About Cai Kjaer

Cai Kjaer is a partner and co-founder of Optimice. Please visit www.optimice.com.au for more information.

AFR BOSS Magazine: Power and Influence Index

Screen Shot 2015-03-13 at 5.33.58 pmWe’re excited to have been working with the AFR BOSS Magazine on developing the 2015 Power and Influence Index. We have analysed all ASX listed companies (more than 2,000), and ranked all of the 5,000+ non-executive directors drawing on data from Thomson Reuters’ Connect4 database.

The underlying methodology for determining influence is based on social network analysis, which we have used in more than 100 projects across Australia, Europe, North and South America to help our clients improve organisational performance.

Our work around the mapping of networks has previously been covered by the AFR BOSS Magazine, and also in an article we had published in the Harvard Business Review (Italy) and HR Monthly.

You can read more about the problems we solve on our website.

Choosing a path – topdown vs network

pathWhich path to follow?

A few weeks ago I wrote a post called The Network of Cities and Organisations about Dave Troy’s Peoplemaps initiative. After having spoken about how cities can be viewed as networks and how we can get new insights using this perspective, Troy finishes his TED Talk with these words: “We have the ability to reshape our cities in a new way: Let’s do it.”

My message was the network perspective also provides new insights into how organisations work, and that we should do the same with our organisations. But how do we reshape our organisations? Is there anything we can learn from urban planners who have been analysing cities as networks?

Assistant Professor Zachary Neal of Psychology at Michigan State University (@zpneal) has written extensively about cities as networks and how we can reshape these. When Neal applies the network lense to cities, each element (or node) in the network is a destination, eg. a library, and streets/paths connect these.

 In his book The Connected City[1] Neal refers to three guidelines for optimum city design:

  1. Build connections between nodes that are different but complementary (e.g. neighbourhood to shopping mall is better than shopping mall to shopping mall)
  2. Consider the scale of the network as we don’t want to walk too far (don’t make us drive everywhere)
  3. Streets/sidewalks are expensive to build and maintain. Only construct when they are truly useful (vs. decorative).

Neal then makes this important point:

 “ …cities should be designed in the specific order that makes them liveable: first define the location of the green spaces and pedestrian areas, then design the network of pedestrian paths, and finally arrange the buildings and streets. This has been the process for many older cities, but newer cities are often built in the opposite order, leading to networks that are good for cars, but bad for people.”

Many organisations seem to be designed just like ‘newer cities’. First the business units and reporting lines (‘buildings and streets’) are determined. Then dotted reporting lines (‘pedestrian paths’) are created to increase coordination, and finally  – maybe – collaborative tools/cultures are considered (‘green spaces and pedestrian areas’).  

This way of designing organisations may have been useful in the past but it is not anymore. Decisions need to be made faster than what can be accomplished when the organisation is designed from a hierarchical top down perspective.  It is on this new reality that The Responsive Organisation initiative was formed. Their manifesto[2] outlines the transition that must happen from the old to the new ‘responsive’ organisations:

From

To

  • Efficiencies
  • Responsiveness
  • Hierarchies
  • Networks
  • Controlling
  • Empowering
  • Extrinsic Rewards
  • Intrinsic Motivation
  • Office and Office Hours
  • Anywhere and Anytime
  • Customers and Partners
  • Community

When we empower people to determine with whom, when and where collaboration has to happen, things happen a lot faster. This brings me back to the city-as-a-network analogy and another quote from Neal:

“Frequently in parks, or on college campuses, although there are many sidewalks, there will be a few well-worn paths through the grass. These informal paths show where people really want to go, and where the paths should have been located in the first place.”

To be responsive we must ensure that a collaborative culture supported by collaborative tools is at the centre. The way the organisation is structured will always be playing catch-up to present day needs. People know how to get things done fast. Don’t let hierarchies get in the way.

(Also read my post on Network Leadership inspired by the efficiencies of roundabouts to get traffic moving)

[1] Neal, Z. “The connected city.” How Networks are Shaping the Modern Metropolis. London and New York: Routledge (2012).

