Of nets and networks

Last weekend I was in Villajoyosa, a Spanish fishing port, 'birthplace of the fishing net industry'. Walking around the harbour and seeing the nets all piled up started me thinking about what was caught in the nets and what escaped through them.

Earlier in the week we'd been discussing a paper by Niels Pflaeging on Organizing for Complexity where he outlines three types of organization structures: formal hierarchy, informal network, and value creation network. In this he argues that, 'value creation is never the result of individual action: It is a team-based process of working interactively, "with-one-another-for-each-other".'

The idea of networks of empowered teams as a new organizational model is one that we're hearing a lot about. Deloitte (a consultancy) describes, 'This new mode of organization-—a "network of teams" with a high degree of empowerment, strong communication, and rapid information flow' as integral to value creation.

But as Anne-Marie Slaughter, talking about her new book, says, 'Network theory is a whole branch of science, but it's relatively new in terms of the last 20 or 30 years. We haven't had a chance to take all that theory out of the universities and apply it to ask, "What kinds of networks should we build, and for what purposes?" '

She raises a good point as there are many types of networks of people: Deloitte discusses team networks, Pflaeging informal and value creation networks, an academic paper small group networks, a blog small world networks, and so on. Then there are various infrastructure networks.

Alex (Sandy) Pentland in his book Social Physics discusses current understanding of social networks and his work in trying to add value to them. For example, using sociometric badges he was able to find out why some call centre teams performed so much better than others. As a reviewer reports, Pentland found that ones that had the most social interaction had the highest productivity and 'suggested the introduction of team-wide coffee breaks, designed to encourage mingling. The increase in speed was so dramatic that Bank of America did the same at all of its call centers, generating a fifteen-million-dollar increase in annual productivity (and, presumably, some newly quantifiable amount of good cheer).'

Understanding social physics, Pentland asserts, lets people "tune" social networks and obtain the results they want, just as radio engineers can tune a receiver to a desired frequency. This allows certain aspects of human life-—from how companies operate to how cities work-—to be "re-engineered" to make them more efficient. See him talking about it in this 5 minute You Tube clip. This raises the possibility that organisations can design value creation networks. But as Pentland found, and Pflaeging states the informal networks and the value creation networks are interdependent and have to be designed/'tuned' simultaneously. Pflaeging explains as follows:

'[In] understanding organizations as value creation networks, underfed by informal structures, and not as command-and-control pyramids, you will stop caring much about formal hierarchy (which is actually "trivial", from the point of view of complexity thinking). You will instead care a lot about value creation streams, and on supporting peer pressure and emergent networking patterns. Organizational robustness comes from the quality and quantity of the interconnections between humans and teams – not from rules, bosses, or standards.'

Deloitte offers some characteristics of these networks of social/value creating teams:

  • They set their own goals and make their own decisions within the context of an overarching strategy or business plan, reversing the traditional structure of goal and performance management.
  • They share integrated information and identify connections between team activities and desired results via shared information centres.
  • They are organised around mission, product, market, or integrated customer needs rather than business function.
  • They are able to work across teams, using techniques like "liaison officers" (the US military), "hackathons," open office spaces that promote collaboration (Apple Inc. and Cleveland Clinic), and job rotation to give teams a common understanding of each other.
  • They move from team to team as needed-—similar to the way experts come together on Hollywood movie sets or in global consulting firms-—and then ensure that people have a home to return to once a team-based project is done. This changes the concept of a "job description" to that of a "mission specialist" or "technical specialist."
  • They focus leaders on roles related to planning, strategy, vision, culture, and cross-team communication.

It seems to me irrefutable that each of us lives in many networks. The organisation design challenge is less to recognise the concept and value of networks and more to know how to develop or encourage their 'knotting' them in a way that nets what's of value and lets the rest slip through.

However, my feeling is that infrastructure networks are as critical as the social networks in creating value and thus are integral to any network design activity – though this is not discussed or made explicit in the info I read on the topic.

Back to the fishing nets – are the fishermen the network or are the nets the network? Where is the value creation?

How do you design and develop organisational networks that create value? Let me know.

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