Leading during 3rd Industrial Revolution: Value creation through networks

May 2012May 2012www.hhs.sewww.hhs.senordicworlds.netnordicworlds.net

TodayToday’’s discussions discussion

Background Background

Organizational network analysisOrganizational network analysis

Into the future….Into the future….

"...when the rate of "...when the rate of change outside an change outside an

organization is greater organization is greater than the rate of change than the rate of change

inside, the end is inside, the end is near...." near...."

Jack Welch…Jack Welch…

Did You Know: Shift HappensDid You Know: Shift Happenshttp://www.youtube.com/watch?v=cL9Wu2kWwSY&feature=searchhttp://www.youtube.com/watch?v=cL9Wu2kWwSY&feature=search

1.1. What trends do you recognize?What trends do you recognize?

2.2.How are these trends affecting you and your How are these trends affecting you and your organization?organization?

3.3. What does this have to do with networks?What does this have to do with networks?

GrowthGrowth

TimeTime

Information Information and knowledgeand knowledge

Human Human absorptive absorptive capacitycapacity

Human capacity cannot keep up…Human capacity cannot keep up…

Adapted from Cohen & Levinthal 1989Adapted from Cohen & Levinthal 1989

””No one knows everything, No one knows everything,

everyone knows something, everyone knows something, all knowledge resides in all knowledge resides in

humanity.”humanity.”networksnetworks

Adapted from Lévy 1997

Six degrees Six degrees of of

separationseparation- Milgram, - Milgram,

19671967

What is a network?What is a network?

A set of actors connected by tiesA set of actors connected by ties

•Ties/LinksTies/Links−Knowledge, trust, Knowledge, trust, team, sit by, team, sit by, dislike, etc.dislike, etc.−Alliance, Alliance, customer, customer, investment, etc.investment, etc.

TieTie

•Actors/NodesActors/Nodes−IndividualsIndividuals−Teams, Teams, organizations, organizations, etc.etc.

ActorActor

Social network analysis has a long Social network analysis has a long history history

and is based on matrix algebra and and is based on matrix algebra and graph theorygraph theory

http://en.wikipedia.org/wiki/Social_network

Hidden influence of social networksHidden influence of social networks

http://www.ted.com/talks/lang/en/nicholas_christakis_the_hidden_influence_of_social_networks.html

Happy peopleIn between peopleUnhappy people

Christakis & Fowler, 2011

Why else do networks matter?

An actor’s position in a social network, i.e., social capital, determines in part the actor’s opportunities and

constraints.

Casper & Murray 2002Casper & Murray 2002

German biotech scientists

60% Compared to 61% Compared to 61% and 39% of and 39% of those who never those who never use Social Tools use Social Tools

86% recently promoted

72% likely to be promoted

Across Europe, people who frequently Across Europe, people who frequently use Social Tools are ‘more use Social Tools are ‘more

successful’ successful’ Very satisfied with job –

compared to 18% who never use Social Tools

Very likely to recommend workplace – compared to 42% who never use Social Tools

Have more interesting work – compared to 42% who never use Social Tools

38%

64%

Google Social Media Study, 2012

Bridging unconnected groups brings Bridging unconnected groups brings advantagesadvantages

•More rapid promotions•Greater career mobility

•Higher salaries•More adaptable to changing environments

Brass, Burt, Podolny & Baron, Sparrowe et al, Gargiulo & BenassiBrass, Burt, Podolny & Baron, Sparrowe et al, Gargiulo & Benassi

TodayToday’’s discussions discussion

Background Background

Organizational network analysisOrganizational network analysis

Into the future….Into the future….

Uncovering informal networksUncovering informal networks

Formal organization Informal organization

Teigland et al. 2005

What do you notice about the What do you notice about the informal network? informal network?

Cross, Introduction to organizational network analysisCross, Introduction to organizational network analysis

Betweenness•Control over what flows in the network•How often are you on the shortest path between two individuals?

Closeness•Access to what flows in the network•How quickly can you reach all others in the network?

Network position is related to ….. Network position is related to …..

