Why 90% of Organisations would NOT Survive a Digital Disruption

Really? 90%? Well let me qualify that and say that that 90% includes those organisations that also try to take advantage of a digital disruption opportunity and are not successful. Nevertheless it’s still a big number, so here is how we are justifying it. We provide some compelling  ‘reality data mining’ analysis to support our case.

Surviving a Digital Disruption will require a major change in the way organisations currently work

Not as controversial? Well let’s look at how Organisational Change guru and Harvard Professor John Kotter sees it in his recent book XLR8. He bemoans the fact that some 70% of major organisational change initiatives fail (so that is 70% already right?). Kotter introduces the concept of the ‘Dual Operating System’ where he places the informal Organisational Network right up there side by side with the formal Hierarchy and Business Processes:

Kotter’s claim is that to successfully achieve an organisational transformation we must now appreciate the power of the informal network to resist change, and therefore, it is appropriate to acknowledge the important role it plays in transformational change. In fact it should not be a competition, but a confluence of the formal and informal, if successful transformation is to be achieved.

Now just a ‘little bit’ of science

Those of you who have been following our activities at Optimice will know that we are passionately focused on relationships and the networks that they form; in essence the ‘network’ side of Kotter’s dual operating system. However, we also pay homage to the formal structures by identifying, through our analytics, how networks transcend the formal hierarchy. In fact this is where our clients get the majority of their value from our work. Hence, as you can imagine, Kotter bringing the dual operating system to the attention of the business community was music to our ears.

Recently we studied the interaction habits of a mid-sized specialist consulting firm with over 700 staff spread between offices in each of the major Australian cities and several others throughout Asia and the UK. As well as surveying them to identify the people that they had met face to face with over the preceding month, we also analysed the connection patterns contained within their Email (Outlook), instant messaging (Lync) and Social networking (Yammer), and their timesheet records on client project tasks that they shared with each other. We were therefore able to build a very rich picture of how this organisation collaborates over both business/geographic, as well as core discipline lines. Below are the summarized results for all relationship channels for cross- Location (business unit in this case as well) and Discipline:


The bars show how many relationships between colleagues the various channels have created. The lines show the proportion of these relationships that are formed between people from across Location/BU and Discipline.

The bars show that e-mail is still by far the most dominant digital channel that connects the highest number of people. However, when we look at each channel for the % of staff that are connecting with a colleague outside their own home business unit/location (red line), there is a clear trend. As one would expect, the physical face to face is heavily influenced by location, as this organisation’s lines of business match their geographic location, so only about 5% of face to face interactions happened with staff outside that location/business unit during the month. About 16% of staff recorded time against a task belonging to another business unit. For Email and Lync the number grows to around 32%, but close to 70% for Yammer.

When we look at the cross discipline interactions we can see the percentages for outside the core discipline are higher, but Yammer is still the highest at 65%. Email is close to this, probably reflecting the cross discipline nature of the projects being undertaken. Note that Enterprise Social Networking is often used to help organisations deepen their connections across disciplines, through establishing discipline specific groups. In this case perhaps the Yammer diversity across disciplines may not be a good thing, if strengthening disciplines is an objective.

So what is going on here? Our assessment in the context of Kotter’s dual operating system, is that only one of these channels is supporting the ‘Networking’ side and that is Yammer. It is also the least used channel currently. For Email and Lync, we believe they are mostly reinforcing the formal interactions represented on the formal Hierarchy/Process side.

We then decided to explore the overlap between the different channels e.g. for say the Email channel how many of the staff connected by Email are also connected by Yammer; or how many of the staff who have indicated a face to face connection are also connecting via Lync of Email? To be able to achieve a fair comparison we decided to use a common minimum set of participants for the digital channels. In this case that set was the 171 staff interacting in Yammer (the smallest network), during the selected period. The chart below show the raw number of overlapping relationships for the different channels. We use a network correlation technique to remove the effects of the different sizes of the networks. Coloring is used to provide a “heat map” effect: 


We can see that Email is the dominant communication channel by far, which created 4,250 relationships. Intersections with the Email network will therefore be far greater. One can clearly see that the Yammer connections are differentiated from the other channels by its lower correlations.

We can also see that the higher correlations between Face-to-Face, Email, Lync and Timesheet suggest that these channels are reinforcing each other. Timesheet data represents customer facing projects, so clearly this is formal, business transactional. This is reinforced by Face-to-Face, Email and Lync; strengthening the ‘formal’ Hierarchy side of the business. We were able to confirm Thomas Allen’s surprising results, where he found that the drop off in communications with physical distance is also mimicked in the same predictable way in electronic communications. Using a subset of some 80 staff co-located on a single floor, we were able to assess how close the different communication channels followed the Allen Curve.

Incredibly some 53% of email interactions with co-located staff were to people sitting within 6 metres of each other. For that same 6 meter separation, nominated face-to-face contacts were a comparable 56%. The Allen curve was less evident with Lync (31% to those within 6 metres) and not evident at all with the Yammer data.

So what does this mean for the Business and Digital Disruption?

We have a framework we use to identify performance in a networked organisation. Essentially we look at two dimensions; Depth (cohesion) and Breadth (diversity). Ideally for maximum performance we expect an equal balance between the two. Kotter has a similar framework with equivalent axes that he labels “Ability to Innovate” (Our Diversity dimension) and “Ability to Execute” (Our Cohesion dimension).

In general we can accept that for radical innovation, e.g. a response to a digital disruption, we need diversity. To get things done efficiently, we need cohesive networks, where we know what each other is doing in some detail.