[2] http://www.theresponsiveorg.com/manifesto

AFR BOSS Magazine: Secret Power Brokers

ElvisThe July 2014 issue of the Australian Financial Review’s BOSS Magazine is featuring a story about the results three of our clients have achieved from the use of Social Network Analysis.

It is yet another sign that SNA is becoming mainstream, and we are very grateful that  Qantas, Telstra and Lend Lease all wanted to contribute.

Many thanks to the BOSS Magazine for allowing us to share the story available with our network.

Download the article: Secret Power Brokers – The ties that bind our workplace

Roundabouts and Network Leadership

Last week I came across a Mythbusters video Shawn Callahan mentioned in a post on Facebook. In the video the two hosts, Adam Savage and Jamie Hyneman, test the effectiveness of a traditional 4-way stop versus a roundabout. Having grown up with roundabouts I wasn’t particularly surprised to discover that roundabouts got almost 20% more cars through compared to the 4-way stop. 

Traffic cop

However, what made me sit up was that they also ran a test where they put Jamie Hyneman in the middle of the 4-way stop playing the role of a policeman directing traffic. They simply wanted to test if the decision-making a traffic cop is making is more efficient at getting cars though than the decision-making all the individuals in the cars can do by themselves. 

Here is what really surprised me: The ‘top-down’ traffic cop approach was 30% less efficient compared to the 4-way stop. In other words, when decision-making is removed at the local level efficiency is significantly reduced. However, when we replace the traffic cop with a roundabout we get a 60% improvement!

For me there are strong parallels to the way we manage our workplaces. I often see a battle between ‘old style’ industrial top-down traffic-cop approach where management is clearly visible, authoritative and controlling, versus the emerging network leadership approach, where management sets out the principles but pushes autonomy down through the organisation.

While the network leadership approach is emerging, the winds are changing fast. According to research by the Chief Executive Board, employees’ work is getting more and more inter-connected, and the need for coordination continues to grow. According to their 2012 report ‘Driving Breakthrough Performance in the New Work Environment’ 67% of respondents (of which there were more than 23,000) stated that greater amount of collaboration is required, and a large majority (ranging from 57% to 67%) said that they regularly coordinate work with people on different teams, at different job levels, in different organisations and with people outside their own department or function.

Tasking managers to be traffic cops directing collaborative efforts across and between organisations is – as the Mythbusters show demonstrates – simply too inefficient. Rather, we need to let employees coordinate work among them, and in our view the role of management should be all about creating the equivalent of efficient roundabouts:

  • RoundaboutSet the overall rules and priorities
  • Help employees connect
  • Empower employees to make decisions locally
  • Monitor what is going on and adjust rules and policies accordingly
  • Only get involved when there is a need, e.g. resolving conflicts

Welcome to the world of network leadership.

 

Eurovision – Visual Voting Map

Eurovision 2014 logoEurovision, the (in)famous European music competition is just around the corner with semifinals starting 6 May in Copenhagen, Denmark. To get in the mood we have created a map showing a summary of the 2013 voting patterns.

Have a close look at the red lines which highlight countries that have voted for each other, and you’ll see some interesting cultural patterns, such as ‘blocks of countries’ that vote for each other:

    • Scandinavian countries Denmark/Norway/Sweden
    • Azerbaijan, Belarus and Georgia
    • Belgium and Holland

Given that voting is in the hands of the both TV viewers and a small jury made up of music industry representatives (50/50 power) one would expect that the voting patterns resemble musical preferences based on cultural similarities rather than being ‘nice’ neighbors or repaying last year’s votes. But what do you think?

Will we see similar patterns this year? Please tell us by using the comments field.

Here we show the same data, but with the countries placed on Google Maps:

ASX Gender Scorecard 2014

Here at Optimice our interest in ASX board members has mostly been about mapping the board room connections, and some of this has previously been covered by Women’s Agenda and Crikey.  However, since it is International Women’s Day on 8 March 2014, we wanted to focus on something different – interesting findings that are not entirely about connectivity.

