This executive summary discusses the importance of social networks in knowledge management and organizations. It notes that 85% of managers surveyed obtained crucial career information from other people within their social networks. Examining communication patterns within organizations can provide insight into why knowledge is not being effectively shared. Managing social networks and improving connections between employees can lead to better knowledge sharing, lower costs, greater coherence, and higher social capital - the value of relationships within the organization.

1. Executive summary
Executive summary
In the days when knowledge management organisation and had presumably not had
was still thought of as comprising activities time to develop their networks.
for capturing and organising content, or Consider another story from a software-
creating knowledge bases and portals, the development company with offices and
Institute for Knowledge Management (IKM) development sites in India, the US and
conducted a survey of 40 managers in a Europe. During group meetings, there were
company known for its knowledge- often people who were unaware of new
management leadership. Respondents were product features or design options that were
asked to reflect on a project that was being actively considered and, more impor-
important to their careers and indicate tantly, had been in the product’s design
where they had obtained knowledge document. As a result, meetings were
critical to their success. Eighty-five per cent ineffective as people had to explain new
said they received this information from features or design changes rather than
other people.1 make decisions for the future. The product’s
These ‘other people’ are the social lead architect decided to investigate the
network: the people we are connected to patterns of communication across the
and to whom we turn when we have an group. The map looked like the one shown
idea, concern, problem or question. The in Figure 1.
Biddy Lionel Yuri Eyal Ziv David
Cliff Igor Jennifer Adar Ezra
Nicholas Nicolai Joan Salomo Nanci Edwin Sean Izacnic Guillaume Dov
Bob Rick
Figure 1 Patterns of communication
social network is not only the first place we Lines between the names of people
go to when requesting knowledge, but is represent communications links. Note the
also the place where we are most likely to larger, connected group on the left and two
find it. But what happens if the social isolated groups on the right. This map
network is inadequate? What if we do not gave the team insight into why communica-
have the right connections to find the infor- tions had failed. The team immediately
mation we need for crucial career events or made a plan to ensure that people would
running a business? The IKM survey found be better connected and created opportu-
that 15 per cent of managers who received nities for more frequent and consistent
information from impersonal sources, such communications.
as computer archives, the internet or KM This example is typical of the situation in
databases, were relatively new to the many firms, and illustrates the value of
1

2. Executive summary
examining the connections that exist improve their effectiveness, competitiveness
between people in organisations. The map and agility. New organisational capabilities
helped the managers understand what was are focused on networking practices. Just as
happening, and stimulated action to a fisherman’s livelihood depends on keeping
improve the knowledge and information his nets mended, managers (especially KM
flow in the company. This insight is a corner- managers) must work at keeping networks
stone of the study and practice of social healthy. New practices described in this
networks and knowledge management report are helping managers detect, sustain
within organisations. and leverage networks to enable more
This report is based on a few cross-organisational working practices,
simple premises: 2 communications and collaboration. This
report brings the need for these capabilities
Networks matter: the new nexus of into focus, and presents some of the
knowledge management is in the networking practices and tools that are
network. It is where work gets done; being adopted by leading commentators
Networks are everywhere: as fish and organisations.
are unaware that their environment The first section of this report describes
is water, we are often not conscious the trends that have converged to make
that networks form our knowledge networks a matter of importance in
environment. Most of the important knowledge management. Subsequent
networks underlying every organisation sections discuss:
are the relationships that are invisible
to management; Why should managers care about
Existing networks can be identified, networks in their organisations?
analysed and measured: knowledge of What do managers need to know
what is happening in networks can lead about networks?
to action that improves individual and What knowledge-management practices
organisational performance; and methods support network creation
New networks can be intentionally and growth?
created, grown and supported: What software tools, products and
individuals, enterprises and communi- platforms support network creation,
ties can reach out and create networks growth and leverage?
to achieve specific purposes and How can you introduce the practice of
common goals; social-network management into an
Networks will be important in the future: organisation without it becoming an end
organisational leadership will be based in itself and a distraction from the
on a leader’s ability to gain rapid business’s purpose and goals?
insights into existing and potential
networks within the organisation, and Each discussion includes the experiences of
take action to leverage them. pioneer practitioners in this new domain of
knowledge management, most of whom
Many businesses are struggling to under- have just completed a pilot project and are
stand how to leverage talent, skills and at the ‘now what?’ stage of implementing
experience from across the organisation to knowledge-networking practices.
