5 Questions on Innovation Networks
Rick Aalbers and Wilfred Dolfsma answer questions about their new book, Innovation Networks: Managing the Networked Organization.
Drawing on key themes from the book, Aalbers and Dolfsma explain organizational network analysis and its relevance and application for managers and consultants looking to encourage innovation within their organizations.
For those who aren’t familiar with the topic of your book, what is organization network analysis?
Organizational network analysis (ONA) is a systematic approach and set of techniques to study how resources and knowledge flow through an organization via the connections between people, teams, departments and even complete organizations. Individuals are nodes and their interactions links – ONA can study these visually as well as statistically and provides an immediate and very reliable diagnosis of an organization. We see an organizations as a set of communication networks, to analyze how the different kinds of exchange between people affects their own and the organization's performance.
By applying organizational network analytics, managers can gain a quick yet comprehensive bird’s-eye view of existing network structures and communication patterns. These can be very different from what managers believe them to be or how they would like their employees to collaborate. While the application of ONA to the discipline of management is relatively new, it has enjoyed a long and rich tradition, particularly in the fields of sociology and anthropology. The foundations of organizational network analysis can be traced back as far as the 1930s.
You describe the organization as “a constellation of networks.” How does this view provide a better understanding of how organizations function than other more traditional ways of looking at organizations?
In an important way, organizations are overlapping networks of social relations among people who collaborate. Individuals in a firm interact and collaborate with others doing different things. Activities mandated by management, self-initiated personal activities, and self-initiated activities that affect the organization's performance. The shape and dynamics of these formal as well as informal networked relations determine, for instance, and this is the main focus in our book, if and how a firm may expect to continue its innovative prowess.
When restructuring, management is better positioned to do so in a way that will enhance the organization's innovative performance. When an organization downsizes management can make sure that innovation is not hurt by allowing individuals who had been innovating together continue to collaborate fruitfully. The network of people collaborating to innovate, a firm’s innovation DNA, should and can be nourished using ONA. We offer various suggestions on how to measure, interpret, and improve intra-firm collaboration, and innovation in particular.
As you point out in the introduction, continuous innovation is a requirement for running a successful organization. However, innovative knowledge does not easily spread within organizations. How can applying a network-based view within an organization enable innovation and knowledge transfer?
If a firm wants to maintain and improve its competitive position, it must innovate. To do so, one needs to know where and whom fruitful knowledge resides inside the firm, and how it can spread. Knowledge does not spread by itself even when all individuals are well-intended. If management knows about the different networks inside their firm, they know how knowledge is likely to spread, and they can intervene to improve the spread of knowledge.
The degree to which organizations are able to reap the benefits of the social capital present in social networks depends to a large extent to the degree to which resources can be accessed and mobilized through these networks. ONA allows managers to identify and overcome the barriers faced within the organization, such as divides between functional or operational domains and business units. Yet, without ONA, what actual innovation contacts exist in a firm is difficult to determine. The formal contacts are most visible, as they are mandated by management. Other contacts can be highly elusive. Yet, managers should be aware of the connections among people and the overall network configurations if their firm's long-run performance is not to be hurt. ONA for instance identifies idea connectors: individuals who are core to getting others together around a new idea, establishing a buzz around new ideas and to attracting genuine managerial attention. Unconnected individuals known to have important knowledge can be identified. We introduce the concept of communication profile, indicating the type of communication someone in the firm is involved in, especially with regard to interactions across firm boundaries. Someone's actual communication profile can be compared with what one would expect given that individual's position in the firm. This can be a powerful evaluation tool for managers.
Can you give an example from your research or consulting work of an organization that has successfully used network analysis to further innovation?
A new business development manager at a financial services firm we worked with faced challenges because of an across-the-board job cut of 30 per cent. David, overseeing all new business initiatives in this firm, realized how the downsizing effort could disrupt innovation relations within his team and from his team to others in the company. Some might continue with those activities, but others might pull out. Insights from social network analysis helped David figured out how to try to maintain innovation activities for his firm as much as possible. .
In the process we found as researchers that it matters crucially how people were connected before downsizing if they are to continue doing so afterwards. Those who continue their innovation activities despite the downsizing, the guardians of a firm's innovation DNA, were connected more as well as differently in the firm’s social networks. Knowing that an existing structure of connections determines continued innovation involvement allows managers to purposefully intervene. Guardians are not differently motivated or disposed toward the firm – offering bonuses for individuals who continue their innovation efforts is not likely to have the expected result. Different HR instruments are to be developed.
Although your book is based on rigorous academic research, it also has a practical application. What key insights will managers and executives gain from reading Innovation Networks?
Managers and consultants start to pick up on network analysis in recent years but miss an accessible yet comprehensive book that provides a diagnostic points of reference. The insights provided in the book allow managers and executives, but also external consultants or scholars interested in organization dynamics, a systematic, comprehensive and evidence-based toolkit to discover how networks in their firm impact performance. Innovation Networks offers a combination of practical methods and examples of organization network analytics, showing how management can utilize social networks to improve various functions in an organization, including, crucially, innovation.