Archives For socialbusinessmanifesto

Paolo Calderari di Palazzolo, Andrea Pesoli
Originally part of the Social Business Manifesto published for Harvard Business Review Italia by OpenKnowledge team. Read more on: 
http://socialbusinessmanifesto.com/ 

“Creativity in itself shouldn’t be encouraged: we instead need to encourage creative solutions to real problems. Innovation is only “good” when it’s useful.”

“There’s no such thing as a bad idea! Just poorly executed awesome ones.”

Look beyond innovation for the sake of innovation. More and more organizations today find themselves having to find and exploit new ideas and opportunities in order to respond to growing competitive pressure and to changes in customers’ needs. The recent economic recession has only further accelerated the urgency of this change and the “demand” for innovation for companies.

The main objective of innovation is not (only) to create the next hot product. Various types of innovation exist and people need to be engaged and stimulated to recognise and pursue not only product innovation, but also process or business model innovation. We need a way to encourage innovation and make it “normal”, namely not to separate it from the rest of the business. It has to be treated systematically, like any process in which a problem is determined and a solution is found. Some of the key questions we need to ask ourselves are therefore: What do we want to obtain and how? What resources will we need? Who will be part of the team? What will be the factors to motivate people and what recognitions will be given? How will the initiative’s success be measured?

Creativity therefore doesn’t have to be seen as a mysterious gift or prerogative of few “talents”, but as the – daily – activity of creating not obvious connections, putting things together that are normally not together. Innovation is always more the product of a collaborative process among individuals rather than the result of the intelligence of a single person.

What is Idea Management?

But where are all of these innovative ideas hidden that are so necessary to drive growth, productivity and value creation? When innovation is more important than ever, the collaborative management of ideas (collaborative idea management) through functions and geographical areas can help organizations to make new ideas emerge, and to refine them and ensure that they reach the right people. This approach is also a way to make employees more responsible and recognise the ones who are more active in the innovation process, so as to measure and stimulate creative activity and to promote a more open, collaborative and social culture in organizations. In other words, to create one or more innovation communities that work in a vertical or cross-cutting way in organizations.

Idea Management is a structured process – an integral part of the innovation process – aimed at the collection, management, selection and sharing of ideas. This process is typically supported by specific technologies (Idea Management Platform) that provide methods and tools that make the union of ideas, their assessment and – in some cases – even their execution, more effective and amplified. Idea Management can be applied in various contexts, from incremental improvements to more radical ones, and it can even cover the entire company ecosystem, including external stakeholders, partners and customers.

It is the social evolution of the traditional “idea box”, where, however, the use of the social processes and technological platforms of Idea Management profoundly transforms its nature:

  • Various forms of participation: these systems value the contribution not just of the idea proposal but also of the cross-valuation (vote), comment or criticism of the idea;
  • Contamination: everyone sees proposals from colleagues and a consistent idea can be born out of a proposal which in itself is not very concrete, or is unfocused, by enriching the information and/or concept;
  • Emergence: the most read, most commented or most appreciated ideas emerge and stand out from others, allowing the community to rapidly see the selection process in progress;
  • Collective Intelligence: if duly supported, the community can make proposals evolve by exploiting the intelligence and knowledge present in the system;
  • Focus on people (and not just on ideas): the proposals that stand out also identify a group of people who believe in the idea and who could also be involved in its implementation.

How to make the innovation process social

There are quite a few contributions that underline the importance of considering innovation as an open process that must involve many players within or outside the same business ecosystem.

The concept of “players” in the innovation process is important and interesting, because it reinterprets a “social” company role that is not always made clear in an organization chart (or rather not only focused on the R&D function) or in a specific organizational role. Unlike the traditional stage-gate selection process, the social approach to involvement and to the realisation of ideas and improvement projects is based on the activation of three different communities: he who brings or generates ideas (explorers, perhaps the most common meaning of innovator), he who carries them out (exploiters), and he who has the task of selecting and assessing them. It is precisely this last role, typically concentrated in Management, which is of fundamental importance for facilitating and “bridging the gap” between explorers and exploiters. Instead of acting as a restraint or gate-keeper (as a team would act by sticking to the assessment methods based on expert committees), the team has to act with a role of broker, a key figure who supports and accelerates the realisation of an idea.

A typical innovation process will therefore have the structure shown in Figure 1.

PHASE 1: Setting of objectives and scenario

  • Identify the topics and main areas of applicability of the initiative. A punctual analysis can help to understand both the sensitivity of an organization towards specific business topics and the level of cultural alignment on the social approach to innovation (readiness);
  • Identify the key players in the innovation process: therefore not only the formal figures, but above all – as we have already seen – those who already play an important role at an informal level (e.g. broker);
  • Specify and define the topics on which to start the first phase of idea production;
  • Involve and form the support team (experts, assessors, moderators, …).