2

3. Executive summary
Terms in context The science of networks and study of
“What in the past could be taken for social networks that have led to social-
granted and sometimes even minimised can networking applications;
no longer be ignored or left to chance.” The evolution of knowledge manage-
Laurence Prusak and Don Cohen3 ment into its third generation that builds
‘Social network’ is an academic term on collaborative infrastructures and
that has slipped into the knowledge- social software developed in the
management vocabulary. Outside of previous generations.
knowledge management and other spe-
cialised academic areas, it is not a term that These topics introduce both the context and
people use with comfort. Officially, it means terminology that will be used as the report
nothing more than a network of people (in goes into more detail on the development of
contrast to networks of computer systems or knowledge strategies that address these
railroad lines). However, to some people, social phenomena.
the word ‘social’ connotes gossip, parties
and getting together outside work. To keep Social capital
things simple, this report uses the terms Most KM practitioners are familiar with the
‘network’ and ‘social network’ interchange- model in Figure 2. This model was first used
ably. In addition, it introduces the qualified to help companies distinguish between tradi-
terms ‘personal network’ and ‘organisation- tional thinking about capital as accounted
al network’ to distinguish between types. I for on the corporate balance sheet (cash
also talk about ‘knowledge networks’ and assets, inventory and property, for example)
‘knowledge networking’, which in some and intellectual capital. It suggests that intel-
companies are more acceptable terms than lectual capital is really the sum of human,
knowledge management. structural and customer capital, and that
corporations need to look for methods to
Social capital, networks account for (literally) the intellectual capital
and third-generation KM of the enterprise. Without intellectual capital,
The knowledge-management community there are no people, no relationships with
is made up of practitioners who are
self-aware and constantly exploring new
ideas and concepts. Because the underly-
ing principles of knowledge management
touch so many diverse disciplines, innova-
tions from different schools of thought Human
Human Structural
Structural
have allowed knowledge management to
Financial
Financial
continually grow and expand. The trends (value)
(Value)
and developments influencing the
emergence of social-networking practices
Customer
Customer
into KM include:
The ongoing KM theme that social
capital can be a measure of an
Figure 2 Forms of intellectual capital
organisation’s value;
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4. Executive summary
customers, no innovation and no traditional capital, such as material assets,
competitive processes.4 inventory and cash. In most respects,
however, they represent what companies are
Human capital: The necessary capabilities actually valued for today.7 You can often
of individuals to provide solutions to sense social capital in the atmosphere of a
customers; for example, the company’s core company or on its intranet bulletin boards,
competency; for example. As you walk through a company
Structural capital: The capabilities of the you see people smiling and cartoons on the
organisation to meet market requirements; walls. You observe informal knowledge being
for example, its processes; exchanged through gossip, stories and
Customer capital: The value of an organisa- anecdotes, and hear engaged, purposeful
tion’s relationships with the people with whom dialogue in meetings. People respect and
it does business; for example, its brand. seek each other’s opinions, share what they
know and trust that their contributions will
As I began working with social-network be acknowledged.
concepts, I returned to the models I used for From a knowledge-management
developing KM practices, and realised that viewpoint, social capital reflects how
there is another way to look at this classic knowledge does or does not move in an
model. Consider that these three elements organisation. For example, leaders may
intersect or connect through the relationships instinctively know that organisational
of the people in the firm. Replace financial stovepipes or silos are unhealthy, but they
value in this model with social capital and may accept them as a fact of life or a
you begin to see another picture. simple communication problem that can be
In their book, In Good Company, Prusak fixed with more information technology.
and Cohen define social capital as, “The Knowledge-management practitioners know
stock of active connections among people, that anything that impedes the flow of
the trust, mutual understanding, and shared knowledge can be detrimental to the
values and behaviours that bind the members business. Recall the example of the software
of human networks and communities and company at the beginning of this report:
make co-operative action possible.”5 absent social ties meant that critical
Wayne Baker, an expert in organisational knowledge was not shared.