In our most recent analysis of more than 9,000 ASX board directors, we have uncovered some other facts regarding gender diversity, which we hope you will also find interesting:

  1. Board positions and gender 
  2. The age distribution and differences
  3. Gender diversity by industry sector
All of the data we base these findings on was sourced from Thomson Reuters and extracted on 28 February 2014.

#1: Chairmen and Chairwomen

If, next time you meet a female board director, you ask them, “Are you are a non-executive board member?”, then the answer is probably yes. 80% of these women are non-executive directors. If the answer you get is “No actually. I am the Chair”, then you have met someone very special. Just  4% of the female ASX directors are Chair(wo)men. 

ASX Gender Diversity by Position












When we look at the overall gender distribution among Chairmen (or even Deputy Chairmen), the women have less than 3% of the positions, and the men have more than 97%.

#2 – Older men and younger women

We have also compared the age distribution among male and female ASX directors, and there is quite a substantial difference. The women have a number of spikes in the 49-55 age group, while it is pretty clear that the men hang around a lot longer:

ASX Directors Age Profiles 2014











#3: Banks and Insurance are for girls – paper for boys
When we read about the percentage of women on ASX boards it is often represented by a single percentage number, and typically only the ASX200 companies are included. However, when we look at the entire ASX by industry sectors, we start to see some revealing details and interesting patterns.

As far as the overall board gender diversity is concerned, the banks are taking the pole position. The paper sector comes in at an unenviable last place, but since the sector is only made up of 3 companies they could easily get much better representation with just a few female appointments.

ASX Gender Diversity by Sector 2014
In the second last place we find the mining industry, and it is here the real challenge lies if we are to really change ASX board room gender diversity. While you could argue that there are more women on mining boards than in any other industry (the 3.81% represents more than 100 women), the problem is that it doesn’t really make a dent in the overall percentage because there are more than 3,000 men (96.19%). 

The big question is therefore what can be done to get (a lot more) women on mining boards.

And while we’re thinking about that, we might as well start thinking about why there are so few chairwomen and what can be done to improve that as well. Here at Optimice we don’t have the answers, but we will keep monitoring this space and hope we can inject some motivation for change by publishing these statistics. 

Last point – if you are a board member for an ASX listed company and would like to know how your board’s gender diversity percentage stacks up against your industry peers, or you’re interested in finding out how your board is connected to other board through overlapping directorships, just send us an email and we’ll let you know.

Nodes, ties and degrees – Social Network Analysis basics explained

I recently came across an article in Fast Company called Why Successful people have so many groups of friends. Not only was it a really interesting read, but there was also a really nice graphic by Dave Gray (founder of Xplane, and awesome with a pen!).

I figured that there were a couple of other key concepts that it would be great to include, and therefore created another drawing (trying to replicate Dave’s hand-drawn style!). Dave’s drawing is also included in this very short presentation.



Workplace, space and connectedness

I think the most important work that happens in organisations today is social, and apart from purely transactional work I can’t think of any example where working together doesn’t create better, smarter, faster or more innovative solutions. And frankly – if the work doesn’t require social interaction, why haven’t you already outsourced or automated it?

In a study of three Italian consulting companies Economist Arent Greve[1] found that employee’s personal relationships (Social Capital) was the most important factor in determining productivity. Dr Matthew Lieberman from the Social Cognitive Neuroscience Laboratory at the University of California states that “The assumption that productivity is about smart people working on their own has been masking the fact that individual intelligence may only be optimised when it is enhanced through social connections to others in the group” [2].

Here at Optimice we believe that the work that really matters is inherently social, and that connectedness is the true differentiator. We aren’t the only ones believing this, and both Google and Yahoo have in public statements made it clear that the workplace plays a critical role in enabling connectivity. The link between workplace, space and connectedness is therefore a matter for serious consideration.

Space and connectedness

Did you know that if you sit more than 50 meters from another person you’d rarely – if ever – communicate (neither f2f or electronically)? Since many organisations co-locate business units, this means that you rarely speak with people outside your own business unit unless it is directly related to your work.