The challenging quadrant on the top right is where we try to balance diversity and cohesion. But here is where we get maximum performance. This is where there is a sufficient critical mass of diverse thought to combat the ‘group think’ around ‘Business As Usual’ (BAU) operations alone. This balance is what we need to exploit digital disruptions, as opposed to being run over by them.

This is a significant challenge for most organisations. As our study identifies, most organisations will have the majority of their attention on BAU tasks. This is actually reinforced by the digital channels of email and instant messaging and likely file share systems like Sharepoint as well. In addition to the channels analysed, the vast majority of business analytics provided by ERP providers are about “activities” related BAU, and not the relationships that distinguish the network.

We can plot our 5 communication channels on our performance matrix:

 This chart plots each channel’s Diversity as %External (to location/business unit) against the Cohesion or Density of each network (number of connections as a % of all possible connections). The relative size of the bubble indicates the number of connections.

Currently Email, through its sheer volume, is the channel providing most connectivity, but mostly within the formal lines of business. We can see that Yammer stands alone in terms of diversity, but is still very immature and lacking a density of connections, as well as actual numbers of participants.

From Lync, Timesheets and Face-to-Face, using the equivalent Kotter chart, we could say that Yammer provides a ‘high ability to innovate’ channel, but at this stage, little ability to execute on this potential.

In other words, at this point in time, for this case, any ideas emerging from the Yammer channel is likely to be swamped by the BAU channels. So the balance is clearly in favour of the formal Hierarchy/Process side. A 90% bias is probably conservative when we take all evidence into account. Yet unless an organisation’s Network/ Hierarchy imbalance is effectively addressed they will not survive a digital disruption.

 So what can be done to redress the imbalance?

The good news is that there are a lot of resources and support out there for helping organisations work more ‘as a network’. Frederic Laloux’s recent book on “Reinventing Organisations” provides an in depth coverage of structures, practices and philosophies for working holistically as a network, covering everyday issues like how decisions are made, how budgets are set, even how salaries are decided on. Zappo is a company moving rapidly toward self-organisation. Their CEO recently recommended Laloux’s book as recommended reading for all staff and controversially added that the company would offer a generous severance payout for anyone who was not comfortable working in a holacracy. Holacracy is now a management theme promoting “anti-hierarchy”. While both of these resources provide practical help in establishing a self-organising organisation, for most of us it will be more about achieving a balance between the ‘Network’ and the ‘Hierarchy’, rather than a complete takeover bid.

One of Laloux’s key findings was that each successful case study he reported on had a passionate founder/leader who could ‘protect the space’ of self-organisation. This may be a little beyond reach for many organisations, but what we are seeing in the market place today is clear evidence that leaders of large hierarchical organisations have now conceded the value by allowing the ‘network’ to build within their organisations, if not yet wholly embracing it. The sales of Enterprise Social Networking (ESN) platforms have been accelerating along with the acquisition or development of ESN offerings from the major IT vendors like Microsoft, IBM, Oracle and Salesforce. It is our belief that it’s now up to the individual staff to embrace this opportunity and take the initiative to create a workplace that they can truly engage with. The alternative will be to fall back to hierarchical control and all the negatives that go with this.

Some specific things that you can do to not only survive, but thrive in a digital disruption

There are many things that you as an individual can do to help build your network presence, and therefore your organisation as a whole’s network presence:

  1. Start working out loud. This doesn’t mean you have to blog about everything you are doing. It does mean however that you should aim to make your work more visible and then engage in conversation about ways to make it better. It could be as simple a posting a question on a forum about a challenge you are facing at work, through to posting your own hints and tips on things that may have worked well for you.
  2. Think twice about private messaging. You have seen from our analysis that Email and Instant Messaging (Lync) are Hierarchy reinforcing channels, rather than Network enhancing. It doesn’t have to be that way. Both channels have the facility to message to multiple people; and when done appropriately, does not result in spamming. In my knowledge management days at BHP and Computer Sciences Corp., two of the most successful knowledge sharing systems was simple ‘Request for assistance’ sites set up using simple email lists. Today the ESNs play that role, but if your organisation hasn’t yet acquired an ESN, start using the group features to help you ‘work out loud’.
  3. Use your ESN or lose it. Those organisations that have invested in ESN platforms regularly are challenged with adoption rates and needing to report on value achieved. The non-adopters often quote a ‘lack of time’. As you can see from our analysis, much of that ‘time’ is spent using the digital tools to enhance our BAU tasks. While this may be a good short-term use of your time, one should always be looking out to the future. A digital disruption has the power to make your BAU job redundant in the blink of an eye.
  4. Use your video channel to network. Many of us in our home lives have used Skype to connect with friends and family online and around the world. My own daughter has been living on the other side of the world for nearly a decade, but our weekly Skype calls have contributed substantially to bridging that distance. We don’t set an agenda for our Skype calls. We don’t ask ourselves what we need to achieve on the next call. While we may have a regular but flexible time to call, the time we spend conversing is quite flexible, depending on what we have on at the time. Well guess what? Microsoft now owns Skype, and those ‘free’ calls are most likely coming to an organisation like yours! And no doubt the competition will quickly follow. So why not start to use your video channels to network, rather than to just execute BAU work? Turn it on in your coffee/lunch breaks and share some networking time with your colleagues elsewhere in the world.
  5. Get help if you need it. It may sound strange that we might need help to do what should come naturally, and that is to network. What is hard however is balancing our organisational networking with the demands of the organisational hierarchy. Recall from our performance matrix, that this is where maximum organisational value can be gained. And this is where Social Business Consultants earn their living. This is not the place for a ‘Social Business Consulting” directory but here are a few references to organisations that we have had some reasonable contact with in this space:

 Open Knowledge, Italian headquartered, have developed over many years a ‘Social Business Index’ to assess your readiness for working as a network.

