Beyond organization charts and process maps is a hidden web of relationships that drives performance and innovation. Employees activate these informal connections when they need to solve problems, make decisions, or get the lowdown on what's happening in the company. All in all, seven hidden networks influence a corporation's strategic success. This Partnering Resources white paper describes these networks and demonstrates the problems that can occur when networks are misaligned. More: http://partneringresources.com/organizational-networks-and-organization-performance/

1. Organization Network Analysis:
Uncovering the Hidden Relationships that Drive
Performance, Learning, and Change
Strategies and initiatives are fundamentally flawed in most companies because they are built on
incomplete information. Mapping informal networks can help companies leverage critical
knowledge assets to mobilize change and boost performance.
Organization charts identify leaders, departments, Unexpected Discoveries
and reporting relationships. Process maps show the Leaders in a global consulting firm discovered
flow of work across departments and divisions. But unexpected patterns after mapping their
despite our best efforts to document how work organization’s informal networks. They were
happens in organizations, there are still fundamental surprised to find that staff within one division had
gaps in our understanding. essentially split into two groups based on common
interests: technical versus business subject matter
This lack of understanding is reflected in results: just experts (Figure 1). The groups failed to collaborate
38% of leaders in one study reported that their and, as a result, the company missed opportunities.
change initiatives were completely or mostly
successful at improving performance (McKinsey,
2006). There’s clearly something missing.
A Hidden Web of Relationships
Underneath the organization charts and process
maps is a hidden web of relationships that
determines who people interact with, how often, and
for what purposes. These relationships affect the Figure 1: The Network before Intervention
speed of execution, the creativity of problem-solving, Blue circles represent technical experts while red circles
and the quality of decision-making. represent subject matter experts. The purple circle represents the
one staff member who was informally responsible for connecting
the two factions. Lines show connections between individuals.
All employees are connected through relationship
Image: Adapted from Cross, Borgatti, & Parker, 2002.
networks. Employees leverage their relationships to
improve processes, solve problems, and complete After becoming aware of the schism, leaders
work. In fact, employees are much more likely to go designed interventions in order to bridge the gaps
to people for information than they are to go to the between groups. They changed project
internet, intranet, or corporate knowledge base assignments, instituted sales goals that integrated
(Cross, Parker, Prusak, & Borgatti, 2001). responsibilities from both groups, and created
communication venues to keep people in touch.
Despite the power of informal networks, most people
have little insight into the shape and influence of After nine months, a follow-up network analysis was
their networks. Furthermore, leaders are often blind performed. The new network map told a very
to how informal relationships influence different story. Rather than revealing factions and
organizational performance and productivity. divisions, this map showed a deeply integrated and
connected organization (Figure 2).
© 2008 Partnering Resources

2. Their efforts paid off. In 2005, areas engaged in
“Pride Builders” posted impressive results: 71%
increase in employee satisfaction and a whopping
245% increase in customer satisfaction in
comparison with a control group (Reingold & Yang,
2007).
Case Study #2: Novartis
Novartis has also used networks to boost results.
The Swiss pharmaceutical company needed to gain
approval, produce, and disseminate new drugs
Figure 2: The Network after Intervention
quickly and efficiently. Leaders recognized the
Blue circles again represent technical experts while red circles importance of networks and developed an
represent subject matter experts and lines represent interactions. organization chart with permeable boundaries. They
The person represented by the purple circle left the division.
encouraged informal networks and trusted
Image: Adapted from Cross, Borgatti, & Parker, 2002.
relationships through various avenues.
The ROI on Network Awareness
Because of their efforts, Novartis ranks among the
The informal network functions as an organizational
broadest pharmaceutical products pipelines in the
circulatory system. When the circulatory system isn’t
industry. It achieved 7 major drug approvals in 2003
healthy, companies lose opportunities and
and launched 11 new medicines in the U.S. from
experience performance problems, as did the global
2000 to 2005. In addition, Novartis was voted by
consulting organization. When functioning properly,
Fortune as one of ten best European companies to
informal networks can help information flow, connect
work for (Cross, Liedtka, & Weiss, 2005).
problem solvers and strategists, and mobilize
needed resources for change. In addition, they can: Leaders are just beginning to understand how to
identify and leverage networks in organizations.
• Improve collaboration across divisions
Once they do, they will access a powerful source of
• Increase innovation and creativity
• Accelerate knowledge transfer organizational energy to accelerate change, grow
• Alleviate bottlenecks that impede workflow talent, and improve performance.
• Prevent loss of mission-critical information by
References
identifying, developing, and retaining key staff Cross, R., Borgatti, S.P., & Parker, A. (Winter 2002). “Making
• Accelerate adoption of new change initiatives Invisible Work Visible: Using Social Network Analysis to
and strategies Support Strategic Collaboration.” California Management
Review.
Cross, R., Liedtka, J., & Weiss, L. (March 2005). “A Practical
The following two case studies demonstrate the Guide to Social Networks.” Harvard Business Review.
results that can be achieved when companies grow Cross, R., Parker, A., Prusak, L., & Borgatti, S.P. (2001).
and leverage healthy informal networks. “Knowing What We Know: Supporting Knowledge Creation and
Sharing in Social Networks.” Organizational Dynamics.
McKinsey Quarterly (2006). “Organizing for Successful Change
Case Study #1: Bell Canada Management: A McKinsey Global Survey. Available at
In 2002, Bell Canada’s new CEO faced a difficult http://www.mckinseyquarterly.com.
problem: how to bring a 122-year-old company with Reingold, J. & Yang, J.L. (July 18, 2007). “The Hidden
Workplace.” Fortune. Available at http://money.cnn.com.
a deeply-embedded monopolist culture into the 21st
century. To address the challenge, he and other
About the Author
leaders identified people in key network roles and Maya Townsend, founder and principal
engaged them in “Pride Builders” meetings. This consultant at Partnering Resources, builds
aligned, focused organizations that achieve
group created its own community of practice, shared their goals more effectively. For more
ideas, identified and tackled cross-functional information, visit partneringresources.com or
email maya@partneringresources.com.
problems, and accelerated key business processes.
© 2008 Partnering Resources