networks who teaches the University of Prusak and Cohen emphasise four
Michigan, is more explicit and personal specific areas where social capital
about its value in his definition of social benefits organisations:
capital. “Social capital refers to the
resources available in and through our Better knowledge sharing due to
personal networks. These resources… established, trust-based relationships,
include information, ideas, leads, business common frames of reference and
opportunities, financial capital, power and shared goals;
influence, emotional support, even goodwill, Lower transaction costs because of high
trust, and co-operation.”6 levels of trust and co-operative spirit
Note that none of these forms of capital (both within the organisation, and
(human, structural, customer or social) are as between the organisation, its customers
easy to quantify as the methods for counting and partners);
4

5. Executive summary
Low turnover rates reduce severance, experiences and culture – will occupy a
hiring and training costs, avoid more positive position in the market.
discontinuities associated with frequent To investigate this proposition in the
personnel changes, and maintain organisational realm, the IKM, under Rob
valuable organisational knowledge; Cross’s direction, carried out research on
Greater coherence of action due to social-network analysis in knowledge
organisational stability and shared management in 1999. It examined what it
understanding.8 would mean to be able to measure social
capital and whether instruments could be
Valdis Krebs, who has worked extensively placed in an organisation to detect how
with organisational networks, began knowledge is flowing and how people ‘feel’
drawing diagrams of these networks in about the environment. Ultimately, it looked
1987. He applied them for the first time at whether it is possible to take the readings
during a project measuring organisational from a variety of organisations and plot
diversity at TRW, a defence and electronics these measures against the balance sheet of
company. During that time he began the company to look for improvements on a
working on methods and software for what year-to-year basis.
he called organisational-network analysis
(ONA). He is one of the leaders (and a Networks
great teacher and mentor to many) of the The past three to four years have brought an
application of network analysis to organisa- explosion of interest in the science of
tional effectiveness and knowledge manage- networks of all types: computer networks
ment. One of Krebs’s earliest findings was (including the internet), terrorist networks,
that the engineers with the highest commit- traffic networks, network spread of diseases,
ment to the organisation were those who and so on. Much of this interest has been
were connected with the key information fuelled by the availability of computing
flow and decision-making paths. More and resources that enable researchers to plug in
better connections led to more social vast amounts of data to analyse networks.
capital, higher commitment and stronger Many of the scholars have written books that
individual performance and improved have crossed over into the mass market
business results. following the success of Malcolm Gladwell’s
The concepts of social capital and The Tipping Point.9
research on its measurement and impact, Gladwell, a writer for The New Yorker
are not limited to the business, organisation- magazine, explained a number of concepts
al and knowledge-management domains. It about social networks as he sought to show
also applies to nations, the quality of rela- how major changes in society and culture
tionships between the people of a nation can happen through a series of almost
and the quality of relationships among unnoticed and seemingly inconsequential
nations. It applies to corporations, industry events. To explain how ideas spread through
networks and the management of relation- populations of people, he recounted some of
ships through the interactions of individuals. the history behind sociological research into
In this context, it should be intuitive that the social networks. He began by highlighting a
firms with more social capital – more study by Dr Stanley Milgram in 1967 that
relationships characterised by trust, shared was the basis for the phrase ‘six degrees of
5

6. Executive summary
The numbers of ties between two people
Owen Sarah represent degrees: one tie is one degree.
Ben and Sarah are connected by one
degree, but Sarah and Emily are two degrees
Emily Alex
apart. Hence, Ben and Sarah have a direct
tie, and Sarah and Emily an indirect tie.