Ripple Effect is an Australian headquartered social business consultancy, former part of the UK Headquartered Headshift.

Post*Shift is UK headquartered and the prior founders of Headshift before its sale to US based Dachis group; who in turn was acquired by Sprinklr. US social business consultancies seem more focused on Social Media, than employee engagement, though eventually the two will meet.

For those that prefer ‘big end’ consultants, most have a social business consulting practice. Perhaps the most notable is Deloitte, who regularly report on social business trends.

We have for a long time seen the value of monitoring social networking connections in real time. With the rise of ESNs we have recently designed an online social network analytics platform called SWOOP , to provide real time feedback on many of the digital collaboration channels mentioned in this post. Our vision is that individuals, line managers, community managers and senior executives will be able to view their performance through the lens of the dual operating system i.e. Hierarchy + Network. In its initial release it works with Microsoft’s Yammer. Feel free to explore, there is something there for all roles and levels in the organisation.

Communicating Diagonally: New Value Pathways via Enterprise Social Networking?

Diagonal communication

One of the keystone value claims for implementing an Enterprise Social Networking (ESN) platform like Yammer, Jive or IBM Connect is facilitating horizontal communication paths across the enterprise. Traditional organisational hierarchies have proven to be poorly suited to sharing information and knowledge sideways, as designed communication pathways at the base of the hierarchy would have information move vertically upward before moving across and then downward to its waiting audience. A lot can happen to an intended message as it makes this tortuous path, often resulting in a poor communication result.

But what about “Diagonal Communication”? By this we mean communication paths that connect leaders of business units to non-leaders of other business units and visa versa, as shown by the dashed diagonal pathways below.
Diagonal structure

A natural response would suggest a potential undermining of the leaders’ authority i.e. if I as business leader, were found to be communicating directly with a staff member of another business unit, would this be disrespecting that member’s own business unit leader? Likewise, if as a non-leader, I seek to communicate directly with a leader of another business unit; am I disrespecting my own business unit leader by not involving them in the communication? It is this reticence that no doubt hinders this style of communication in traditional hierarchical organisations; arguably at some cost to the organisation.

Recently we completed an analysis of collaboration patterns with a major financial services company by analysing the usage logs of their ESN (Yammer). The objective was to understand the value being gained to date by applying our social networking analytic measures. Because this was a ‘relationships centred’ analysis, we aimed to go beyond the simple usage traffic measures and only include connections where a true reciprocal interaction had occurred i.e. to be included in our analysis a specific two-way interaction between two individuals had to have occurred to produce a link. As anticipated, the horizontal collaboration paths across internal business units were indeed prominent, but perhaps the bigger surprise was the size of the diagonal communication paths: 

Diag Comms Table

The results indicated that the diagonal linkages were nearly three times the number of the vertical, within business unit, connections. One can only speculate as to why. Perhaps the ESN was seen to give license for this form of informal communication, without the concerns attached to more formal communication. Perhaps it is a response to such  ‘protocol’ constraints by releasing a pent-up demand for communicating diagonally in a more timely fashion; with the knowledge that the formal channels can be enacted should the communication escalate to something significant.

Whatever the reason there is significant value to be gained though opening up diagonal channels of communication. Firstly, the opportunity to accelerate more radical enterprise innovations. Radical innovations typically result from the bringing together of inputs across a diversity of sources, like other business units. Formal channels can kill off an innovation opportunity simply through its bureaucratic nature. Secondly, organisational politics can result in mixed messages as communications move up and down a hierarchy. Diagonal communication can open up a more open and active narrative across the organisation, leading to more informed and responsive decision-making. Last but not least, ESNs, by opening up informal diagonal channels of communication, while potentially not undermining the formal channels; allows organisations to get the best of both worlds: Social + Business.

Social Physics: Oxymoron or Big ‘Social’ Data Tipping Point?

I’ve long been a fan of Sandy Pentland’s work at the MIT media lab. Pentland is perhaps best known for his ‘social tags’ used for monitoring individual human interactions to identify those interaction most associated with productive teams. When his new book “Social Physics: How Good Ideas Spread – Lessons from a New Science” coincided with the Easter holiday break, what better way to spend the break than to consume another Pentland tome? The title “Social Physics” in itself is notable as Pentland’s desire to a put a name to what he is doing, that is, identifying social interaction patterns from logged activity data. I once had a similar aspiration based on my early explorations into mapping discussion log and email data, long before even the Internet and social media/networking was around. My term was “Net Mining”, which I cheekily tried to introduce into Wikipedia, but was rightly rejected by the Wikipedia moderators as having ‘no recognised history’. Perhaps Pentland from the loftier heights of the MIT Media lab will have more success. The use of the ‘Physics’ term is an attempt to align his activities with a fundamental science, and perhaps in the future a few Pentland inspired “Social Physics Laws” that underpin our daily lives.

For some, placing the words ‘Social’ and ‘Physics’ side by side is an oxymoron only to be used in the context of sex education (but lets not go there!). An early critic of Social Physics is none other than Nicholas Carr, who famously stated a decade ago that “IT Doesn’t Matter”; has written an article in the MIT Technology Review (to add insult to injury). Carr states about Pentland “what he fails to see is that those norms and influences are themselves shaped by history, politics, and economics, not to mention power and prejudice” in referring to Pentland’s claims that social norms, behaviours and influences can be accurately modelled mathematically.

