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By Ellen Pearlman
Strategic Thinkers: Lowell Bryan, Eric Matson, Leigh Weiss
Credentials: Lowell Bryan is a director in McKinsey's New York office; Eric Matson is a consultant and Leigh Weiss is an associate principal in the Boston office
Big Idea: Formalizing a company's ad hoc peer groups can spur collaboration and unlock value
Article: "Harnessing the power of informal employee networks," published in The McKinsey Quarterly, November 2007 (http://www.mckinseyquarterly.com). The article is Copyright (c) 2007 McKinsey & Company. All rights reserved. Reprinted by permission.
All of us are familiar with informal networks. In any professional setting people of like interests share ideas and, like it or not, gossip. Often that is the way that knowledge gets passed around the corporate corridors, in a manner that can be more effective than the official memos that come out of the executive suite.
As McKinsey studied the phenomenon of social and informal networks, authors Bryan, Matson and Weiss were surprised to discover "how much information and knowledge flows through them and how little through official hierarchical and matrix structures." Since so much "real day-to-day work" gets done in this fashion, they reasoned that companies could design and manage new formal structures that would address some of the downsides of these informal groups-they can, after all, increase complexity and confusion, and are difficult to manage.
In the case of one petrochemical company they studied, the more than 20 formal networks they created succeeded because they were organized "around focused topics closely related to the way work was carried out." Moreover, management appointed network leaders, provided training to members, invested in technology, and collected and distributed best practices that arose from these collaborations.
The authors point out that traditional matrix organizational structures worked pretty well until the late 1980s. But the impact of globalization has forced companies to be more flexible and adaptive to succeed.
To read more about the formal structure that the authors recommend, go to:
http://www.mckinseyquarterly.com/links/28171
The network effect is surely going to impact people and institutions far into the distant future. As work continues to get more and more complex and as people naturally seek others out to solve problems and share knowledge, corporations will have to gain a far better understanding of how to manage this dynamic workplace. The structures that were developed for the industrial age just don't work in the interconnected information age.
Also of interest:
- "The Next Big Thing," Tom Davenport's blog on Harvard Business Online. Several of his entries deal with the concept of social networks and their relationship to business. Check out: "Where's the working in social networking?"—Davenport concludes there is no business value—and "LinkedIn is not a social network." To read the blogs, go to: http://discussionleader.hbsp.com/davenport
- Book: "The Hidden Power of Social Networks," by Rob Cross and Andrew Park, published April 2004 by Harvard Business School Press. Based on their study of more than 60 informal networks, Cross and Park show how managers can utilize specific and inexpensive actions to enhance the impact networks can have on performance and innovation. Purchase the book.
CIOZ Question: How have informal networks helped or hindered you in your professional life? Post your comments below.
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