Influenc

e

and Info

rmal

Power

Myths about networksMyths about networks

I already know what is going on in I already know what is going on in my network my network

We can’t do much to help informal We can’t do much to help informal networksnetworks

To build networks, you have to To build networks, you have to communicate morecommunicate more

Adapted from Cross et al. 2002

1) Central connectors within one 1) Central connectors within one locationlocation

Whelan & Teigland 2010

Peripheral players

Bottleneck

Surprise!!

With which colleagues do you discuss everyday technical issues/work-related

problems at least once a week?

Schenkel & Teigland 2011

Red=MaleBlue=Female

=Left org

With which colleagues do you discuss exciting new ideas and better ways of

getting things done?

Schenkel & Teigland 2011

Red=MaleBlue=Female

=Left org

2) Peripheral players and 1) 2) Peripheral players and 1) Central connectors help manage Central connectors help manage

information overloadinformation overload

Whelan & Teigland 2010

Peripheral players

…..you “hire” his or her network.

When you hire someone,… When you hire someone,…

Dual loyaltiesDual loyalties

Loyalty

Loyalty Loyalty

Loyalty

OrganizationOrganization ProfessionalProfessionalnetworknetwork

Teigland 2003

Stockholm

London

Brussels

HelsinkiMadrid

Copenhagen

3) Boundary spanners cross divides3) Boundary spanners cross divides

Transferred from Stockholm

Teigland 1998

San Francisco

What are they doing?What are they doing?

Are more social get-togethers Are more social get-togethers and coffee and coffee breaksbreaks the solution? the solution?

”Birds of a feather flock together”“Lika barn leka bäst”

People find similar people attractive and develop relations with people like

themselves

Our networks tend to be homogeneous and not heterogeneous

Marsden 1987, Burt 1990Marsden 1987, Burt 1990 27

““ManagingManaging”” networks in your networks in your organization organization

Before After

Anklam & Welch 2005

1. Uncover networks

2. Analyze networks

3. Improve connectedness

Actions

•Identifying overly connected people

•Bridging invisible network silos

•Creating awareness of expertise distributed in the network

•Identifying and drawing in peripheral network members

U.S.

Brazil

Angola

Saudi Arabia

Canada

U.K.

Nigeria

U.S.Gulf ofMexico

Brazil

AngolaUK

Canada

Saudi Arabia

Nigeria

U.S.

Brazil

Angola

Saudi Arabia

Canada

U.K.

Nigeria

U.S.Gulf ofMexico

Brazil

AngolaUK

Canada

Saudi Arabia

Nigeria

U.S.

Brazil

Angola

Saudi Arabia

Canada

U.K.

Nigeria

U.S.

Brazil

Angola

Saudi Arabia

Canada

U.K.

Nigeria

U.S.Gulf ofMexico

Brazil

AngolaUK

Canada

Saudi Arabia

Nigeria

Obtaining benefits of scale and Obtaining benefits of scale and lateral coordination through lateral coordination through

communitiescommunities

Gulf ofMexico

Brazil

Angola

UK

Canada

Saudi Arabia

Nigeria

Gulf ofMexico

Brazil

Angola

UK

Canada

Saudi Arabia

NigeriaBusiness results•Lowered customer dissatisfaction by 24%•Reduced cost of poor quality by 66%•Increased new product revenue by 22%•Improved operational productivity by more than 10%

ONA results•Cohesion – average # steps for each person to get to another – improved by 25%

Cross 2010Cross 2010

Comparing performance across firmsComparing performance across firms

Teigland et al 2000

Networking activities recognized and rewarded at individual and unit levels

Management support for informal and formal networking activities across internal and external boundariesBest practice task groupPersonal initiatives

Extensive socialization: personnel rotation, cross-office teams, “open” office layout

A visionary organization − Clearly defined mission: ”To make technical

contributions for the advancement and welfare of humanity”

− Supporting core values, e.g., teamwork, helpfulness

− Company-wide goal of World’s Best Laboratory

Hewlett-PackardHewlett-Packard

Teigland et al 2000

BA

Two individuals/organizations Two individuals/organizations with the same number of contacts…with the same number of contacts…

……but with very different access to but with very different access to resourcesresources

BA

A

Poor Poor creativity and creativity and

innovative innovative performanceperformance

Highcreativity and

innovative performance

Teigland 2003

B

Avoid creating insular networksAvoid creating insular networks

http://www.enronexplorer.com/focus/19185#http://www.enronexplorer.com/focus/19185#

Myths and reality checksMyths and reality checks

I already know what is going on in my network Those who think they know their network the best are usually the ones who know the least

We can’t do much to help informal networks Informal networks can be “managed” through changing the organizational context

To build networks, you have to communicate more

Networks can be strategically developedAdapted from Cross et al. 2002

TodayToday’’s discussions discussion

Background Background

Organizational network analysisOrganizational network analysis

Into the future….Into the future….

