Innovation Networks: a la Google or a la Apple?

A recent article in International Herald Tribune entitled "Yin and Yang of corporate creativity" describes two approaches to innovation, one of Apple and another of Google. The Google approach is a bottom up, open innovation which is based on rapid experimentation and receiving quick customer feedback. The Apple model is more top down model where the company achieves close to perfect integration of different elements in the product and then pushes it down to customers (remember a now famous comment from Jobs: it's not the consumers' job to know what they want).

This dichotomy is very much relevant to the issues of managing innovation networks in an organization or across organizations. Such network can consist of individual collaborators (if this is an inter-personal network) or partner companies (if this is an inter-organizational network). Google's approach is similar to a network where the central member in a network relies on the peripheral members for insights into the environmental dynamics and then works with them to find a solution to the environment's needs and then constantly make small adjustments to the resulting product.

Apple's approach is similar to a network where the central member controls the network and imposes its views on the peripheral members. In such network, innovation occurs in discrete steps with major adjustments embedded in different generation products.

Which network is better for generating innovation? The answer is that it depends on the environment these networks are facing. If success in a given environment depends on coordination of very different elements (e.g. hardware and software) or connecting ideas from very different domains (e.g. music and technology), then top down model of network management a la Apple makes a lot of sense. If success in an environment is based on coordination of similar elements (e.g. only hardware or only software) or ideas from similar domains (e.g. technology only) then the model a la Google makes more sense. Ideally, of course, innovation networks should probably combine two approaches- top down and bottom up- it seems to me that this was the Microsoft's approach in the 1990s.

How to benefit from closed networks?

Let's continue reviewing basic topics in inter-personal networking. We learned that an individual with open inter-personal network is a person whose friends don't know each other. This individual is considered to be a broker, because he or she can combine information and knowledge from some of his/her network contacts and create something new and innovative. We also know that some people are simply hardwired in their brains to become brokers, because they are more manipulative with their network contacts than the others (see the previous post on self-monitoring).

Closed network is an alternative to an open network. An individual who has a closed network is someone whose contacts all know each other. Most of us tend to exist in closed networks, as it is simpler to maintain them. Why? Because we tend to hang around with people who know each other and if some of our friends don't know each other it is easier for us to let them meet one another, than to keep them separated. Put simply, it is far easier to organize one big party and invite all friends there (so that they get to know each other), than to organize multiple small parties where we invite groups of people who don't know each other.

If all of your friends (or acquaintances) in an organization know each other, then you are likely to be in a closed network and you are unlikely to be able to generate many innovative ideas. However, closed networks are better at providing emotional support and enforce the norms of collaboration. That is, if your friends know each other, it is more difficult for one of them to cheat on the others and not to provide you with help when you request it.

Open and closed networks are useful for different things. Open networks provide access to new information while closed networks provide you with emotional support and help. Ideally, one's network should combine the elements of open and closed networks. You should build the networks such that some of your friends know each other, while the others don't. You get help and support from the part of your network that contains the contacts who know each other, while you get innovative ideas from the people who don't know each other.

In other words, you need to be strategic in how you build your personal networks within your firm and only then you can derive your own personal competitive advantage from them.

Who is more likely to become a broker [in a network]?

Some blog posts ago we started talking about individuals who occupy brokerage positions in open networks, a.k.a. brokers. These are the people whose network contacts are not connected to each other. We also learned that brokers were more likely to generate good ideas, be promoted faster and get better salary raises.

But who is likely to be a broker? As it turns out, part of the inclination to engage in brokerage behavior is personality-related. There is a classic psychological scale with which one can measure a pre-disposition of an individual to change/adapt his or her behavior to the situation in a chameleon like fashion--this scale is called "self-monitoring". If you want to take a self-monitoring test, here is a link to do that, you will find out to what extent you are chameleon like in dealing with people:

http://pubpages.unh.edu/~ckb/SELFMON2.html

High self monitors are more likely to build open networks (i.e. become brokers) than low self monitors. Because high self-monitors often tell people what they want to hear (and behave the way they think people want them to behave), these individuals are initially quite likable by the others. At the same time, these individuals are also strategic in building their networks to become brokers in them. This is what a recent study in the Administrative Science Quarterly has found.

http://asq.sagepub.com/content/55/4/639.short

If you are high self monitor, chances are you are also likely to be a broker in your workplace network and get all the benefits from it.

If you are low self monitor, beware of your friends, some of them might be high self monitor brokers who absorb your knowledge, recombine it with the knowledge of the others and benefit from it. What should you do? If you are a low self monitor, then you need to make an extra effort to meet new people from different departments, different work groups, etc. who are not likely to know the same things as the people you usually hang around with. In this case, you will increase the "openness" in your network and hopefully get some brokerage benefits out of it.

Good luck!

Networks and Job Search

The never-ending financial crisis has sadly cost many people their jobs. It is well-known that networking can help people find jobs, but what is the most effective way of networking? Are you likely to get better job leads from people whom you know very well (your close friends) or from people whom you don't know very well (your distant acquaintances)?

Conventional wisdom says that your friends should provide you with better job leads, yet just like many other conventional "wisdoms" it is wrong.

In an influential paper "The strength of weak ties" a sociologist Mark Granovetter showed that, at least in the Western societies, people are unlikely to get great job leads from people they know well. Your close friends are likely to know what you know, and these people are likely to exist within the same social spheres as you do. Hence, their job leads are likely to be those that you know of as well or at the very least are likely to be very close to what you already know.