This is a small network, and you could
Ben probably draw this by hand if you knew all
the people (in fact, this is a practical way to
do some simple network analysis). Chapter
four, ‘Network-analysis and tools’, describes
Sabrina Michael the methods and tools for collecting data,
drawing maps and reviewing statistics when
Figure 3 Social-network maps:
Ties, nodes and degrees a network consists of a large number of
people. The software involved is generically
called social-network-analysis software, or
separation’. The concept holds that you, I or SNA software. Chapter two, ‘Network struc-
anyone on the planet is connected to tures, patterns and views’, goes into more
everyone else by no more than six connec- detail about how to read and understand
tions: me, somebody I know, somebody they maps. For now, it is helpful to understand
know, somebody this third person knows, the two basic sources of data: surveys and
and so on. The methodology of the Milgram data mining. Surveys ask people within a
study, and therefore its conclusion, now clearly defined network about their relation-
appear to have some inconsistencies, but the ships to other people. In Figure 3, for
magic of the notion remains.10 example, Sarah has indicated in the survey
Alongside the magic are a number of that she goes to Alex and Ben for advice.
useful basic properties of networks, structural Surveys provide qualitative information
patterns and heuristics for analysing about relationships, but can be difficult to
networks that have been developed and administer in large groups. Data mining
passed into some mainstream disciplines, involves the use of software with applica-
like knowledge management. These tions that include social context. In e-mail,
concepts come with a small number of tools for example, this social context consists of
that enable practitioners to collect data the sender and recipients (direct or copied).
about networks, plug the data into software As you will see in the next section, social
that can perform all kinds of analysis and software and social-networking applications
draw maps such as that shown in Figure 3. can provide data for analysis using social-
In Figure 3, the circles represent nodes in networking tools
the network: each node represents a person.
Arrows between people are the ties – they Social software and
show where people are connected and in social-networking applications
what direction. For example, if the relation- Terminology is a source of great confusion,
ships in this network represent who goes to especially between the terms ‘social
whom for advice, then ties to Ben indicate software’ and ‘social-networking applica-
that four people go to Ben for advice. tions’. I differentiate these terms as follows:
6

7. Executive summary
social software refers to software applica- Both software categories – which will be
tions that foster the development of social described in more detail later – are useful
networks, such as collaboration tools, and available in both organisational settings
e-mail, instant messaging, weblogs (also and in everyday life. In an organisational
called blogs), wikis and other tools that you setting, social software represents an
are already familiar with.11 These tools help essential element of a knowledge-manage-
form connections on a person-to-person ment framework that is sustained by an
basis, strengthening individual relationships understanding of how people and groups
and in most cases, improving the social collaborate. Social software improves
capital of a group as well. Consider the connections among people and groups.
extent to which you use e-mail, not just for Network-referral software, which is being
business correspondence with colleagues, field tested on many public websites, can be
but also to set up lunches, celebrations and introduced into an enterprise to solve
other social activities. The more e-mails you specific types of knowledge-management
exchange with a person, the more you problems, such as those related to expertise
develop a common language, shorthand for location, contact management, relationship
frequently used terms, and generally management and relationship mining.
improve the ties between you and that Social-networking applications use the con-
person. Multiply that by all the people in an nections themselves as a knowledge asset.
organisational network and you can see Both applications accumulate proxy
how social software nurtures and sustains information about connections between and
social capital. among people, either overtly (as in the
Social-networking applications, on the referral software) or implicitly. E-mail logs
other hand, enable users to network digitally and saved or shared folders, for example,
and step across the degrees of separation. are a rich source of data about who com-
You may, for example, be looking for infor- municates with whom, with what frequency,
mation on paperweights and want to find and (when the contents of e-mails are
someone who knows something about them. searched) about what topics. As more
You can search the web or your intranet to organisations and researchers become
find a paperweight expert, but you know that interested in the nature and value of
your conversation will be a lot easier if you networks, the silent collection, or mining, of
have had an initial introduction. Social- this data grows in importance.