 While its hard to argue with Carr’s points here, it is fair to say that Pentland’s ‘experimental rig’ is unquestionably the most sophisticated that we have seen to date, generating copious data for measuring social interactions.  While the social tags were viewed as a little extreme when first introduced, since then, the smart phone has become a proxy social tag in Pentland’s research, which brings the practicality of his work eerily close. So even if the ‘physics’ analogy is a bit of a stretch, as Carr suggests,  perhaps the Pentland crusade could still prove the tipping point for the legions of social network analysis (SNA) academics, who have been analysing social relationship networks using mathematical methods for over 80 years now, to a point where mainstream business finally ‘gets it’.

The book essentially builds on his earlier work with social tags and effective teams. Whereas this earlier work identified the correlation between conversational interaction patterns i.e. the to and fro of dialogues had; equality (or not) of interactions used along with body language attributes identified by the social tags; this book goes a little further to claim a degree of predictive capability.  The claim to be able to infer a cause and effect, over a simple correlation observation is facilitated by the longitudinal data that the social tags and now mobile phone apps can collect. Pentland rightly points out that traditional survey based collections are mostly ‘single point in time’ (marked as ‘1’ in the graph) and therefore make it difficult to claim any cause and effect relationships from the results.

SP Graph

This graph from the book is notable in identifying where the social physics efforts exist when compared with the more traditional survey based social science studies (and our own social network analysis surveys, I might add). As much as we could be offended by being placed close to the (0,0) axis point I still feel there is a big difference in the quality of the intelligence you might gain from an astute survey question and any number of social tagging data points. But one can’t argue with the duration of observation measure. Surveys are a point in time. And pragmatically the same survey is unlikely to be repeated more frequently that on an annual basis at best. My long-term view therefore has been that they are complementary instruments, so I am happy to be a Social Physics follower at this point in time. I might add here that Pentland does not rely solely on ‘mined data’ or what he calls ‘reality modeling’. He does describe a mobile phone app they have developed to turn the device into a social tagging device, which includes surveys to capture personal feedback information as an adjunct to the logged data, reinforcing the view of their complementary usage.

The predictive models Pentland and his colleagues developed for use in predicting consumer behaviour, influencing behaviours, or citizen behaviours identified in the book are mathematically as sophisticated as traditional physics and therefore mostly out of reach to 99% of the population. But this is a necessary requirement that is often understated by ‘Big Data’ proponents. To come up with the conclusions that Pentland does, means that terabytes of data have to be filtered and analysed. This is a non-trivial task and is prone to the same erroneous conclusions that poor physics or economics can produce if not undertaken with care. Just one slight criticism here. While Pentland starts to identify some of the mathematics behind his predictive models, in the book there was scant recognition for the decades of social network quantitative analyses undertaken by many researchers around the world, with perhaps the SNA ‘Bible” by Wasserman and Faust and the UCINET software being best representative of its application.

As I worked through the chapters I became more excited by how similar Pentland’s key findings, from his sophisticated big data modelling, reinforced our own more speculative assumptions, gained from our more traditional survey driven social network analyses. The most prominent finding relates to idea flows traveling through an exploration phase, where diversity of input is a key success indicator; followed by an ‘engagement’ phase where more intense interactions are required to turn ideas into actions. These findings reinforce the concepts we introduced in our white paper ‘The Three E’s of Innovation” (Explore, Engage, Exploit) which was designed for application within traditional organisations, where specific organisational departments and individual roles might play one or more of these roles, as part of their organisational mandate. Pentland’s Explore/Engage was more generically framed, though he does acknowledge the organisational context in his work with organisations in identifying what makes great teams. In the book he makes the same plea as many of us working in the social business world, to put the formal organisational hierarchy aside and to focus on the interaction patterns. He suggests that one way of achieving this is by making such interaction patterns visible to the individuals, in the hope that by viewing their own interaction patterns, they will be more motivated to adjust their own interaction behaviours; in contrast to being coached or instructed from above. We are comforted by this suggestion as again it reinforces some of our own experiences regarding the use of network visualisations to influence behaviour change. For example, we collaborated with the University of Technology in Sydney in visualising project interdependencies to influence project manager decision-making. More recently we have been using our interactive web maps as a vehicle for prospective leaders to ‘discover’ their own better networking strategies.

For us Pentland has added the science, which reinforces our own less data intensive findings and field experiences, and therefore adds to our confidence in pursuing our networked approach to innovation.

The third reinforcement comes from the findings from activity around ideas (as assessed by the social tag information). The diversity of participants in these more open conversations was shown to characterise the exploration phase, and then the denser interaction patterns were shown to characterise the engagement phase. We had conducted some preliminary research on data collected from a Spigit implementation. Spigit is an ideas platform, which makes use of an innovative gaming engine to attract participation in a more open and transparent ideas market place. Ideas platforms largely reflect Pentland’s Exploration phase. In our research exercise we had data on ideas that had actually been accepted for implementation by management and therefore could look for patterns of interactions from the Spigit conversation platform that correlated with accepted ideas as opposed to ideas that were rejected. Our tentative findings were that the key predictors were the level of conversation activity around an idea and the diversity of participants in the conversation. Happily Pentland finds exactly the same thing from his more copious data and undoubtedly more sophisticated analyses. Again we can now move forward with this proposition with much more confidence. Thank you Sandy!

