April 29, 2008 — How is it that some firms consistently demonstrate outstanding levels of performance and innovation? Does such performance require a superstar CEO? Cutting-edge technology? A staff composed of only the best and the brightest?

According to Rob Cross, a management professor at the University of Virginia's McIntire School of Commerce, social networks — collaborations linking people, expertise, resources and decision-making authority — are "the key to organizational excellence." Moreover, Cross said, standard business models and organizational charts inevitably fail to recognize these underlying networks and the unique ways they affect value.

Cross, who heads U.Va.'s highly influential Network Roundtable, spoke at length on the power of networks at McIntire's Eighth Annual Spring Symposium, "Leading in a Connected World," held April 25. Through the Network Roundtable, Cross has worked with more than 120 companies in industries as wide-ranging as consulting, pharmaceuticals, software, manufacturing, chemicals and government.

Joining Cross for a panel discussion of his network research in action were Tracy Cox, director of performance consulting at Raytheon Professional Services LLC; Ted Graham, practice associate at McKinsey & Company; John Helferich, executive-in-residence at Northeastern University's College of Business Administration and Batten Fellow at U.Va.'s Darden School of Business; and Lisa Vertucci, managing director and global head of talent development at Lehman Brothers.

Network News

A decade ago, Cross said, the response to corporate conundrums or shortcomings was simply to build larger databases and "throw more data at people." But when Cross, as a young researcher, asked people how they actually went about solving problems, he invariably found that it was other people — not vast databases — that helped them find solutions.

"You'll never see a database beat a human when it comes to solving a problem," Cross said.

The key is to make sure that information is moving efficiently through an organization and that the right people are in contact with one another. "The effective management of collaboration can create valuable efficiencies within a firm," Cross said.

By the same token, though, invisible collaborative breakdowns and decision-making delays can lead to lost opportunities and the squandering of valuable corporate time and resources.

Displaying dazzling maps of information flow through real firms, Cross illustrated for the symposium audience just how powerful such networks are. Functioning as a sort of organizational X-ray, network analyses reveal groups and persons who act as effective conduits for communication and information, as well as the points at which breakdowns occur. Once weaknesses in a network are identified, managers can begin to make changes to help correct them by doing things like making staffing changes or taking steps to foster communication.

Taking it to the Next Level

After describing how he'd used network analysis at U.Va. to help improve faculty collaboration, assess classroom learning, and improve cooperation on the football, soccer and baseball teams, Cross discussed how networks function at the personal level.

Contrary to what the self-help industry would have you believe, Cross said, "being successful isn't just about building big networks — it's about building good relationships."

Moreover, Cross said, high performers use networks to help them continue to learn and to augment their skill sets. Possessing a keen understanding of the value inherent in others, successful people strive to fight insularity; avoid learning and decision traps; focus on the quality, rather than the quantity of their relationships; and see the opportunities that other people's skills and contacts represent. High performers, Cross said, tend to build "bridging ties across functional lines and subgroups." Moreover, he said, high performers often have ties outside organizations, giving them access to new ideas and innovative angles.

Cross also pointed out that at the behavioral level, individuals can act as network villains or network heroes by acting as "de-energizers" or "energizers," respectively. De-energizers (who tend to be territorial, critical, pessimistic, unreliable, uninterested in others' opinions and untrusting of others' abilities), he said, can have a "big negative impact," as the ill effects of their behavior ripples through an organization, wasting people's time and skills. Likewise, energizers (who tend to ask lots of questions, see realistic possibilities, trust people and have big-picture goals in mind) can have a broad positive impact.

Special Guest Appearances

Cross was then joined by his guest panelists, each of whom spoke about the impact that network analysis had had on their organization.

Leading off the discussion was Raytheon's Cox, who said that Cross' method of network analysis had achieved "huge results" — measurable by the billion-dollar contracts that resulted — for his corporation. Raytheon had turned to network analysis when, a few years ago, they found that "growth opportunities" seemed to be shrinking.

"On the surface," Cox said, "things looked good. But collaboration wasn't really occurring; we were still organized day to day around region and function."

With its collaborative issues and bottlenecks laid bare, Cox explained, Raytheon was able to alter its culture in a way that enabled it to foster a "huge performance edge."

Lehman's Vertucci said that network analysis allowed her, too, to see her organization in a new light. Surveying the top-performing 10 percent of Lehman's vice presidents, she said, she came to the stunning realization that this tiny fraction of managers was responsible for some 43 percent of the company's relationships. Such high-performers, she said, tend to be "doing things" to build strong connections: offering their advice and expertise, mentoring and helping to solve problems.

Vertucci then came to another realization: By relocating some of these top performers, she could help strengthen the ties between the company's global and domestic offices, an area she knew to be a weak point. "Top performers had ties across all different areas," she said, "and they'd bring those connections with them."

McKinsey's Graham then spoke, stressing the importance of leveraging external networks. Graham, who formerly served as chief knowledge officer at public relations heavyweight Hill & Knowlton, pointed out that in industries like public relations, "many important relationships are external to the firm — so it's important to invest in those who have excellent external contacts." A firm believer in the value of network analysis, Graham spearheaded Hill & Knowlton's membership in the Network Roundtable.

In addition, he created a premium research product called "Influencer Network Analysis" to map the relationships among the individuals, media and organizations that are shaping opinions across various industries and realms of public life.

The panel discussion closed with a presentation by Helferich, the former head of research and development at Mars Inc. Mars, he explained, has three primary divisions — pet food, candy and rice — which didn't always collaborate as effectively as the company would have liked. Using network analysis, he said, Mars was able to "make the invisible visible" and "see what was really going on."

Finding pockets of fragmentation, insularity and network domination in the company, he set about organizing face-to-face events and working groups designed to foster connectivity.

"Fragmentation really hurts an organization," Helferich said, "and domination and insularity can stifle innovation and prevent new ideas from coming in."