network referral software is designed to help
you find people who can introduce you to Third-generation knowledge management
the people you want to meet. This software is It is become a truism among those of us
based on the degrees-of-separation concept. who work in knowledge management that
LinkedIn is an example of such a referral the term itself has become problematic. We
tool.12 If you want to contact a person in a would rather use something else, but it has
particular company on LinkedIn it will tell you become a shorthand way of identifying a
how many degrees away you are from them. school of thought that is more practice than
It can tell you that, for example: theory and more about applied technology
than about technology itself. We work in the
You know Sally, who knows Per (who real world and are constantly learning –
is an expert on paperweights) from our own and each other’s experiences
7

8. Executive summary
– and acquiring new tools. What we like is the AOK network.13 As its facilitator, Jerry
about working with knowledge management Ash, says, “Managing knowledge is not the
is the learning culture, and that the princi- latest fad. It is a shift in the value of
ples we apply to knowledge management in knowledge due to fundamental changes in
an organisation we apply to ourselves. We political, social, economic, business and work
collect ideas, try them out, share them with environments brought about by the passing of
others and notice how they are transformed the industrial age and the arrival of the
through sharing. And we are reflective. knowledge economy.” David Snowden, who
There are many opinions on the nature of introduced the concept of complexity to
the various knowledge-management gener- knowledge management, argues that KM is
ations. My synthesis of these opinions leads the management of the ecology of
to the first premise of this report: networks knowledge.14 Snowden also introduced the
are where work gets done. term, ‘emergent knowledge management’.
The first generation of knowledge man- Social-networking and knowledge-
agement was heavily focused on technology. networking practices are a central focus of this
Knowledge assets were primarily information current generation’s ecology of emergent
resources and re-usable artefacts, such as knowledge management. That is the connec-
intranets, document, databases and files. tions among people in organisations and
The initial market surge in knowledge across organisational boundaries. If we say
management focused on providing software that in the first generation knowledge was in
to assist in managing these assets. This artefacts, and in the second it was in people,
generation coincided with the introduction we need to say that in the third generation we
of web-based technologies into corporate understand that knowledge is in the network.
environments: intranets, content-management These generations are summarised in Table 1.
systems, web-based portals, search engines When knowledge is in the network, it
and so on. emerges from the interactions of units within
The second generation came as the the network – individual to individual,
distinction was drawn between explicit and individual to group, group to group. The
tacit knowledge. As more thinkers and network is not just the social relationships,
practitioners understood these differences, but organisational relationships and
process improvement and organisational relationships among people, groups and
disciplines started to take hold through the artefacts as well. Snowden refers to three
sharing of good practice, continuous general heuristics about the knowledge
improvement, reward and recognition worker in this generation:
policies, change management, and commu-
nities of practice. The second generation Knowledge can only be volunteered; it
proved that the real knowledge of an can never be conscripted;
organisation lay in its human resources. We know more than we can tell, and we
The exact nature of the third generation, can tell more than we can write down;
which is upon us, is still emerging from the We only know what we know when we
conversations among practitioners and need to know it.
theorists. Some say that it is about business
transformation. One of the largest communi- In the third generation, a central idea
ties of knowledge-management practitioners of knowledge management is about
8

9. Executive summary
Generation of KM Where knowledge ‘lives’ Type of knowledge Implications
First generation Artefacts Explicit Create the infrastructure for capturing,
collecting, refining and re-using artefacts
Second generation Individuals Tacit Focus on collaborative behaviours and
person-to-person knowledge exchange
Third generation The network Emergent Provide the conditions for enabling knowledge
and action to emerge
Table 1 Generations of knowledge management
understanding what can and cannot be may be. This is also a complexity-based
managed. As you can infer from these model, as it reflects information’s constantly
heuristics, it is nearly impossible to manage changing nature and the relationships
what people know when they are not always between individual people at the edge and
aware of it themselves. We therefore use the what is happening at the network’s core.
term ‘emergence’, which comes from the If you remove the warfare connotations
science of complex systems, also referred to from this concept, you find that ‘power to
as complex-adaptive systems (I will use the the edge’ also resonates in the context of
shorter term, ‘complex’, throughout the global, agile corporations. David
report to mean a complex-adaptive system). Krackhardt, another pioneering researcher
Emergence is what happens at the point in social-network analysis, summarises
where two systems meet. Knowledge power as the ability to mobilise resources
emerges when people connect with each and get things done.