Finally the book addresses the use of social physics in planning cities. Geo-tagging is now a common feature in Smartphones,  so it becomes a relatively simple task to visualise social interactions in a geographic layout as an alternative to the common ‘force field’ layout for social networks. Thanks to Google maps, it is now possible to overlay social network connections onto geographic maps. “Location” is a common attribute used to characterise different actors in a social network in identifying the level of collaboration or otherwise between say, geographic regions. We have reported elsewhere how important co-location can be to facilitate effective knowledge sharing. We have recently also been experimenting with providing geo-mapping visualisations of social networks with this example taken a social network survey of a consulting organisation:

SP GeomapSo Oxymoron of Tipping Point? Personally I have seen many terms accused of being an oxymoron survive and proceed to a healthy existence; with ‘knowledge management’ being one notable example. We acknowledge that many a oxymoron are just a statement of aspirations, more so than a legal claim. We can live with ‘health tans’ and ‘business ethics’, so why not Social Physics? In terms of the use of big ‘social’ data for gaining new performance insights; no doubt there are many an HR professional with their carefully crafted HR Information systems shaking in their boots at the thought of a bunch of data scientists, mining data outside their formal HRIS, making them redundant. For us it is whether ‘Social Physics’ can be the tipping point between the ‘other physics analogy and that is the contrast between Newtonian thinking and Quantum thinking:

Newtonian vs quantumIs it enough to break mainstream business’s penchant for reductionist thinking; in breaking businesses down to individual processes and/or people, in favour of looking at networks as a whole?

We certainly hope so!

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:

Leading from the Bottom

We have been long term advocates of J.B. Quinn’s inverted hierarchy model for new service led economies.

Inverted HierarchyEssentially Quinn’s argument was that the vast majority of jobs in the developed world (around 80%) are now service oriented and that competitive advantage now comes from having ‘best in class’ competencies. His inverted hierarchy emphasises the need for line management to “support”, rather than “direct” front line staff in services organisations. Since its publication in the 1980s there has been a plethora of supporting voices from all quarters. The Deloitte’s led study “The Big Shift”; and book on “The Power of Pull”; the MIT management think tank on “Leaders Everywhere”; Steve Denning’s book “Radical Leadership”; plus numerous HBR and McKinsey articles all imploring the same message, get rid of the bureaucracy, flatten the organisation, and empower the front line staff. Easier said than done? 

Try as we might the management hierarchy, with its military heritage adopted by industry in the last century, has been a hard one to shake. Over a decade and a half of Social Network Analysis (SNA) studies has highlighted to us just how embedded this model is within organisations, though clearly the degree of hierarchical compliance does vary significantly across industries. A network model of a well functioning hierarchy will show cohesive networks at the executive level. The cohesive groups will then fragment as you move down through the levels of the organisation chart. At the base of the chart you will see shop floor level teams only connected through higher levels in the hierarchy. 

Network Hierachy

Of course in an industrial age, where the workforce was largely engaged in manufacturing or producing widgets, this form of work organisation has stood the test of time in terms of efficiency and low cost production. The situation changes when those passive widgets become active and opinion fuelled customers! As aware as we are how can we enact change to the inverted hierarchy?

 Barriers to Change

Rather than going straight to solution mode it is worth reflecting first on the nature of the barriers that we are faced with:

  1. Your organisational remuneration systems are likely to be strongly biased to the levels in the hierarchy, hence there is a vested interest for those at the top to maintain the status quo.
  2. Those part-way up the hierarchy have developed long term strategies as to how they can climb that hierarchy and have little interest in disrupting the status quo.
  3. Those at the base of the hierarchy have learnt that to progress up the hierarchy one must first learn to do what your line manager boss wants, hence reinforcing the hierarchy.
  4. For many nationalities the management hierarchy is embedded in their cultures. Asian cultures in particular have ‘respect for your elders’ and ‘respect for your leaders’ built in, even if sometimes that respect is not implicit, it is usually explicit.
  5. Even office or workplace designs reinforce the hierarchy. The default design is to co-locate those according to the organization chart. Though some forward thinking organisations are now challenging this by looking to engineer innovation and developing serendipitous connections through judicious physical space design.

There have been several sources of suggestions for facilitating the required changes. For example, leadership guru Steve Denning in his book on radical management suggests:

–       A shift in goals from making money for shareholders to delighting customers through continuous innovation.
–       A shift in the role of managers from controlling individuals to enabling self-organising teams.
–       A shift in the way work is coordinated from bureaucracy to dynamic linking.
–       A shift in values from a preoccupation with efficiency to a broader set of values that will foster continuous innovation.
–       A shift in communications from top-down commands to horizontal communications.

 
Gary Hamel in his writings on “Leaders Everywhere” suggests:

 –       Too much is required by too few people on top — change is belated, infrequent, convulsive, i.e. by the time the top realises that a change is needed, it’s too late.
–       Instead of continuing to ask more and more of the top leaders, we should move responsibility and expertise downwards.
–       We already realise that value is created by the associates (note: most don’t call them employees any longer), e.g. by interacting with clients, we talk about co-creation with clients.
–       One of the next important steps, after 360-feedback, is 360-compensation that gets rid of the rigid, hierarchical structure of compensation, but attributes compensation more fairly to where it is created.


Authors of the “Power of Pull”, John Hagel, John Seeley Brown and Lang Davison address the issue of client engagement (the pull) with these suggestions:

 –       Choosing environments that increase our likelihood of encountering people who share our passions; becoming and staying visible to the people who matter most.
–       Influencing their endeavors so they amplify our own work.
–       Discovering and interacting with the right people at the right time (timeliness).
–       Making the most of every serendipitous encounter (relevance).

Along the same lines MIT professor Thomas J Allen, the inventor of the ‘Allen Curve’ which articulates the level of drop off in communications with spatial separation, with co-author Gunter Henn, find that levels of physical co-location predicts the level of electronic communication. In their book the Organization and Architecture of Innovation, they make the compelling point that non-collocated teams that share an organizational membership will suffer some loss of intra-departmental communication, but this would be more than offset by increased inter-departmental communication with co-located members of other departments, which would be virtually non-existent without that co-location. The increasing availability of electronic communication facilities has no or little effect on this. So their suggestions could be summarised as:

 –       For staff involved in tasks requiring complex communications, co-location is essential.
–       For staff tasked with coordinating others, co-location is not critical
–       Where organizations are looking to build a diversity of interactions (like the base of the service pyramid) the tradeoff between intra-departmental vs inter-departmental communication, in deciding on who sits near who, is well worthwhile.