PHASE 2: Generation of ideas

  • Launch the initiative on a restricted group of people (soft-launch) with the twofold objective of having a punctual feedback from end users and starting to populate the platform;
  • Involve a wider group in the generation of ideas (full-launch);
  • Punctually manage the growth of the community, timely intervening to “correct” negative behaviours (e.g. unconstructive comments, missing information, inappropriate language) and award positive ones (e.g. connections between ideas, precise comments, …);
  • Communicate the state of progress within and outside the community, also giving visibility to Top Management.

PHASE 3: Idea selection

  • Give visibility of the phase of approval of single ideas directly on the platform, punctually engaging the experts in the assessment;
  • Select the ideas (or groups of ideas), based on various KPIs. Ideally, the services on which it is important to concentrate are impact on the company (e.g.
    turnover increase, cost saving, scope of the idea, brand value, …) and feasibility (e.g. resources necessary, time to market, investment, …);
  • Award those who come up with the best ideas and…realise them!

This process, especially in phases 2 and 3, can obviously be repeated whenever new innovation initiatives on specific topics are to be launched (see figure 2).

Schermata_2012-11-04_a_19

What to do and what not to do.

We end this article with a series of pieces of operational “advice” based on our experience:

  • Establish clear objectives. At times collaborative innovation initiatives are born within organizations as experiments or as extensions of collaborative social aspects. In these situations, the “learning by doing” approach sometimes takes over, and risks defocusing and dissolving the experience. In reality, to ensure the project’s success it is useful to initially identify clear business and result objectives, so as to strongly link the innovative process to an additional value brought to the organization and to its stakeholders.
  • Know the target. Before launching an innovation initiative, it is important to know who the participants in the process will be, in terms of profile, role, business unit and localisation in order to outline the best engagement strategy possible. Culture-country aspects must also not be underestimated. Tools like Social Network Analysis can also shed light on the existing collaborative dynamics and on the roles that some key players already play within the organization. These people should be punctually involved.
  • Manage the change and the alignment with the company strategy. The addition of an Idea Management tool must also be accompanied by a process of change management and alignment of the innovation initiative with the company strategy. There are many hidden barriers, firstly the natural low propensity to sharing and collaboration and the calling into question of formal roles. The communication, sharing and engagement of stakeholders in the process, especially if the approach is new within the company, are key to the initiative’s success and adoption.
  • Balance quality and level of engagement. Quality of ideas and level of engagement (e.g. number of people who actively participate) are two often conflicting objectives. We therefore need to know how to balance these two aspects in the various phases of maturity of the initiative, initially favouring engagement and introducing metrics to assess the quality of contributions once a certain consistency and stability has been reached in the community.
  • Exploit online and offline communication. As visually engaging and refined as it may be, online communication alone (email, launch videos, ….) still shows its limits. The best initiatives always mix online and offline elements in communication, especially when specific populations have to be involved in the initiative.
  • Being transparent in the assessment process. One of the weak points of the idea box approach is its lack of feedback in the assessment process. On open and social platforms, every remark, every feedback (e.g. a critical comment from an expert indicating the weak points of an idea) can be both the mainspring that makes the idea itself evolve and a moment of personal “formation” and formation for the community as a whole.
Schermata_2012-11-04_a_19

Finally, a few points for attention:

  • Only concentrating on the “numbers”. Modern platforms offer very refined and punctual analysis and reporting mechanisms. It is however important to avoid concentrating too much on the numbers alone (e.g. ideas, votes, comments posted, …), because the real value is in the interactions between people and the connections they generate. Different cultural backgrounds produce creativity and innovation. Favouring and appreciating different opinions, identities and perspectives therefore generates a greater level of innovation. Although it is possible to measure these dynamics, a linear relationship does not always exist with real added value. The phrase “Not everything that counts can be counted” is therefore valid.
  • Lowering the guard on community management. The promise to involve employees in an open, collaborative process of research and development of new ideas is certainly compelling. However, once the initial novelty and interest period has worn off, the community’s activity must be supported by constant specific communication and engagement initiatives. Be careful not to overestimate the impact of gamification dynamics which, alone, cannot increase and sustain the participation and involvement of users.
  • Sidelining usability and graphic aspects. The consumerisation of IT cannot be ignored. Users, whatever their profile or role, will definitely pay attention to aspects that are easy to use and access. It is therefore better to spend a bit of time making the user experience easy and pleasant.
  • Not involving sponsors/executives in the process. Innovation within large organizations is often thwarted by the presence of inflexibility, a uniform company culture, and communication flows that are too formalised. Executives therefore have the fundamental role of facilitating and accelerating the various phases of the innovation process and, ultimately, realising the ideas. Having finally stressed the aspects of change, the involvement of senior figures is important to lead (in terms of leadership) the cultural and – where possible – organizational change.

