Gandal et al. (2009) performed an interesting study regarding knowledge creation and its effects on change through the use of an organizational network analysis. Through the use of an organizational network analysis, they were able to discern the type of network structure necessary for successful change management and identify behaviors of information gate keepers that stifle progress. In this particular case, the researchers concluded that gatekeepers or brokers of knowledge in a given network are still considered to be central to that network’s function, even when an abundant resource such as the internet is freely available, to provide all members of the network with relevant information to their goals. In fact, many actors in this particular study tapped their internal networks for expertise on how to search the internet effectively for the knowledge they were seeking. Over time, those “search experts” also became information conduits and gatekeepers.
Even when there is widely available/distributed knowledge for network members to draw relevant information from (such as the internet), many actors choose to pull information from gatekeepers who are either experts in a particular function or highly connected individuals. This may be because of a trust worthiness perception inherent to information exchange networks – the more you trust a source the more likely you are to extract information from that source. Whats interesting is that information and knowledge gate keepers are a critical key to new organizational innovations or new ideas (see Barabasi, 2003). In the Gandal case, the ramifications of the structure of the internal network extended beyond internal information flow, because of traits of network members (technical proficiency). Many of them were not deemed to be good communicators, and yet they still facilitated valuable knowledge flow to the right part of the network.
Mergers & Acquisitions
For cases of mergers and acquisitions, understanding the hidden knowledge map for the organization is key to a successful transfer of organizational knowledge from parent to subsidiary, vice versa, or from one partner to another (which is an alliance, a special case of M&As). Often, merger and acquisition due diligence and planning efforts focus on the merging of formal organizational networks i.e. by formal title or operational function without regard to value-driven activities.
I’ve seen it many times, where the post integration and M&A is pretty much done by some arbitrary process that has no grounding in empirics. Though I’m not making an argument that all business transactions should be grounded in empirics, I would like to see some method to the madness because without a method there can be no continuous improvement (my Lean and Six Sigma part of the brain are screaming to be out right now).
The issue that arises from that ad-hoc method of using titles and salaries to make restructuring and integration decisions is that often, information and knowledge gate keepers are not necessarily seen as critical employees, but ones with replaceable skills and attributes. Mainly because they do not have what is deemed to be important formal titles. “What would the executive assistant know about company operations,” I imagine someone says. Nevertheless, much of the time they tend to be critical information conduits, without which the organization can become highly ineffective because they broker information and thus value-creating relationships. With the large majority of mergers and acquisitions ending in failure (failure to achieve planned synergies) or even loss of revenue, or even worse, eventual and slow demise, organizational leaders must look on the network perspective, which is independent of formal authority structures to determine who the real hubs of organizational knowledge are.
The type of network analysis conducted by organizational leaders should always be relevant to their strategic goals and objectives. For the Gandal case, their network measures were collaboration and communication of knowledge because they found that these factors were drivers of their internal innovation. For highly task-oriented groups, for example, staffing agencies, the measure could be communication and authority and authority because value-driven transactions are based on those networks much more than others.
The importance of network driven knowledge management and knowledge sharing is clear on three organizational levels: On the strategic level, they help the organization sense its internal environment and retain value for the stakeholders of the organization through relationship retention. On the tactical (short-term) level they help the organization share best practices, up-to-date information, and experiences that are relevant to value creation with itself. Finally at the operational (transactional) level, the ability to share and replicate best practices and incremental improvements “can lead to greater efficiencies, lower costs and higher quality of goods and services” (see Allee, 2000).
Allee (2000) argues that the key to disseminating knowledge throughout organizations effectively is the ability to create intellectual capital through sub-group networks (clusters and components), which are commonly known as communities of practice in corporate lingo. She proposes that communities of practice overlap project and knowledge networks in a way that allows organizations to execute on knowledge and create organizational value that would otherwise disappear if the network were not energized and employees were working in independent, siloed units. Of course, without a network perspective one would not be able to identify existing knowledge networks or project networks (member networks that form to support each other to accomplish existing company goals). What’s interesting about this hypothesis is that traditional knowledge management practices, that become very important guidelines in implementations of everything from new corporate initiatives to restructuring efforts, in almost all change management interventions simply assume that more information and more knowledge is always better (see Anklam, 2005), without really looking at WHERE the knowledge comes from and needs to move to. This assumption contrasts the idea that communities of practice are key to managing organizational knowledge that Allee argues for, unless a network perspective is adopted that will allow knowledge leaders to map internal knowledge networks. Plainly said, all these companies will go out and build these wonderful communities of practice, but won’t know how to use them properly.
In Anklam, Cross and Gulas’s case study of a global organization that is moving from a region-centric corporate structure to a global, business line driven structure (MWH Global Inc), we see a good example of how knowledge management in organizations can be augmented by the network perspective. In this case, MWH is considered to be a global leader in the areas of water, hydropower, and remediation. Its service businesses include environmental engineering, power generation, construction and other highly technical areas. In 2003 the IT group of MWH was beginning to move from a regionally based corporate structure to a more central business support driven structure that is independent of region. The reason for the move was that they felt that they could not serve internal customers with consistent levels of customer service, provide good IT strategy and administration, and relevant technical expertise in very critical areas to MWH.
The IT group consisted of 185 people in 27 offices and 11 countries. It was a global organization in its own right and clearly, from the numbers, dispersed. The researchers in this case performed the baseline demographic analysis followed by an organizational network analysis to assess network structure, communication, and awareness. Network metrics such as degrees of separation, density, and overall connectivity were collected. Working together with the executive leadership, the researchers found that there were several regional groups with highly interconnected internal networks, where information was being shared easily and efficiently, and on the other hand osmotic silos were prevalent, which prevented information from leaving the internal networks. The classic OD people would call that in-group/out-group dynamics, but the network scientists would call that homophily.
The researchers believed that the key to effective dissemination of knowledge in the networks was to create awareness of the skills available to employees in other parts of the global network, help the connectedness of expertise groups across different geographies, reduce the reliance on overly central people who are becoming hindrances and bottlenecks to the knowledge process, and increasing overall connectivity. The executive team, in collaboration with the consulting team, began to develop a series of activities that were designed to meet the goals of the baseline analysis. These activities included extensive communication efforts emanating from the leadership of the IT group, establishing “communities of interest” that would be embedded in the performance management process, and finally the development of cross functional, global project teams that would be tasked with establishing common best practices across the entire group(s).
In conjunction with these efforts, emphasis on collaborative behavior was established by the executive team, and awareness of the skills and professional profiles of team members across service units was created. That way they were incentivized to reach out and build relationship and in the process increasing the density of the network. In addition, the metric for the degrees of separation (how far someone is from a person that possesses the knowledge that they need, counted by the number of people that separates them) was reduced for the overall network, and 7 of 8 divisions saw considerable increases in connectivity.
To summarize, the challenge was to provide the necessary knowledge which was already available internally to the organization where it was needed the most when it is needed the most. Getting the network data was probably the ONLY way to get it done.
Traditional restructuring efforts do so without concern or an attempt at deep analysis of internal informational and knowledge networks. For MWH global, even with a traditional reconstruction of the organization from a region-centric structure to a business-line-centric structure they would likely not be able to deliver the technical expertise necessary to support diverse global business lines without precise knowledge of where the knowledge is (no pun intended).
Organizational network analysis, ensures that key knowledge brokers are positioned in such a way to provide maximum effect for the organization.
For individuals that are on the fringe of the knowledge network who might possess highly technical expertise, but are not comfortable enough to seek out others in the network to provide the expertise, structured activities that allow them to meet others and to create awareness for their own expertise is highly critical and in our several case studies, saved the day!!