Orchestrating Change through Networks

For our part we believe that the value that SNA can add is the ability to provide specificity to these general recommendations. By providing targeted areas for action, the effects are likely to be felt in the shorter term, providing a stronger catalyst for change. For example, in addressing Denning’s recommendations, SNA can provide a baseline as to how the current organisation is working. What are the current levels of bureaucracy? Is it uniform or are some areas more bureaucratic than others? Which areas are likely to be engaging in innovative co-creation activities with clients? Is this happening at the service interface or at higher levels in the hierarchy? How are customers being engaged at each level of the hierarchy? How is client intelligence being vertically integrated up and down the hierarchy?

Management LayersThe above map is filtered to show predominantly reciprocated relationships to accentuate the relationship patterns. One can see how the management layers are closely clustered with a selection of clients. At another level we can see many associate-client disconnected clusters. The opportunity exists for the management to facilitate peer connections between these disconnected clusters to achieve a broader base of client connection, without the need to introduce bureaucratic overheads.

In addressing Gary Hamel’s suggestions, SNA can assess how much appreciation the management layers have on the value being generated at the client interfaces. We regularly find that in hierarchical organisations dependency nominations rarely point downwards i.e. managers tend not to acknowledge their dependency on their own staff, but will freely nominate ‘up and out’. In the Hamel scenario we would see many more reciprocated nominations. SNA is often compared with 360 deg reviews. When asked a question like “who helps you most in getting your job done well”?” Those staff nominated the most would qualify for higher remunerations according to Hamel. SNA can identify these ‘most valued’ staff precisely.

In terms of efficiency we had already indicated that the dependency relationships invariably point upward, rather than the other way. As Hamel indicates, this causes a logjam at the top, with many organisations paralysed while waiting for management responses. Many of the executives we work with have despaired at what they see as their staff’s inability to be accountable and to resolve peer level issues amongst themselves, rather than relying on the line management to make a call on any little dispute. We shouldn’t be surprised as hierarchies are designed this way. Unfortunately with growing interdependence between job roles the call on managers to adjudicate disputes is growing with it. What we need to see and encourage is natural ‘leaders without authority’.  These are the influencers and ‘can do’ staff who can influence others through their powers of persuasion, rather than through the power of position. They are able to successfully negotiate outcomes through co-operation and collaboration. We have found that the ‘key players’ identified by the SNA are, more often than not, these types of people. 

Natural leaders

In the above map we have identified those that are not part of the line management, yet have attracted several peer dependency nominations, which are often reciprocated (red lines).

In the “Power of Pull” much is made of being able to quickly identify the people you should be collaborating with, independent of a formal structure. An ‘industrial era’ response to these needs would be to build a skills or ‘yellow pages’ directory where everyone’s skills and experiences could be catalogued and freely searched. These efforts have largely been miserable failures. For several organisations we have been able to fill this gap by using the key players identified in the SNA as connection brokers. Rather than building expensive directories that become out of date before they are published, the SNA identified brokers who are organised to respond to people search enquires, by doing what they do naturally. And that is to provide qualified referrals, meaning that the right connections are being made in the fastest possible time.

 Yellow Pages

The “Power of Pull” also identifies the importance of serendipitous connections or relevance. In SNA terminology these are called ‘weak ties’, made famous by Mark Granovetter’s “Strength of Weak Ties” theory. Granovetter’s research identified that someone looking for a new job is much more likely to be successful by working through people that they might only know peripherally, rather than working through their closest connections. The logic is that your weak tie network provides a far broader search potential than your close ties, whose connections you are likely to be already connected to.  SNA can explore your ‘weak tie’ network, identifying those that are best positioned to broker connections to the largest number of relevant connections.

 Weak Ties Network

The above map identified only those connections that were nominated as ‘minor’ and therefore representing this organisation’s ‘weak tie’ network. The nodes were sized by a ‘betweenness’ metric, which identifies those best positioned to broker connections between diverse groups. Interestingly the most dominant grouping (coloured ‘grey) were viewed as somewhat peripheral in comparison to the core groups. Our advice to the management was to make them aware of the potential role these ‘brokers’ could play in triggering breakthrough innovation.

Finally lets address the Thomas Allen’s research and the powerful influence physical proximity has on connectivity and collaboration. This topic is addressed in more detail in Workplace Space and Connectedness, but for this article we highlight how SNA can overlay physical location attributes onto the social network analysis maps to identify just how powerful this impact might be in any given workplace. To ‘engineer serendipity’ we basically need to change where people sit. In doing this however, we don’t want to destroy existing teams. Using SNA we can clearly identify those teams showing the strongest density of internal connections. It is these teams that are mostly susceptible to the negative aspects of group think and therefore would benefit most from a more diverse suite of connections. They are also the teams least likely to be damaged by physical separation, as the existing trust links will ensure continued collaboration, independent of physical location.

 Network Map - Across floors and levelsThe above map identifies the connectivity patterns across physical work areas (identified by a Floor/Area code). In this case we can see the organisation has allocated the physical space according to the organisational structure (as per the colour of the circles). The connectivity patterns identify the ‘traffic pattern’ of connectivity across the physical space. The cohesiveness of the existing teams can also be seen, providing a choice for those teams that could be physically separated for ‘engineered serendipity’ purposes.

Summing up

There are many arguments for inverting the management hierarchy in order to thrive in today’s economy. It is however, easier said than done, with many structural mechanisms working to reinforce rather than dismantle it.

