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The People Who Make Organizations Go –or Stop by Rob Cross and Laurence Prusak Reprint r0206g HBR Case Study r0206a The Skeleton in the Corporate Closet Julia Kirby HBR at Large r0206b My Week as a Room-Service Waiter at the Ritz Paul Hemp Managing Yourself r0206c A Survival Guide for Leaders Ronald A. Heifetz and Marty Linsky Charting Your Company’s Future r0206d W. Chan Kim and Renée Mauborgne The Very Real Dangers r0206e of Executive Coaching Steven Berglas Value Acceleration: Lessons r0206f from Private-Equity Masters Paul Rogers, Tom Holland, and Dan Haas The People Who Make r0206g Organizations Go – or Stop Rob Cross and Laurence Prusak Best Practice r0206h Spinning Out a Star Michael D. Lord, Stanley W. Mandel, and Jeffrey D. Wager Frontiers r0206j Have Your Objects Call My Objects Glover T. Ferguson June 2002 e’re all familiar with the truism “It’s not what you know, it’s who you know.” Managers invariably use their personal contacts when they need to, say, meet an impossible deadline, get ad- vice on a strategic decision, or learn the truth about a new boss. Increasingly, it’s through these informal net- works – not just through traditional organizational hier- archies – that information is found and work gets done. Social networks can be powerful political tools as well; few managers can resist the temptation to use their con- nections to discredit business initiatives they dislike or to support proposals they favor. Most corporations, however, treat informal networks as an invisible enemy – one that keeps decisions from being made and work from getting done. To many senior executives, these intricate webs of communication are un- observable and ungovernable – and, therefore, not ame- nable to the tools of scientific management. As a result, executives tend to work around informal networks or, worse, try to ignore them. When they do acknowledge the networks’ existence, executives fall back on intuition – scarcely a dependable tool – to guide them in nurturing this social capital. It doesn’t have to be that way. It is entirely possible to develop informal networks systematically. In fact, our re- search suggests that if senior managers focus their atten- tion on a handful of key role-players in the group, the The real work in most companies is done informally, through personal contacts. How can executives manage such amorphous networks? Start by focusing on those employees who play four critical linking roles. by Rob Cross and Laurence Prusak Copyright © 2002 by Harvard Business School Publishing Corporation. All rights reserved. 5 The People Who Make Organizations Go – or Stop W pages, we describe the four roles in detail and suggest ways that executives can transform ineffective informal networks into productive ones. The Central Connector The first person you notice when you look at a network map is the person everyone in the group talks to the most. Take a look at the exhibit “Finding Central Connec- tors and Peripheral Specialists,”which depicts how the in- formation flows in a global pharmaceutical company we consulted with. In this informal network, Alan is clearly the central information source for almost everyone in the network. The incoming arrows on the map indicate that Alan is the go-to person for most of his colleagues, even though Lisa is the head of the department. In most cases, the central connectors are not the for- mally designated go-to people in the unit. For instance, effectiveness of any informal network can be enhanced. After analyzing informal networks at more than 50 large organizations over the past five years, we’ve identified four common role-players whose performance is critical to the productivity of any organization. First, there are central connectors, who link most peo- ple in an informal network with one another. They aren’t usually the formal leaders within a unit or depart- ment, but they know who can provide critical informa- tion or expertise that the entire network draws on to get work done. Then there are boundary spanners, who con- nect an informal network with other parts of the com- pany or with similar networks in other organizations. They take the time to consult with and advise individu- als from many different departments – marketing, pro- duction, or R&D, for instance – regardless of their own affiliations. Information brokers keep the different sub- groups in an informal network together. If they didn’t communicate across the subgroups, the network as a whole would splinter into smaller, less-effective seg- ments. Finally, there are peripheral specialists, who any- one in an informal network can turn to for specialized expertise. Despite the enormous influence these role-players wield within an organization, they are often invisible to senior managers. Because senior executives rely on gut feel, gossip, or formal reporting structures for their infor- mation about their managers and employees, they often misunderstand the links between people, especially in large and globally distributed corporations. And because there are so many informal networks in an organization, the problem is exacerbated. So the first step in managing informal networks is to bring them into the open. That can be done through a well-established technique called social network analysis, a graphical tool that maps out the relationships in an organization. (For an explanation of the tool and how it can be applied in business, see the sidebar “Who’s Who?”) Once these network maps have been drawn, executives can start asking the right questions of the right people. Do the employees in one business unit have problems getting vital data from another business unit? Maybe that’s be- cause one of the central connectors in the informal net- work is hoarding information. Is the unit too isolated from other parts of the organization? Perhaps the bound- ary spanners aren’t talking to the right people outside the group. Is the unit losing its technical expertise in a key area? It could be that a peripheral specialist needs to be drawn more closely into the network. In the following 6 harvard business review The People Who Make Organizations Go – or Stop Rob Cross is an assistant professor of management at the University of Virginia’s McIntire School of Commerce in Charlottesville. Laurence Prusak is the executive director of the IBM Institute for Knowledge-Based Organizations in Cambridge, Massachusetts. Over the past two decades, much has been written about the role and impor- tance of informal networks from a vari- ety of academic perspectives including sociology, social psychology, anthropol- ogy, and epidemiology. Drawing on those disciplines, social scientists have developed and honed a powerful tool called social network analysis, a tech- nique that lets users identify and map informal networks of people. In fact, David Krackhardt and Jeffrey R. Hanson wrote a detailed description of social network analysis in “Informal Networks: The Company Behind the Chart” (HBR