other within and across networks, and when The more networked the information
networks reach touch points. and knowledge, the easier it is to move
A closely related concept that is decision making – the power – to the
appearing more frequently is that of people closest to the customer. The ability to
network-centric warfare (NCW), and its identify potential innovations can also be
companion mantra, ‘power to the edge’. shifted to the organisation’s periphery, and
NCW effectively links all possible informa- people across a global enterprise can
tion sources – satellite images, intelligence readily and quickly share context. As David
data, global positioning information about Albers and Richard Hayes say in their
supplies and equipment, mobile audio, report, Power to the Edge: Command
video and computer-networked connections and Control in the Information Age: “Until
to people, and so on – to provide precise quite recently, networking was too expensive
global and situation awareness. By linking for us to realise the value proposition.
sources of information and knowledge, the Communications technologies provided an
network is the centre of the command-and- opportunity to be more robustly networked.
control operation, and it is possible to move As bandwidth becomes less costly and more
decision making to the edge. That is, to the widely available, we will be able to not only
people closest to the situation, wherever that allow people to process information as they
9

10. Executive summary
see fit, but also allow multiple individuals management must focus on enabling the
and organisations to have direct and conditions for knowledge to emerge.
simultaneous access to information and This report examines what is possible
each other. We will also be able to once you have made the connection
support richer interactions between and between social-networks ideas and
among individuals.”15 knowledge-management practices. Figure 4
Knowledge management in this network- shows a map of the concepts and ideas that
centric environment means trusting people have emerged, are coming together again
to make the right decisions when they are and changing in practice.
provided with the right context. And, If, like me, you have always considered
because the context is complex, it can never knowledge management a lens through
be wholly known or understood. Managing which to view current business problems, then
networks is about managing complexity, that you can consider organisational networks a
is, being able to chart a course, provide new frame – although unfortunately it does
direction and enable action at the edges of not have a fixed shape. The lens is still
the network, even as the network itself is knowledge, and you continue to draw on the
constantly changing. methods, tools and practices in your KM
toolkit as needed. But you also have an
Summary: the intersection of additional set of tools that let you examine
knowledge and networks and leverage the power and knowledge that
As Table 1 shows, the role of knowledge are in the networks around you.
Social
software
Social capital
KM first and
second
generations
Organisational
Knowledge- and management
Emergent sciences
networking
knowledge
practice
management
Social
networks
Social- Social-
network networking
“Power to analysis software
the edge”
Figure 4 Emergence of networking practices
10

11. Executive summary
Brief history of SNA and KM it internally to support IBM’s re-organisation
Social-network analysis has always been a rich efforts as it moved to a services-oriented
and multidisciplinary field. It began in the business model. He continued his work with the
1930s-40s with research and discoveries in consulting group and worked with Krebs to
psychology, sociology and anthropology. These enhance InFlow, the mapping and measuring
insights were first explored using mathematical software that Krebs created as a class project in
analysis in the 1960s among a group led by 1987 while working at Toyota and taking
Harrison White at Harvard University. (See courses in artificial intelligence.
www.analytictech.com/networks/history.htm. For Meanwhile, academic research on social
a great photo of the first symposium on the topic networks flourished. In 1998, Duncan Watts
held at Dartmouth College in 1975, visit and Steven Strogatz published an article on
http://eclectic.ss.uci.edu/~drwhite/Networks/MS small-world networks that brought a new group
SB1975.html.) The International Network for of academics – physicists and complexity
Social Network Analysis (INSNA) was founded in scientists – into the study of network dynamics.
1978 and has been holding annual conferences In 1999, Rob Cross approached Larry
since 1979. Prusak with an idea for bringing the insights of
David Krackhardt, Daniel Brass, Ron Burt, social networks to knowledge management.
Ron Rice and Karen Stephenson were among Cross, Stephen Borgatti, who created the
the first to apply network analysis to people, UCINET software, and Andrew Parker collabo-
organisation and culture and to develop the rated on bringing these methods and tools to
vocabulary of network types and metrics, which companies participating in the IKM. Over the
is key to this report. In 1993, Stephenson, following years, Cross and Parker worked with
Gerry Falkowski and Valdis Krebs worked dozens of companies who were members of the
together at UCLA and then at IBM developing IKM to expand on the knowledge base of
the methodology for organisational-network social-network analysis, which introduced
assessment (ONA). They introduced ONA into network analysis to the broad and diverse
the IBM consulting group where Falkowski used knowledge-management field.
11