In the late 1970s, MIT Professor Thomas Allen researched the physical distance between people and how often they communicate. The result is known as the ‘Allen Curve’, and shows that “the probability of a pair of people in an organization communicating with each other declines rapidly as the distance between them increases”[3]. Allen found that there is a 50-meter barrier, and if a person who sits outside the barrier, then the communication literally is non-existent.

Allen Curve

Figure 1 – The Allen Curve

You might argue that the importance of physical proximity would have diminished with the rise of electronic communication methods. However, Allen repeated his research in 2006 and concluded: “Our data shows a decay of all communication media with distance”[4].

In other words: We communicate more with people that we are sitting close to regardless of the method of communication.

Allen is not saying that phone, email etc. isn’t used to communicate with people who are further away, or that we don’t communicate with people who are further away. We all know that email, phone etc. has enabled us to communicate and collaborate with people we would otherwise never have been in contact with. His point is simply that we communicate more with people that we are sitting close to.

Perhaps this was true in 2006, but shouldn’t we challenge this finding here in 2013? Surely all of the social media tools are removing the reliance on physical proximity.

There is no doubt that social media sites are helping us connect with people that we are not physically close to. At times we are even establishing relationships with people we never get to meet in real life. However, when you compare the frequency of interaction against those we are co-located with, physical proximity wins. Another way of thinking about this is to ask yourself this question: Wouldn’t you communicate more with a ‘remote’ person if you were co-located?

Our project work also shows that organisations have very clear location-based silos. For example, the map below shows the collaboration patterns for a logistics and supply chain organisation.

(The colours represent the two major locations/cities that the teams worked from)
Network Map - Location SilosApart from a few connections between the locations they are working as two separate entities. The old saying ‘out of sight – out of mind’ holds true.

Organisational charts, space and silos

Organisational silos are also created around the formal organisational structures, and it is a common challenge most organisations are faced with. When we then allocate workplaces that match the existing organisational structures by locating HR people next to other HR people, Finance people next to other Finance people etc., we are reinforcing the silos.

Our allegiance to the organisational chart – reinforced by physically co-locating business units and driven by KPIs  – results in deep silos.

Why are we insisting on co-locating people between whom collaboration is already a given due to the need for coordination?

Virtual collaboration tools have been put in place to enable efficiencies by bringing work to where the people are, rather than the other way around. It seems that the best explanation lies in the need for management to keep an eye on things, and that is most easily done when the team is within line of sight.

But there is a high price to be paid for the lack of diversity that comes with silos. Real break-throughs are less likely to happen between people who work in the same business unit, doing the same thing surrounded by like-minded people. What we need is to change our approach and orchestrate connectedness between different people with different backgrounds working on different things. The fine balance between diversity and cohesion is tipped away from the diversity dimension in the majority of organisations that we have worked with.

Orchestrating connectedness

To orchestrate connectedness we first need to baseline the existing connections. Social Network Analysis (SNA) is widely acknowledged as the most effective way to uncover collaboration patterns across locations and organisational structures. Here at Optimice we are guided by three simple questions that will quickly make these patterns visible:

  • Who do you collaborate with to get your work done?
  • What is the primary reason for this?
  • How important is this interaction for you?

By color-coding and grouping each person by location and business unit, the intra-location/organisation collaboration patterns stand out immediately. Below you’ll see an example of how quickly you can discover the collaboration patterns between various areas in a building.

Network Map - Across floors and levels

Using these insights about the current collaboration patterns we can now orchestrate connectivity be moving people who should know each other closer together. For example, if we want the people on 5H and 7H to have stronger ties, then co-locate them for a period of time and create incentives for them to make the best of the newfound ability to connect.

The power of SNA lies in our ability to be very specific about the connections we want to orchestrate, and in our ability to subsequently measure if it had the desired effect. As such it becomes a critical measure of success.


[1] Greve, A.,Benassi, M., & Sti, A.D, (2010). Exploring the contributions of human and social capital to productivity, International Review of Sociology – Revue Internationale de Sociologie, 20(1), 35-58.

[2] Lieberman, Matthew D (2013), Social: Why Our Brains Are Wired To Connect, Oxford University Press

[3] Allen, Thomas J. (1984). Managing the Flow of Technology: Technology Transfer and the Dissemination of Technological Information Within the R&D Organization. Cambridge, MA: MIT Press.

