The Networks of Top Innovators

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Introduces social network and innovation research, reviews previous evidence and presents highlights of a study I conducted at a top 10 oil and gas company.

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  • Units and cities with less than 10 respondents areexcluded
  • Source: Burt (4)
  • The Networks of Top Innovators

    1. 1. The Networks of Top Innovators Matt Desruisseaux, A.B. (Harvard), PhD (Cambridge) Based on research funded by the Bill & Melinda Gates Foundation Also available on request: The Networks of Effective Leaders The Networks of High Performers Social Networks in Healthcare © 2013 Matt Desruisseaux. Do not circulate or use without permission.
    2. 2. Introduction Social networks are a high-growth area in management research. The accumulating evidence is that the networks people build, within and across firms, constitute social capital in that they help people and groups attain certain outcomes. My own research tested hypotheses on how networks create competitive advantage and support innovation. This presentation introduces network and innovation research, reviews evidence from previous research, and presents highlights of a study I conducted at a top 10 oil and gas company. Overview: 2 1. Networks • Concepts • Metrics 2. Known network effects • On creativity • On innovation 3. Case study • Diagnostic • Recommendations © 2013 Matt Desruisseaux. Do not circulate or use without permission.
    3. 3. 1. Networks Concepts & metrics Page 3
    4. 4. Network concepts 4 Networks can been mapped at different levels (individuals, firms, etc.) and for different kinds of ties: idea discussion, advice, investment, strong vs. weak ties, etc. They indicate access to “sticky information” that sits in different clusters and power to take certain actions. Innovation has been linked to two network roles: • brokers, who link disconnected contacts and are said to to span structural holes • boundary spanners, who have contacts in different groups, e.g., their own R&D lab and a few other labs Brokers and boundary spanners have greater access than their peers to non-redundant information and greater power to coordinate information flows. Nodes can be individuals, teams, departments, firms, etc. broker brokers & boundary spanners lab A lab B structural hole
    5. 5. Network metrics UCINET and other software can calculate (bold = linked to innovation): • network properties, e.g., centralization or the number of brokers in a team • whole-network actor properties, e.g., eigenvector or betweenness centrality • ego-network actor properties, based only on ego’s direct contacts, e.g., knowledge heterogeneity of ties (Blau index), Simmelian boundary-spanning ties (E-I index), or Burt’s constraint Or validated scales can capture networking behaviours, like the tertius iungens strategic orientation. 5 Metrics help answer questions like: • Do networks differ unexpectedly across departments or locations? • How can we encourage employees to build, maintain and use informal networks more conducive to innovation? Where pij is the proportion of time and energy spent by i on contact j (and pqj is the investment between two alters), Burt’s constraint is: Expanding the squared term reveals the metric’s links to network size, density and hierarchy (more later). EXAMPLE: CONSTRAINT © 2013 Matt Desruisseaux. Do not circulate or use without permission.
    6. 6. 2. Known network effects On creativity and on innovation
    7. 7. Creativity Creativity is the generation of new ideas. It can be measured by observation, experiments, textual analysis of written ideas, or supervisor ratings on validated scales. At least 13 studies suggest that boundary spanners and brokers are more creative than their peers. Effect sizes are generally small, yet may have large impacts for firms. 7© 2013 Matt Desruisseaux. Do not circulate or use without permission. EXAMPLE: GOOD IDEAS FOR A SUPPLY CHAIN The 673 managers running the supply chain of a US electronics firm submitted their best idea to improve the chain. Managers in broker positions were 29% less likely to have their idea dismissed, had their idea rated as significantly more valuable, and received better evaluations, promotions and compensation. (Burt, 2004)
    8. 8. Innovation 8 Innovation is the generation and implementation of new ideas. Not all brokers succeed at t implementing new ideas. Besides creativity, innovative teams or individuals have: • a central network position (explained 9-16% of innovativeness in ad agencies, chemicals firms, and a food manufacturer) • a tertius iungens strategic orientation, a tendency to join others when their combination can be productive* • certain inter-unit ties** and contacts with diverse knowledge • rotating leadership, i.e., a manager in one firm brings contacts on board, then someone in the partner firm takes the lead and mobilizes other contacts *At a car manufacturer, a 1-point increase (on a 7-point scale) made people 32% more likely to reach a given degree of innovation involvement. (Obstfeld, 2005) **At an electronics firm, weak ties sped up projects by up to 4.5x when knowledge was codified, but slowed them down when knowledge was complex. (Hansen, 1999) **At a high-tech multinational, strong ties between people in different R&D labs who also had a mutual contact were the greatest network predictor of successful patents. (Tortoriello & Krackhardt, 2010). EXAMPLE: PRODUCT DEVELOPMENT © 2013 Matt Desruisseaux. Do not circulate or use without permission.