A shift from being “problem solvers” to “solution finders”

Access to 24x7 global workforceAccess to 24x7 global workforce

Average wage Average wage approx. USD 1.40 / approx. USD 1.40 /

hourhourhttp://www.people.fas.harvard.edu/http://www.people.fas.harvard.edu/~drand/~drand/

““Distributed groups of Distributed groups of individuals focused on solving individuals focused on solving

general problem and/or general problem and/or developing new solution developing new solution

supported by computer-mediated supported by computer-mediated communication.communication.””

Dahlander & Wallin, 2006 p. Dahlander & Wallin, 2006 p. 12461246

User-driven Innovation

Di Gangi 2010Di Gangi 2010

The wisdom of the crowdThe wisdom of the crowd

ClosedClosedExpensiveExpensiveComplexComplexAccurateAccurate

OpenOpenInexpensiveInexpensive

SimpleSimpleClose enoughClose enough

Hinton 2007

AccurateAccurateUp-to-dateUp-to-date

History tends to repeat itself….History tends to repeat itself….Innovation, financial crisis, industrial Innovation, financial crisis, industrial

revolution, … revolution, …

Steam Steam engineengine

Internal Internal combustion combustion engineengine

MicroelectroMicroelectronicsnics

Late 18Late 18thth C C Late 19Late 19thth C C Late 20Late 20thth C C

Schön 2008

Third industrial revolution?

A new workforce is appearing…A new workforce is appearing…

Prensky 2001, Beck and Wade 2004, Mahaley 2008 Prensky 2001, Beck and Wade 2004, Mahaley 2008

““Digital ImmigrantsDigital Immigrants””““Digital NativesDigital Natives””

Company loyaltyCompany loyaltyWork ≠ PersonalWork ≠ Personal

Learning=Behind the deskLearning=Behind the desk

Company loyaltyCompany loyaltyWork ≠ PersonalWork ≠ Personal

Learning=Behind the deskLearning=Behind the desk

Professional loyaltyProfessional loyaltyWork = PersonalWork = Personal

Learning=Fun and gamesLearning=Fun and games

Professional loyaltyProfessional loyaltyWork = PersonalWork = Personal

Learning=Fun and gamesLearning=Fun and games

Adapted from FredCavazza.net

“u r always on….”

Drivers of changeDrivers of changeIncreased

Interactivity

Di Gangi 2010Di Gangi 2010

Our economy changesOur economy changes

Pine Jr. & Gilmore 1998, 1999; DiGangi 2010DiGangi 2010

30% profit margin in commodity business

HierarchyHierarchyLinear, static, process-Linear, static, process-

based organizationbased organization

HierarchyHierarchyLinear, static, process-Linear, static, process-

based organizationbased organization

HeterarchyHeterarchyDynamic, integrated Dynamic, integrated

collaboration networks collaboration networks

HeterarchyHeterarchyDynamic, integrated Dynamic, integrated

collaboration networks collaboration networks

70 empl70 empl230+230+PartnePartnersrs

41,000+41,000+CommunityCommunitymembersmembers

5,000+5,000+Customers in Customers in

130 130 countriescountries

• Content management software, #1 in Content management software, #1 in media industrymedia industry

• Customers: UN, Vogue, Hitachi, 3M, MIT, Customers: UN, Vogue, Hitachi, 3M, MIT, FT, WSJFT, WSJ

• 70 employees in 9 countries (US, Europe 70 employees in 9 countries (US, Europe & Asia)& Asia)

eZ PhilosophyeZ Philosophy

Connecting people who share a passion for something they

do so that they can collaborate, share ideas, learn, and create knowledge

eZ provides eZ provides platforms for platforms for interaction interaction

throughout its ecosystemthroughout its ecosystem

eZ Software development team

OpenSimulator: A value-creation OpenSimulator: A value-creation ecosystem ecosystem

AcademicEntrepreneurHobbyistLarge FirmNon-profitLocal PublicFederal PublicResearch InstSME EmployeePeriphery

Teigland, Di Gangi, & Yetis Teigland, Di Gangi, & Yetis 20122012

““Open source” …Open source” …not just about software anymorenot just about software anymore

3D printing becoming more 3D printing becoming more commonplacecommonplace

Here comes the Immersive Internet….Here comes the Immersive Internet….

