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The Collaborative Organization: How to Make Employee Networks Really Work

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The Collaborative Organization: How to Make Employee Networks Really Work FALL 2010 VOL.52 NO.1 The Collaborative Organization: How to Make Employee Networks Really Work By Rob Cross, Peter Gray, Shirley Cunningham, Mark Showers and Robert J. Thomas BROUGHT TO YOU BY REPRINT NUMBER 52121 MANAGING COLLABORATION The Collaborative Organization: How to Make Employee Networks Really Work THE LEADING The traditional methods for driving operational excellence in QUESTION How can global organizations are not enough. The most effective companies organizations make smart use of employee networks to reduce build more costs, improve efficiency and spur innovation. collaborative BY ROB CROSS, PETER GRAY, SHIRLEY CUNNINGHAM, MARK SHOWERS AND ROBERT J. THOMAS and innovative organizations? FINDINGS Executives should AS INFORMATION TECHNOLOGY becomes increasingly critical within large, global or- analyze employee collaboration net- ganizations, chief information officers are being held to ever-higher performance standards. A recent works to discover survey of 1,400 CIOs illustrates this mandate, with streamlining business processes, reducing enter- how high-perform- ing individuals and prise costs and improving work force effectiveness at the top of their agendas.1 But beyond providing teams connect. efficient operational support, top management increasingly expects the IT department to be a strate- Networks should be designed to gic business partner — to forecast the business impact of emerging technologies, lead the development optimize the flow of new IT-enabled products and services, and drive adoption of innovative technologies that differ- of good ideas across function, distance entiate the organization from competitors. and technical specialty. CIOs often try to address these challenges by relying on the same managerial tools they use to pur- Network analysis sue operational excellence: establishing well-defined roles, best practice processes and formal can show where too much connec- accountability structures. However, our research shows that such tools, though valuable, are not tivity slows enough. The key to delivering both operational excellence and innovation is having networks of in- decision making. formal collaboration. Within IT organizations in large global companies, we have seen that innova- tive solutions often emerge unexpectedly through informal and unplanned interactions between in- dividuals who see problems from different perspectives. What’s more, successful execution fre- quently 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,” p. 85.) CIOs who learn to harness and balance both formal and informal structures can create global IT organizations that are more efficient and innova- Some collaborative networks are clearly tive than organizations that superior to others, but employees aren’t rely primarily on formal given guidance about mechanisms. However, even how to form them. SLOANREVIEW.MIT.EDU FALL 2010 MIT SLOAN MANAGEMENT REVIEW 83 MANAGING COLLABORATION though individual employees may be able to iden- Align collaborative with business partners and tify local patterns of collaboration, broader external stakeholders: CIOs need to know how configurations of informal collaboration tend to effectively their units serve the needs of business be far less visible to senior leaders. In the face of stakeholders. By creating a detailed map of the exist- this reality, we have found that organizational net- ing cross-departmental relationships, they can see work analysis offers a useful methodology to help where innovations are occurring, where sufficient executives do two things: assess broader patterns support is being provided and where investments of informal networks among individuals, teams, should be made. functions and organizations, and then take tar- Minimize network inefficiencies and costs: Al- geted steps to align networks with strategic though collaboration is often seen as a virtue, too imperatives.2 much collaboration at too many organizational levels Network survey and analysis software allows can be a negative. It is important to reduce network senior managers to gather a wide range of data connectivity at points where collaboration fails to from employees about their collaborations — for produce sufficient value. example, whom they look to for information and expertise, whom they engage with on routine deci- 1. Attain Benefits of sion making, whom they turn to when dealing with Scale Through Effective problems that require more innovative brain- Global Collaboration storming and how much time they invest in specific Because technology decisions often vary consider- collaborations. Deeper insights emerge when em- ably from country to country due to local laws, ployees are asked to characterize the nature of their standards and languages, IT organizations tend to relationships — for instance, whether the interac- optimize their operations locally rather than glob- tions leave them feeling highly energized or ally. That can lead to tremendous redundancies in drained. expertise, capabilities and technology investments In addition to providing critical information as well as fundamental incompatibilities across about key network junctions, network analysis helps geographies. Within the IT organizations we exam- senior managers detect structural problems — such ined, many islands of expertise rarely collaborated as hidden logjams that slow the network down or outside of their own operational unit. Yet benefits of gaps that undermine strategy execution. scale — such as faster innovation through technol- Senior leaders who understand the broad patterns of ogy transfer and more access to expertise — required employee interactions and what makes for effective having connections across geographies. internal networks have opportunities to reduce col- As CIOs increasingly focus their attention on col- laborative costs and network inefficiencies. They can laboration-intensive priorities such as linking business work to improve performance in four critical ways: and IT strategies, and leading enterprise change initia- Attain benefits of scale through effective global tives,3 they often deploy new communication collaboration: Organizations can construct teams to technologies and ask for more collaboration from leverage diverse expertise and drive adoption of new employees. But when leaders forget that communica- ideas across geographies. By carefully studying collab- tion is not the same as collaboration,4 their efforts end oration challenges across functions and geographies, up simply layering new communication obligations they can identify gaps and enhance connectivity and on employees who are already overworked.5 best practice transfer in targeted ways. Every large IT organization struggles with the Drive work force engagement and perfor- challenge of how to enhance collaboration appro- mance: Uncovering the network characteristics of priately across the varied technical groups and the high performers can show employees who play business units it supports. For Monsanto Co., the similar roles how to improve their own perfor- global agribusiness company, the potential for gains mance. It can help leaders identify the individuals came into focus in 2007 when senior management who energize the organization and how to leverage evaluated the success of a global team of employees their contributions. implementing a new global transaction system. 84 MIT SLOAN MANAGEMENT REVIEW FALL 2010 SLOANREVIEW.MIT.EDU Many of the team members had previously ABOUT THE RESEARCH collaborated with one another, and these prior con- Over the past six years, we have conducted network analyses of information nections proved invaluable in establishing a technology functions in 12 large organizations in the utility, pharmaceutical, petrochemical, professional services and high-technology industries. Our foundation of trust that allowed the group to be- research has employed statistical tools and methods for identifying and come productive quickly. The results were analyzing relationships between people, known as organizational network impressive: Instead of phasing in the new transac- analysis, to assess both internal and external networks to identify tion system as a series of individual projects within opportunities for improving collaboration for significant business impact. Typical network analyses involved engaging senior leaders to identify spe- each region, the team was able to orchestrate a sin- cific challenges and opportunities facing their organization, and then developing gle global rollout. It was more than a matter of survey questions to elicit relationships (for example, “Please indicate the de- taking advantage of strong internal networks; the gree to which you typically turn to each person below for information to get team also leveraged an external network of contacts your work done,” or “Please indicate the degree to which you seek each per- son out for input or approval prior to making key decisions in your work”). We that spanned multiple regions and helped build then used a custom survey engine to streamline the data collection process support for the initiative and drive adoption. Based and network analytical software to produce diagrams, tables, scatter plots, on the group’s performance, management investi- charts and other metrics and visuals to identify key patterns and points of inter- gated potential productivity and quality est. That allowed leaders to see the
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