that people reached out to relevant colleagues for advice at the start of a research program. Third, the leaders centralized staffing to facilitate cross-group collaboration and to ensure that the best expertise was placed on each research project (rather than staffing locally from each country). Finally, they redesigned individual performance metrics to focus less on individual productivity and more on collaborative behaviors.
| 7. Ensuring Integration Post-Merger or Large Scale Change
Particularly in knowledge-intensive settings, large-scale change is fundamentally an issue of network integration. ONA, done before a change initiative, can help inform the change process as well as central people within the network that a sponsor might want to engage in design because of their ability to convey information to others. ONA can also be done as a follow-up 6 to 9 months after implementation. Quite often these assessments reveal significant issues that leaders need to address for the initiative to be successful.
Challenge: A consulting firm we worked with had invested substantially in changing its structure from one in which profit and loss responsibility lay with offices in each major city to one that consolidated these offices into four regions throughout the United States. The firm's leaders initiated the reorganization to increase the depth and breadth of expertise that could be brought to client projects and competitive sales situations. Eighteen months after the restructuring, we were asked to conduct a series of organizationa network analyses to assess collaboration in the newly formed regions.
Key Findings: We mapped several practices in different regions and found that the firm was enjoying mixed success. For example, the network map of one practice clearly showed a fragmentation into three subgroups reflecting the major cities in that region (above left). In another region, we mapped a group with almost identical characteristics in terms of size, work, and geographic dispersion. As seen in network picture on the right, here we found a very different pattern of collaboration across the three primary cities in this region.
Changes: To better understand why one practice had become integrated and the other hadn't we conducted numerous interviews with people in the different practices. We found differences in management that were having a strong influence on network integration and the comparative performance of the practices. For example, except for the partners, who had periodic face-to-face meetings, the group in the more fragmented region had no forum to come together, meet each other, and learn about colleagues' skills and expertise. In the cohesive network, employees indicated that other people in the region became viable sources of information only after they had met face-to-face and had an opportunity to understand one another's strengths. Just as important, staffing practices were different in the two groups. Rather than focusing exclusively on efficiency and billable hours, the more cohesive group recognized that effective relationships developed during projects. As a result, staffing decisions were often made with an eye to integrating people from different locations, a decision that flies in the face of conventional wisdom. Finally the two groups employed different human resource practices despite a common, firm wide HR policy and procedure manual. For example, although both groups used a critical incident interviewing technique, the cohesive group looked for evidence of collaborative behavior in job candidates whereas the fragmented group was much more focused on past individual achievement such as sales ability or technical skills.
| 8. Developing Communities of Practice
Communities of practice are usually not formally recognized within an organization but can be critical to an organization's ability to leverage expertise distributed by virtue of physical location or organizational design. ONA can be used both to uncover the key members of the community as well as assess overall health in terms of connectivity.
Challenge: We conducted a network analysis of a customer-facing service community of practice in a large oil and gas company. The community consisted of employees spread across seven countries. Senior managers wanted to understand the network of connections among the different countries. They believed that promoting collaboration across sites would reduce re-work as well as improve the quality and innovativeness of work done on projects.
Key Findings: The network maps revealed very little information sharing across countries. In many cases there are only four or five connections between each country and in some cases no connections at all. On a more positive note, we did find a high level of collaboration within each country. This was especially the case in the country that had successfully reduced losses due to poor quality. A close look at this country indicated that there was a high level of collaboration between the different functional groups. It is also very clear from the network map that three people were playing prominent boundary-spanning roles between several of the countries. Our initial belief was that these boundary spanners were acting as vital conduits of information between the countries. To our surprise, after interviewing several key people in the community, we found that the boundary spanners, known as global advisors, were more information bottlenecks than connection facilitators.
Changes: As a result of the network analysis and a feedback session with many of the network members several changes were made. First, the organization developed a business-driven communication plan, which provided a clear charter to tackle tangible initiatives. Second, the company developed a self-service portal that included expert locator functionality. Third, several community of practice events were conducted. This has helped community members meet and know each other-enhancing trust and therefore facilitating sharing and the breaking down of silos. Fourth, to address the role of the three people who had become bottlenecks, there was a move away from the centralized organization design model to one that was more dispersed and participatory with an emphasis on distributed decision-making. Specific people in each of the countries were assigned the role of local knowledge champions.
| 9. Personal Networks and Leadership Development.
A powerful way to improve executive effectiveness or promote connectivity in an organization is to work through each employee's personal network. Research has shown that people in more diverse, entrepreneurial networks tend to be more successful. Providing executives and employees with a means of planning their personal network development is an effective way to promote connectivity. Such feedback can help employees identify biases in their networks and understand why they might want to invest more in some relationships and less in others. For example, are people getting information only from a certain hierarchical level? Alternatively, are they leveraging only those colleagues who are physically close or in the same functional unit, or are they actively reaching out to different people to benefit from diverse perspectives?
There are many ways to assess the composition of your network and its impact on performance, learning and innovation. For example, sociologists commonly look at the effect of certain similarities between people-such as age, race, education, and gender-on clustering in networks. But these demographics do not always illustrate the subtle means by which one's contacts affect learning. In many coaching sessions with managers at all levels in organizations, we have found at least six dimensions of personal networks to be consistently important.
Combining these dimensions to assess your personal network can give you insight about where to focus your relationship building. For example, consider an executive whom listed fifteen people in his personal network. Having recently been promoted to this position, he found that most of the people he relied on at this point were new to him. Although he was pleased with this network from an informational perspective, he was little less comfortable with the extent to which he could trust these people to discuss and brainstorm tough organizational issues. One implication of this assessment was a need to rekindle relationships with two past mentors who could be distant advisers.
Additional biases existed. For example, he was concerned about his excessive reliance on people lower in the hierarchy and on those in his own group. He had set out to build relationships with his employees in order to be an effective leader, but it was clear to him that he had not established sufficient relationships with those higher in the organization. As a result, he often missed opportunities to leverage resources or knowledge that existed elsewhere in the organization, and he was less able to gain buy-in on initiatives he wanted to pursue. He was also surprised to note his heavy reliance on those physically near him. The network analysis showed him that two practices-relying too heavily on spontaneity and failing to systematically reach out to those in different locations-were biasing the information he had to work from. To fix this imbalance, he began to structure time into his calendar for people he might not necessarily bump into in the halls or cafeteria.