1) The formal organizational structure of a company outlines official roles and tasks, but the informal structure indicates how work actually gets done through communication networks. 2) Social network analysis examines properties like tie strength, centrality, density, structural holes, and closure that influence how information and resources flow. 3) Individuals can build and diagnose their own networks to access greater social capital and opportunities. Expanding networks beyond proximity and similarity can provide new information and resources.

1. Informal Structure and
Social Networks

3. President
Pete (HR)
Ann Rose Mary
Emma
Bill (R&D)
Amy
Ann
Andy
Minna
(Sales)
Pege
Lisa
Tina
Organizational Chart

4. The Actual Network Structure
Note: UCINet Data from In the Office:
Networks and Coalitions, Thurman, 1979

5. The Company Behind the Chart
• The formal structure of the organization the official
titles, tasks, and roles people have in the
organization
• Informal structure indicates how work actually gets
done
– Who communicates with one another?
• This usually mirrors formal structure, but never
perfectly – Why do you think this is the case?

6. What is a social network?
= Node
Each line
represents a tie
A social tie:
Relationships
that provide
resources like
advice, information,
and social support
Note: We usually
think of ties as
positive relationships
Social Network, def: The pattern of relationships (ties) between nodes
(people)

7. Properties of Social Ties
• Social ties
– Relationships between individuals
• Relationships vary by strength
– Emotional intensity
– Duration
– Frequency of interaction Node
Node
Tie

8. Why do strength of ties matter?
• Strong ties
– Social support (i.e. friendship)
– Buy-in where strong level of trust is
needed
• Weak ties
– Better for accessing information on
novel opportunities
– That’s why they are largely more useful
for finding jobs (Granovetter, 1973)

9. Properties of Networks
= Ego (person of focus)
Density:
# of ties in ego’s
network divided by
the possible ties
in ego’s network
Centrality: The
number of
relationships a focal
“ego” has with others
What is the ego’s
network centrality?
Density Formula:
{(# of ties) / [n(n-1) / 2] * 100}
n= number of nodes tied to
ego

10. Why does centrality matter?
PerformanceEvaluations
Degree Centrality
G
C
A

11. Why does density matter?
• When density is high in a network, almost everyone is
communicating with everyone else
– Indicates a shared identity (‘we are all friends’)
– High level of trust
– Collaboration is easy (‘let’s all work together’)
– Mobilization is easy (‘fire-fighting’)
• But, since everyone communicates with everyone
else, it’s hard to get new ideas, information, and
resources into the network
• Novel resources and collaboration are both important
in a network
How is this achieved?

12. Before Microsoft Took Off. . .
• Why was Bill Gate’s mom one of the most
important people in his network?

13. William Dawes
Redundant contacts
in one town
Which one does history remember?
Revere vs. Dawes
High number of contacts
High brokerage
Low number of contacts
Low brokerage
Paul Revere
Diverse contacts in
different towns
Source: Uzzi, B. & S. Dunlap (2005). "How to build a better network." Harvard Business Review, 83(12): 53-60. 13

14. Structural Holes and Closure
Ego
Structural Hole
Structural Hole
Structural Hole
Structural Hole
Closure
Structural hole: when
“ego” is connected to
“alters” who are not
connected to each other.
Ego is a “broker”.
Closure: when “ego” is
connected to “alters”
who are also connected
to each other.
Density a property of an
entire network
SH/Closure indicates how
parts of the network are
arranged

15. Brokerage vs. Closure:
What are each good for?
• Structural holes (brokerage) and closure are each
useful for different objectives:
– Structural Holes: new ideas, information, creativity,
control of resource flows between different parts of the
organization, personal gain (e.g. salary, promotion)
– Closure: trust, strong commitment, reinforcement of
norms and culture, efficiency, group cohesion,
coordination of complex tasks, mobilization
• It’s optimal to have closure within one part of a
network and brokerage in another part

16. Network Problem

17. Beyond the Organization’s
Informal Structure:
What is your network?
Not just this. . . Closer. . .
17

18. Your Network
Your Network
All of your relationships with others that provide advice, access
to information, social support, and other resources.
Social Capital
All of the resources you may access through your network.
How is this different from other forms of capital
18

19. Your Network
19
Contact Who introduced you? To whom did you introduce this
contact?
Source: Uzzi, B. & S. Dunlap (2005). "How to build a better network." Harvard Business Review, 83(12): 53-60.

20. Diagnose Your Network
• For homework #5, you’ll be asked to create
your network and then assess it

21. Network Diagnosis
How much of your network is consists of those
with whom you are proximate or self-similar?
– Self-similarity principle: the tendency to network
with others who are similar to ourselves
• Experience, background, college major, race, gender
– Proximity principle: the tendency to network with
those with whom we spend the most time with
• Other Olin students, those in your dorm floor

22. 22
Source: Festinger, L., S. Schachter and K. Back (1950). Social Pressures in Informal Groups; A Study of Human Factors in Housing. Palo
Alto: Stanford Univ. Press.
Who became friends?
Westgate Study (1950)

23. It is important to
EXPAND your network!
• Foci – The Shared-Activity Principle
– Take part in an activit(ies) that will allow you to
generate relationships that expand the usefulness
of your network (not just your number of ties)
– Consider activities that involve people you would
not meet by only relying on homophily or
proximity
– Find a superconnector

24. Summary
• Informal organizational structure is a primary
determinant of how work gets done within
organizations
• Network properties affect networks in
important ways
• Your social capital can yield personal and
career benefits