We have identified a number of ways SNA can facilitate this challenging task:

  • Identifying how clients are actually being engaged with at all levels of the organisation. Visually identifying where bureaucratic processes are impacting performance.
  • Identifying who the ‘key players’ in the organisation are, being those identified through 360 degree nominations. Rewards and acknowledgement of these key players can change behaviours.
  • Identifying the ‘leaders without authority’. These are the people at the bottom of the hierarchy who through their powers of influence and persuasion can lead the way from the bottom.
  • Use the identified key players as connection brokers. In this way ensuring that the right connections can be made at the right time, without the overhead of bureaucratic systems.
  • Build the reach across the organisation through identified brokers in the ‘weak tie’ network, as a more effective alternative to relying on the formal hierarchy.
  • Identify the most cohesive teams as those who would benefit most from an injection of diverse connections through co-location. They would also suffer least from not being physically co-located. 

What’s in a Role? Another relic of the industrial age?

How should organisations manage their workforces in the post-industrial age? How should roles be described? More importantly, how does one assess whether a role is being performed adequately or not?

Think about how workforce planning is being done in your organisation. Traditionally the human resources department will sit down with senior executives to map out the types of roles and positions the organisation needs to maximise performance. These named roles will typically be accompanied by a role description. There even may be a set of named competencies attached to these named roles. Having set up the ‘template’ for the identified roles, they can then be used to recruit new staff, assess current staff, identify training and development programmes, or even compare the organisation against competency benchmarks. There are several guides and templates for doing this. Sounds very logical and rational? The problem is that this model was designed for an age when the majority of staff were engaged in repetitive industrial style work. Efficiency was achieved through standardising roles and work instructions. Feedback cycles were short with product defects, clerical errors and the like identified by other compliance checking roles. The end customer was typically several degrees of separation away from the majority of the workforce.

Wind the clock forward to today. The equivalent of a shop floor manufacturing worker or a bank clerical worker is the call centre operator or the fast food restaurant waiter or waitress. Their day-to-day interactions are not with a passive manufactured product or a paper invoice to be created and checked. They deal with end customers. People who can talk back, form opinions and make decisions that can directly impact the fortunes of your organisation. But are we still describing the needs of these key roles in the same way that we would describe the job of a factory or clerical worker of the last century? To illustrate, I have selected one of many similar examples of a template for a call centre operator, found on the Internet. I have underlined the job tasks that I really care about as a prospective ‘customer’ of these services:

Inbound Call Center Job Description
General Purpose

Answer incoming calls from customers to take orders, answer inquiries and questions, handle complaints, troubleshoot problems and provide information.

 Main Job Tasks and Responsibilities

  • answer calls and respond to emails
  • handle customer inquiries both telephonically and by email
  • research required information using available resources
  • manage and resolve customer complaints
  • provide customers with product and service information
  • enter new customer information into system
  • update existing customer information
  • process orders, forms and applications
  • identify and escalate priority issues
  • route calls to appropriate resource
  • follow up customer calls where necessary
  • document all call information according to standard operating procedures
  • complete call logs
  • produce call reports

 Key Competencies

  • verbal and written communication skills
  • listening skills
  • problem analysis and problem solving
  • customer service orientation
  • organizational skills
  • attention to detail
  • judgment
  • adaptability
  • team work
  • stress tolerance
  • resilience

Outbound Call Center Job Description
General Purpose

Interact by phone with outside parties to solicit orders for goods or services, request donations, make appointments, collect information or conduct follow-up.

 Main Job Tasks and Responsibilities

  • contact businesses or private individuals by phone
  • deliver prepared sales scripts to persuade potential customers to purchase a product or service or make a donation
  • describe products and services
  • respond to questions
  • identify and overcome objections
  • take the customer through the sales process
  • obtain customer information
  • obtain possible customer leads
  • maintain customer/potential customer data bases
  • follow up on initial contacts
  • complete records of telephonic interactions, orders and accounts

 Key Competencies

  • communication skills
  • persuasiveness
  • problem solving
  • adaptability
  • tenacious
  • negotiation skills
  • stress tolerance
  • high energy level

Now if you do the same you may not be as harsh as I have by selecting just one of the tasks/responsibilities for each of the inbound and outbound roles, but I suggest you would be hard pressed to find many more. So why is this so? Why are call centre operators being selected on their ability to become 21st century factory or clerical workers? Following processes, filling data bases, even delivering pre-prepared ‘would you like fries with that’ scripts!

A key issue is how performance is assessed against job tasks. In the industrial age, performance was largely measured by output alone. How many widgets were produced; how many invoices were processed etc.. Quality issues could be identified by ‘inspector’ roles and corrected in short order. Unfortunately the same model is being applied to call centre operators. The ‘production’ metric is number of calls made or serviced. While we get the ‘this call is being monitored for…..’, one suspects that only a very small proportion of these calls are actually ‘inspected’. A dissatisfied customer or prospect is largely invisible to the organisation. A ‘compliance check’ of a call centre operator against the job description could come up positive when they are failing on the key customer engagement dimensions and visa versa. Role descriptions from the industrial age do not translate well to our service centric economy.

Interestingly, when you look at the identified ‘Key Competencies’ for each role they appear to be directed at the job tasks that I as the ‘customer’ has identified, more so than the process centred tasks. So the designers of this job description do have a sense of what is required to be successful in the role. But how they describe the role is last century industrial.