    9. 9. 3. Case study Diagnostic and recommendations Page 9
    10. 10. Diagnostic: method I surveyed 132 people at an oil and gas company. They reported 482 contacts inside and outside the firm (e.g., who they discuss new ideas with) and the ties between those contacts. The result, clustered by internal unit and type of external contact, looked like this: Employees also completed measures of networking behavior and I interviewed many of them in three cities. Supervisors rated their innovative performance. 10© 2013 Matt Desruisseaux. Do not circulate or use without permission.
    11. 11. Diagnostic: top 5 findings 1. A personal tendency to use brokers* increased innovative performance. 2. Network hierarchy made up a high fraction of total constraint on brokers (especially for foreign-born employees)**. This suggests that people networked through a boss or other partner who made them somewhat redundant as brokers. 3. Time and geography were key barriers to building and using networks to innovate. One manager said: “there’s a network in London I don’t have access to, even when I travel there.” 4. External contacts were not fully leveraged: “I have so many contacts … [in] other oil companies… business developers, bankers and lawyers but [the company] does not have a way to capture this.” 5. Some wanted better recognition of less visible types of innovation. This confirmed a company survey showing low performance-reward alignment in some units. 11 HQ native Born elsewhere Size + density Hierarchy **Sources of network constraint personalized broker focal brokee all-around broker focal brokee *Brokees relied on all-around brokers to access non- redundant information and on a personalized brokers to mobilize cliques around their new ideas. © 2013 Matt Desruisseaux. Do not circulate or use without permission.
    12. 12. Selected recommendations 12 1. Implement a practice of scanning team members’ external contacts 2. Increase the frequency of cross-unit events 3. Incentivize certain types of employees to act as informal brokers; train them on the benefits of brokerage (see below) 4. Develop online social tools that routinize and lower the costs of informal information flows 5. Reduce network hierarchy by steering workflows and organizational culture toward more autonomy in informal relationships © 2013 Matt Desruisseaux. Do not circulate or use without permission. Raytheon, the US defense contractor, trained some of its executives on informal networks and brokerage. Two years following the training, these executives, compared to an untrained control group, were: 43-72% more likely to be promoted 36-42% more likely to receive top performance evaluations (Burt & Ronchi, 2007) EXAMPLE: IMPACT OF TRAINING
    13. 13. Extras Page 13
    14. 14. Preview: Social Networks in Healthcare Much network research has been done in healthcare. Highlights include: • 29% of variability in the adoption of 68 change initiatives in the UK’s NHS explained by models incorporating change agents’ advice networks • costly departures of informal brokers when there are few among a hospital’s staff • 20-35% lower costs for Boston hospitals with small GP-specialists networks and 5-15% lower for hospitals with networks centered around GPs (see below; Lewis & Fisher, 2012 ) Also, my own study in a Canadian healthcare system showed that high performers and effective leaders tended to use others as brokers in order to get work done. 14© 2013 Matt Desruisseaux. Do not circulate or use without permission.
    15. 15. Recommended reading 15 Administrative Science Quarterly Ahuja, G. (2000). Collaboration networks, structural holes, and innovation: A longitudinal study. Davis, J., & Eisenhardt, K. (2011). Rotating leadership and collaborative innovation: Recombination processes in symbiotic relationships. Hansen, M. (1999). The search-transfer problem: The role of weak ties in sharing knowledge across organization subunits. Lingo, E., & O’Mahony, S. (2010). Nexus work: brokerage on creative projects. Obstfeld, D. (2005). Social networks, the tertius iungens and orientation involvement in innovation. Tushman, M. (1977). Special boundary roles in the innovation process. Other publications Burt, R. (2004). Structural holes and good ideas. American Journal of Sociology. Burt, R., Kilduff, M., & Tasselli, S. (2013). Social network analysis: foundations and frontiers on advantage. Annual Review of Psychology. Lewis, V., & Fisher, E. (2012). Social networks in health care. Journal of the American Medical Association. Rodan, S., & Galunic, C. (2004). More than network structure: How knowledge heterogeneity influences managerial performance and innovativeness. Strategic Management Journal. Sosa, M. (2011). Where do creative interactions come from? The role of tie content and social networks. Organization Science. Tortoriello, M., & Krackhardt, D. (2010). Activating cross-boundary knowledge: The role of Simmelian ties in the generation of innovations. Academy of Management Journal. Books Burt, R. (1992). Structural holes: the social structure of competition. Harvard University Press. Kilduff, M., & Shipilov, A. (2011). Organisational networks. SAGE. © 2013 Matt Desruisseaux. Do not circulate or use without permission.
    16. 16. Enquiries welcome at mathieu@post.harvard.edu © 2013 Matt Desruisseaux. Do not circulate or use without permission.

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