Professor Ron Burt argues that social networks spanning the gaps in our existing social structure are key to innovation, and personal and commercial success.
Yesterday's solutions won't solve today's problems
Technology has expanded our ability to communicate across geographic and social distance. "Global" is the word of the day. The limited scale of yesterday's organisations is today inefficient. We've removed layers of bureaucracy and laid in fast, flexible communication systems.
Leaders of large organisations inevitably talk about people and cultural issues when asked to describe the most difficult barriers to managing and co-ordinating communications.
We are capable of co-ordinating across scattered markets of human endeavour, but we are not yet competent in how to take advantage of this capability. This is because we continue to work in organisation silos and in the way we learned in long-established organisations.
Individuals as the authors of their own destinies
Authority in the formal chain of command no longer provides the answers it once did. Matrix structures have a person reporting to multiple superiors, which weakens the authority of each reporting relationship.
Efficiencies gained by removing layers of bureaucracy shift control from vertical chains of authority to horizontal peer pressure. Work once defined by superiors in the formal organisation is now negotiated between colleagues who have no authority over one another.
People are more than ever the author of their jobs - not told what to do, so much as expected to figure it out. When people are confused or unclear, they turn to friends and colleagues for advice and support.
Accountability flows through the formal organisation of authority relations. All else flows through the informal - advice, coordination, cooperation, friendship, gossip, knowledge, trust. Formal relations are about who is to blame. Informal relations are about who gets it done.
The power of informal relations
Informal relations have always been with us. They have always mattered. What is new is the range of activities in which they matter, and the emerging clarity we have about how they create advantage for certain people at the expense of others.
Coordination through networks of informal relations creates competitive advantage. The advantage is visible when certain people or groups enjoy higher incomes, quicker prominence, more consequential projects.
People do better because they are better connected with other people; they are obligated to support others and are dependent on trusting and exchange with others.
Those who branch out reap the rewards
Belief and practice are more similar within than between groups. The drift to the creation of cliques or obstacles to entry inhibits knowledge transfer between groups - so people connected to separate groups have an advantage in detecting and developing lucrative projects.
People that live at the intersection of social worlds:
Boundaries between groups are discussed as holes in social structure, or more simply "structural holes," and competitive advantage is analysed in terms of social networks spanning structural holes.
The accumulated research evidence is that networks spanning structural holes are associated with a variety of achievements such as good ideas, positive evaluations, attractive compensation, early promotion, effective teamwork, and profitable companies.
Ron Burt is Professor of Sociology and Strategy at the University of Chicago, and an expert on collaborative networks and how they lead to innovation.
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