So what’s Missing and what can be done?

engineering seredipityFirstly we need to appreciate that work is social. This was the case in the industrial age, but amplified now as the majority of jobs today require interactions with other staff to get the work done. A McKinsey study found that some 70% of staff roles require tacit knowledge and interactions. The archetype call centre operator is shown as someone sitting in their cubicle on the phone to their clients, with little scope to converse with their fellow operators or other staff. In fact if they were caught in dialogue with their fellow staff this may be seen as time taken away from the main task of taking calls. Reading the job descriptions there is little reference to interacting with anyone other than a customer and a database.  Strict compliance to these job descriptions leaves no scope for learning from more experienced staff, understanding the human aspects of escalating or re-routing customer calls etc.. In fact I would suggest that those deemed as being excellent call centre operators would probably fail a strict compliance check against the stated job role.

The problem is that job designers are still looking to prescribe job roles and processes as if they were designing a factory. The majority of staff are now ‘knowledge workers’ who need to interact with their fellow workers to effectively do their work. Knowledge workers need to be supported in building their expertise through interacting with their fellow knowledge workers, rather than forcing this activity underground. An anthological study of photocopying repair staff at Xerox identified the socialisation processes that were essentially conducted outside of normal work, yet were critical for building the technical competence required. Despite the existence of copious technical reference material, sharing stories about repair experiences provided the ‘social learning’ that contributed most to repair technician competency. We therefore need to allow the socialisation activities to be brought to the surface and be subject to inspection, analysis and improvement in the same way that business processes and work instructions are.

Making Roles Interactions Visible

The traditional role description will specify required interactions only at an aggregated level e.g. “work with marketing to…..”; “discussing needs with clients….”; “making pitches to ….”, etc.. Contrast this to the granularity of the job role specifications for the call centre operators that are processes centred: “enter new customer information into system”; “complete record of telephonic interactions, orders and accounts”.  We can easily assess whether the call centre operator is fulfilling these aspects of the job by reviewing the data base entries. But what can we do to assess whether the important interaction requirements are being fulfilled?

We have been conducting SNA studies for some 15 years now, but for the first time, through the use of an interactive web based mapping tool we have been able to facilitate explorative sessions where the clients can follow paths of enquiry that spark their interest and inquisitiveness the most.  Interestingly we have found that clients want to focus on job roles the most. They have become keenly interested into how people really do their jobs. For the first time they can look at how different people playing the same roles interact with their stakeholders. The interactions are exposed at the individual level i.e. a high resolution picture of how individual roles interact with each other.  For example, we mapped the interaction patterns of two “Account Director” roles for one client:
AD Map - Whats in a Role

At first glance it is clear that Account Director 2 is much more connected with many more links to external clients (blue dots) than Account Director 1. It’s worth noting that for Account Director 1, two of the three customer connections are shared with another staff member. For Account Director 2 the majority of customers are unique and not connected with other staff. So which is the best pattern of interaction? The fact that we could be having this conversation and doing this type of analysis at the granularity we were, is unique in itself. The conversation moved to one of “what is an ideal interaction pattern for the account director role?”

Not only are the Executive now able to think in more detail about how their knowledge workers should be interacting in some detail, they can also identify how these patterns should evolve over time. For the individuals themselves they are able to compare their own networking patterns against other peer workers. They are now able to have business improvement discussions by comparing networking patterns in the same way that a Six Sigma process might be used to assess a business process run chart.

Coming back to the question of “what is an ideal interaction pattern for position X?”, creates a whole new level of conversation, debate and analysis about job roles requiring interaction (with is now 70%+). As indicated earlier, traditional job descriptions would have phrases like “work with….”; “pass on to…”; “obtain from…” as if these were simply mechanical tasks. In reality many of these tasks may require significant negotiation backward and forth. If we think about the Account Director role, some fundamental activities could be described with terms like “Co-ordinate”; “Represent”; “Broker”; “Gatekeep”; “Liaise”; “Consult” etc.. Social Network Analysis researchers have for some time been working on identifying these types of roles that people may be playing, independent of the organisational labels that they are given. The importance of this is that job roles can be aligned with how people naturally prefer to operate. If someone is a natural broker, why not allocate him or her a formal role that plays to his or her strengths?

Looking at the Account Director (AD) role again we can identify different ways with which the role could be executed simply by analysing the networking patterns:

BP Maps-whats in a role

On the left we can see the role played as a gatekeeper i.e. all contact has to flow through the AD role like a funnel from internal to external. In the middle, the connections are the same but this time they are two-way or reciprocated. This would indicate more than a ‘handover’ is being performed and more of an active co-ordination is happening, but still the AD is central to the activity. On the right we have a situation that relationships have been built directly between the external and internal stakeholders. While the AD may have instigated the connection, ongoing interaction can continue independent of the AD, leaving the AD time to create new connections and broker new relationships. Which behaviour would you like to see in your Account Directors? Perhaps some behaviours are context dependent as the first case showed, where maturity of the market dictated how the role should be played. The important point is that we can start to have business improvement discussions that were not possible without the relationship data being collected.

Closing Thoughts

It would be naïve to think that executives are not intuitively aware of the challenges faced by many of the job roles that are demanding more effective collaboration today. This is evidenced by the mismatch in the job descriptions and competency requirements illustrated in the call centre operator example. Process centric job descriptions are potentially constraining the ability of senior executives to effectively build, monitor and enhance workforces where collaboration is replacing process as the key value driver.

The workplace is becoming more ‘socialised’. Its not only social networking, social media, or even flatter organisations. Industrial style workforce planning now needs to be adapted to meet the changing needs of businesses to be more adaptive and reactive to customers needs. The days when only the thin layer of sales staff were the only ones who interacted with clients is well and truly gone. Organisations need to identify and develop leaders at all levels and functions within the organisation. The science of Social Network Analysis has been with us for over 80 years now. It is now time to bring the practice into the mainstream for developing and managing our workforces.

 




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.