O’Driscoll 2009O’Driscoll 2009

How many How many usually usually think of think of virtual virtual worlds…worlds…

My CV•Leading a virtual team of 30 individuals from across

the globe•Creating and successfully executing strategies under

pressure•Managing cross-cultural conflict without face-to-

face communication

Building skills in virtual Building skills in virtual environmentsenvironments

What can Virtual Worlds be?What can Virtual Worlds be?

http://www.youtube.com/watch?v=Quh2OiPHkm8

Platforms for unleashing Platforms for unleashing creativity and creativity and

revolutionizing value revolutionizing value creationcreation

““Clearly, if social activity migrates to Clearly, if social activity migrates to synthetic worlds, economic activity will synthetic worlds, economic activity will

go there as well.go there as well.”” Castronova, 2006Castronova, 2006

US$ 635,000 for a virtual asteroid!US$ 635,000 for a virtual asteroid!

http://blogs.forbes.com/oliverchiang/2010/11/13/http://blogs.forbes.com/oliverchiang/2010/11/13/meet-the-man-who-just-made-a-cool-half-million-from-meet-the-man-who-just-made-a-cool-half-million-from-the-sale-of-virtual-property/the-sale-of-virtual-property/

•US$ 500,000 profit in 5 US$ 500,000 profit in 5 years by Jon “Neverdie” years by Jon “Neverdie”

JacobsJacobs•Entropia Universe with Entropia Universe with

GDP >US$ 440 mlnGDP >US$ 440 mln

From the mobility of goods From the mobility of goods to the mobility of financial to the mobility of financial

capital to … capital to …

Teigland, JVWR, 2010Teigland, JVWR, 2010

...the “mobility” ...the “mobility” of labor?of labor?

Some things do not changeSome things do not change

Innovation Exchange

Exchange Trust

Trust RelationshipsRelationships Interaction

What should you think about?What should you think about?

How to let go?How to let go?

How to leverage the power of How to leverage the power of networks to create value inside networks to create value inside and outside the boundaries of and outside the boundaries of the firm?the firm?

How to create a sustainable How to create a sustainable ecosystem?ecosystem?

Develop three forms of networkingDevelop three forms of networking

OperationalOperational PersonalPersonal StrategicStrategic

Purpose Getting work done efficiently

Enhancing personal and professional development

Developing and achieving future priorities

Members Mostly internal contacts and focused on current demands

Mostly external contacts and focused on current and future interests

Both internal and external contacts and focused on future

Network attributes

Depth through building strong working relationships

Breadth through reaching out to contacts who can refer you to others

Leverage through creating inside-outside links

Ibarra & Hunter, HBR Jan 2007Ibarra & Hunter, HBR Jan 2007

How do you stay How do you stay in command in command

…………while letting go while letting go

of control?of control?

Open LeadershipOpen Leadership

Having confidence and humility to give up

need to be in control, while

inspiring commitment from people to

accomplish goals

Karinda RhodeKarinda Rhode

aka Robin Teiglandaka Robin Teiglandrobin.teigland@hhs.serobin.teigland@hhs.se

www.knowledgenetworking.www.knowledgenetworking.orgorg

www.slideshare.net/www.slideshare.net/eteiglandeteigland

www.nordicworlds.net www.nordicworlds.net RobinTeiglandRobinTeigland

Karinda RhodeKarinda Rhode

aka Robin Teiglandaka Robin Teiglandrobin.teigland@hhs.serobin.teigland@hhs.se

www.knowledgenetworking.www.knowledgenetworking.orgorg

www.slideshare.net/www.slideshare.net/eteiglandeteigland

www.nordicworlds.net www.nordicworlds.net RobinTeiglandRobinTeigland

Photo: Lindholm, Metro

Photo: Nordenskiöld

Photo: Lindqvis

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