[4] Allen, Thomas J.; G. Henn (2006). The Organization and Architecture of Innovation: Managing the Flow of Technology. Butterworth-Heinemann. p. 152.

HR Monthly on Social Networks: You need a map!

HRMonthlyOctober2013

A few weeks ago we were contacted by the editor of HR Monthly, an Australian magazine aimed at HR professionals, for a story on social networks. The editor had heard us speak at the Hargraves Conference (blog post available here) back in May, and was seeing a real desire for the HR community to ‘add more value’ to its internal customers.

The editor was really taken by the whole area of mapping informal networks, and the outcome was a terrific story just published in HR Monthly. I have been given permission to share with our network, as it is otherwise not publicly available. Click here to download.

The article also includes some great examples from Deloitte, Bupa and one of our clients Christine Gardner. We are of course very grateful for the positive endorsement of our company, but also the value that mapping and analysing social networks brings in general.

We hope you find the article of good use.

The evidence is here: Visual portfolio mapping delivers better decisions

More than 4 years ago Optimice approached University of Technology of Sydney with a proposition to see if the visualisation of interdependencies in a project portfolio could bring business value. We first heard about this at a Knowledge Management conference in Canberra, Australia, where Graham Durant Law had looked at it as a part of his PhD research. We wanted to take this even further into other industries and also prove that this actually led to better outcomes. Now we can finally tell you about the exciting findings.

The basic concept of mapping project interdepencies is quite simple. You draw a line between the projects to show the dependency.

Project Interdependency SimpleWhere it starts to get more complicated is when you add more projects and interdepencies. This is where social network mapping comes in. We believed that the core visualisation techniques drawn from the field of social network analysis would provide the best “cognitive fit”, i.e the optimal way to represent information for decision making. Therefore, we put the proposal to UTS to test how well the social network analysis visualisation technique actually works in a portfolio management setting.

The research led to an article in the International Journal of Project Management where we outlined the benefits of using social network visualisation techniques to show project interdependencies. This article also included qualitative evidence of the positive business outcomes the visualisation led to. However, what we really lacked was some more tangible evidence.

Dr Cathrine Killen from UTS then developed an experiment that would allow us to compare the visual map with two traditional techniques for showing project interdependencies. In 264 separate experiments Dr Killen gave each participant exactly the same challenge:

In a portfolio of 26 projects with a total value of $16m, please cut 10% of the budget by removing one or more projects taking into consideration the strategic fit and flow-on effects.

The 264 participants were randomly given one of the following three different representations of the portfolio to work with:

Comparison of techniques
  • Map shows the project interdependencies as a social network map. Each project is represented as a circle, color-coded by ‘strategic fit’, and sized by budget
  • List shows the same information, but in a tabular form
  • Matrix also shows that same information, but as a matrix
The research found that the use of the map was correlated with the highest levels of decision quality. Not just to a small degree, but nearly 3 times better:

“...the percentage of research participants that made the optimal decision was highest for the group that used the network mapping VPM tool, with 28.6 percent of the participants achieving an optimal decision in the time allowed. Just over ten and eleven percent of the decisions made using the other tools, the dependency matrix and the Tabular list were optimal.

The management of interdependencies is an acknowledged area of weakness for project portfolio management. If your organisation’s project portfolio runs into the millions, if not billions, of dollars you will appreciate just how much value you can gain from choosing the best techniques to understand interdependencies. 

In these days where the time-poor executives need to make critical decisions that can have significant flow-on effects across the portfolio, we need to make sure that we provide them with the best possible foundation to make informed decisions. This is exactly what makes the visual portfolio map stand out from the rest.

For those of us who spend our lives mapping networks it is also a bonus to get empirical evidence that visualisation directly and positively impacts business outcomes.

You find a link to the Dr Catherine Killen’s paper which will be presented at the Decision Sciences Institute’s Annual Conference in Baltimore, Maryland in November 2013 here. There you can also find an interactive version of the portfolio map included in the research.