The best job leads come from acquaintances, ties to whom Granovetter called "weak" (as opposed to "strong" ties to friends). People to whom you have weak ties exist outside of your social sphere, you don't meet them often, they know things and people you don't know. Hence, these people have information about interesting job leads that you have never thought of.

So, what should be your job hunting strategy? Talk to acquaintances about your job search and sooner or later they will provide you with useful leads. This is where responding to the usual "Hi, how are you?" question from a person you last saw six months ago with " Great, I am looking for a job" might prove to be very useful.

What networks are good for what?

There are two extreme types of network structures that are good for different things—open networks and closed networks. This post will describe advantages and disadvantages of an open network.

Open networks are networks where your partners are disconnected. For example, you may know 5 people and if these people don’t know each other, you are in an open network.

This network is great for generating innovative ideas. Because these people don’t talk to each other, you can get information from each one of them, combine them and produce your own idea that none of these people had. What made Steve Jobs so creative? One explanation is that he was able to speak to people who did not speak to each other. By talking to technology people (and being a technology person himself), he knew how computers worked. By talking to designers of electronics, he knew what designers knew; by talking to music executives he knew what they knew. But because technology people did not often talk to designers and neither designers nor technology people often talked to the music executives, no one of them was able to generate great ideas such as ipods, ipads and itunes. This description is a bit simplistic, of course, but helps illustrate the point: if you talk to people who don’t talk to each other you can access information that none of them has on their own and then you can create something that none of them was able to create on his/her own.

A person in an open network can refer to him/herself as a broker. This is not in the financial sense, of course, but rather in the sense of being able to broker information across different people.

A lot of academic research done, for example, by Ron Burt at the University of Chicago, shows that people who occupy positions in open networks are more likely to be perceived by their supervisors as generating good ideas, these people are promoted faster and are given better salary raises.

The disadvantage of such a network is that it is difficult to maintain. If you want to keep your partners unfamiliar to each other, you need to make sure you meet with them separately. It would have been much easier to maintain relationships with them if you invited them all to the same party, but then they would get to know each other and come to know what each one of them knows. So, your information advantage will be reduced. The more these people talk to each other, the more likely is your information advantage to be eliminated completely.

It is also difficult to verify the quality of information you receive. If one of your partners tells something to you, you have no idea whether this is true or not. Had your partners been connected, you could have verified by talking to another partner whether this person receives the same information as you are.

What is a network?

This blog is for people (and companies) who are interested in how to benefit from social networks. I will share results of research that examined how network positions can provide benefits to individuals and companies. I will also discuss what to do in order to build better networks[I1] .

I was studying, teaching and researching about social networks for the past 12 years. In this blog, I want to de-mystify the concept of social network as a source of competitive advantage for individuals and organizations. I also want to discuss how positions of social networks can be linked to good things for an individual (or for the individual’s company). For example, certain network positions are likely to make an individual more innovative, receive better performance evaluations or be promoted faster. Hence the title of this BLOG: Networks and Innovation.

What is a social network [and how it can be useful]?

Inter-personal social networks are links that connect individuals. Social networks doesn’t just mean virtual ties in Facebook, social networks mean your “physical” ties such as friendship, advice seeking or support. If you went to an organization and asked everyone “give me the names of people with whom you exchanged information”, you can use this information to build a picture of what social relationships look like in that organization.

Here is a picture of social connections in a hypothetical firm. There are nine individuals working in this firm. The links emerge as a result of them answering questions about information exchange. For example, individuals G and E said that they exchanged information, but no one exchanges information with A. If A were the CEO, I would be worried… No one talks to the guy.

You will note that there are solid and dashed lines. Solid lines represent “strong ties”—frequent relationships between individuals. Dashed lines represent “weak ties”—these are less frequent relationships.

Oftentimes people don’t exchange information across formal boundaries in their organizations. These boundaries are represented by ovals. You will see that there is only one “weak” tie between E and B across two departments.

Is this picture unrealistic? After all, how is it possible that there are so few connections between people and across departments in such a small company? Funny enough, this happens very frequently. People tend to specialize, they talk to others in their departments, but very often this means that they don’t talk to people across departments.

An individual’s position in an inter-personal network will affect this individual’s ability to innovate. What is innovation? It is often a novel [and useful] combination of elements that were not combined before. Imagine that individuals A, E, G, H and F are in the R&D department while individuals B, C, D and E are in the marketing. Because E talks to B, they can have ideas that combine what marketers know with what R&D people know. With all due respect, in many organizations I know of, R&D people mostly talk to R&D people and marketers talk to marketers. When you can combine information from R&D and marketing, you can generate good (and useful ideas). How can you do that? You need to have friends in R&D if you are a marketer and friends in marketing if you are working for R&D.

A useful test to find out about your network concentration in your functional unit, ask yourself:

a) How many people in my organization did I ask for work-related advice in the past three months?

b) Of these people, how many work in my own department?

c) Of these people, how many work outside of my department?

The more people you ask for advice in your department (in proportion to the total number of people you ask for advice), the more is your network concentrated on your department. If most of your contacts come from your department, you need to be worried because you are missing many different opportunities to innovate (or at least to come up with great ideas). If that is the case, make sure your next lunch (or “catch-up” meeting) is with someone from a different department.

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[I1]

Subtheme/ tagline [build competitive advantage with social networks]