July–August 1993), in which they argued that this tool could be logically applied to business. Indeed, some organizations are already using social network analysis to recognize and manage their informal networks. Although it may be tempting for senior executives to map all the infor- mal networks in a company at one go, this may be overkill. It is more effective if executives first identify the functions or activities where connectivity is most needed to improve productivity and Who’s Who? the information flows at one practice of a large technol- ogy consulting company we worked with depended al- most entirely on five midlevel managers. They would, for instance, give their colleagues background information about key clients or offer ideas on new technologies that could be employed in a given project. These managers handled most technical questions themselves, and when they couldn’t, they guided their colleagues to someone else in the informal network – regardless of functional area – who had the relevant expertise. Each of these cen- tral connectors spent an hour or more every day helping the other 108 people in the group. But while their col- leagues readily acknowledged the connectors’ impor- tance, their efforts were not recognized, let alone re- warded, by the company. As a result, the connectors we spoke with were losing heart; they told us they were plan- ning to focus more on work that top management was inclined to reward. Therefore, it’s important to explicitly recognize the connectors. Indeed, merely acknowledging their exis- tence by showing them the network map, and their im- portant role in it, gives central connectors considerable gratification. But longer term, companies need to set up tangible ways to reward the good citizenship of their connectors. Some organizations offer spot rewards. For instance, there were few central connectors at a large engineering company we studied, so senior executives instituted a sys- tem of “above and beyond” rewards: Each time someone went out of his or her way to introduce a colleague in trouble to those who could help solve the problem, the connector was nominated for a cash reward. Although small, the bonus was paid out quickly and the effort was publicly acknowledged. This incentive helped create many more central connectors in the engineering com- pany in a relatively short time. june 2002 7 The People Who Make Organizations Go – or Stop then map the corresponding networks. These priority areas – say, the develop- ment of a new product line or the inte- gration of a recent acquisition – normally follow from the company’s strategic objectives. The next step is to collect information from people to map sets of relationships within the priority areas. While those data can be obtained in various ways, from tracking e-mail to observing peo- ple, the most efficient way is to adminis- ter a ten-to-20-minute questionnaire. The questions asked will depend on the kind of network you want to uncover. In most companies, senior managers are most interested in assessing how in- formation flows. For instance, they want to know “To whom do you talk regularly about work? From whom do you get your technical information? And from whom do you get your political informa- tion?” Some organizations map net- works of trust (“Whom do you trust in this group to keep your best interests in mind?”) or networks of energy (“When you interact with this person, how does it affect your energy level?”). Other orga- nizations choose to map activities such as decision making (“To whom do you turn for advice before making an impor- tant decision?”) or innovation (“With whom are you most likely to discuss a new idea?”). In short, the ability to map networks of relationships is virtually lim- itless and can be tailored to the needs of each organization. The survey can be pretested on a small sample of employees to determine if they would respond positively or if the poll would be seen as an unwanted intrusion. Safeguards such as guarantee- ing confidentiality and cross-checking responses can be built into the process to ensure that employees’ privacy is protected and that they are answering honestly. The information collected from the surveys is then used to create network maps that illustrate the relationships be- tween the members of a group. Software programs are used to generate such maps since it is almost impossible to draw them by hand. Reading the maps is easy. Typically, each line on a network map indicates a link between two peo- ple, while the arrows show the direction of the relationship. In an information network, an incoming arrow indicates that someone is being sought out for in- formation or advice, and an outgoing arrow signals that someone is seeking information or advice. If an informal network has more than 50 members, it may be a good idea to focus on the subnetworks in the group. Subgroups form for a variety of reasons–formal reporting structures, political tensions, or physical locations – and can have a major impact on a net- work’s performance. Executives must analyze why there are such splits in the informal network before planning their interventions. Finally, it is essential to conduct inter- views with the key role-players indicated in the map. Although the roles are re- flected in the number and nature of interactions among members of the group, they cannot be simply read off a map: Sometimes a person plays more than one role in a network, and, often, that same person may play different roles in different networks. Other organizations have changed aspects of their per- formance management systems to regularly reward cen- tral connectors. For instance, an investment bank we worked with changed the criteria for its annual bonuses: At the end of the review period, each manager’s ability to link people in the bank was specifically evaluated by all the people with whom he or she worked. The most successful connectors (those who greatly improved employee com- munications, for instance) were awarded bigger bonuses than other managers were–a major departure from the schemes most investment banks follow, in which the managers who create the most profits get the biggest bonuses. While most central connectors serve the company in a positive way, linking colleagues and increasing productivity, some end up creating bottlenecks that can hold back the informal network.Some- times the connectors use their roles for political or financial gain; in other cases, they are just struggling to keep up with their own work while also fulfilling their roles in the network. Whatever the rea- son, it is not easy for the other members of the network to supplant an ineffective central connector because he or she is often the person around whom the network first formed.There may be little incentive for anyone else to take on this time-consuming role. Instead, the members of the network will keep buzz- ing around the central connector out of sheer habit – though, increasingly less often than they would like to. A network map cannot