Innovation Today

October 19, 2012 — Leave a comment

Rosario Sica, Paolo Calderari di Palazzolo
Original version of this article is part of the Social Business Manifesto project – 
http://socialbusinessmanifesto.com/innovation-today/ 

What is innovation? If we take the dictionary definitions, we find things like “introduce something new” or “a new idea or method, or tool”. In short, a novelty. So then, if one morning you get out of the wrong side of bed, have you been innovative? If you find a new way of using a document are you creating innovation? We believe that this ends up trivialising what is truly innovation. Let’s try to start again from the definition of innovation. From our point of view innovation regards problem solving. It consists in finding new solutions to present problems, or even in discovering problems that people might not even know they have, thus improving their lives.

One of the biggest problems that we have noticed over recent years in innovation concerns the spending and investments that are being made in research and development, expressed as a percentage of the gross domestic product: they have continued to decrease significantly as shown in the table below:

Country R&D (in billions of euros)
USA 368.8
Japan 138
China 86
Germany 69
France 43
South Korea 34
GB 35
Russia 24
Taiwan 16

Source: Main Science and technology indicators, OECD

We have less research and development. All the resources are in fact concentrating on development, which means that we are developing products and services for which we know a market already exists. The majority of research laboratories that once existed now no longer exist. All of them, without exception, have cut out projects in which they were investing, in order to concentrate on the four or five projects for which they are certain there is demand. In other words, they are only creating what is commonly called incremental innovation. If we think of the size of problems that the company is dealing with (energy, economic crisis, environment, etc.), these are not problems that will be solved by choosing the colour of an iPhone. These are fundamental problems that have yet to be solved, and we cannot solve them if we remain anchored in what we already know. We need new knowledge, we need to explore new intervention paradigms, and new research, that allow not the expected results, but the unexpected results, and that as a result are capable of changing things.

A search in Google for books with the word “innovation” in the title finds 120,000 books. Just five years ago there were only a few hundred books with the word “innovation”! There are too many books on innovation and too few on real innovation.

Potentials of the Social Web

Where can we find true innovation over the last few years and what are the new paradigms in line with the “network society”? Think about the internet and how it has profoundly transformed our lives. Think about how much time it took for the internet to be successful: 30-40 years for it to become what it is, for it to have such a profound effect on our lives. The internet came out of the Bell laboratories of General Electric. There they invested in pure research, without the slightest idea of what concrete results would have been obtained. The internet itself was an unexpected result, among many, of a great amount of intense research driven by military needs. Where is the research that may generate unexpected results with regard to media communication, new materials, and new energy frontiers? Where is investment being made today to achieve these critical results for our future? We have not seen many initiatives going in this direction.

We are at a turning point, a consequence of the internet: social web. We are starting to see that there are strong possibilities that collaboration will become a fundamental driver to accelerate processes and information exchanges. The possibility for billions of people to start to connect and communicate in new ways has never been possible in the past; it is a significant step forward and offers enormous potential.

The true challenge is how to seize this potential, both as companies and as a society, in order to change the way of innovating. We see two different types of companies: one includes those that we call “winners”, i.e. those companies that are willing to take risks and therefore to upset the market by making things that previously did not exist; the second type includes those companies that we’ll call “losers”, those who are afraid of changing, i.e. companies that have a strong position and are trying to defend it, rather than create new positions for it.

Let’s take the case of Apple: did it listen to its customers, and use an “open” process, when it was thinking of creating the iPhone? No, contrary to what we usually hear, it was a completely closed process, based on the quality of internal Apple resources that carried out research, investigated the problems experienced by people, and had the vision of how a new service could have been. They had the leadership, ability and willingness to take risks. They had the courage to say: “People have never heard of an iPhone, but everyone needs one”, and they created it. We can’t go to customers and look to them for answers, or get a concept of a new product from them when they don’t even have an idea that the possibility of it exists. These are the limits of crowdsourcing.

Leadership and social capital

The heart of the question is leadership. We remember Kennedy’s speech when he announced to America that a man would have been sent to the Moon: it was a risky challenge, but taking this idea forward meant discovering and finding solutions to many of humanity’s problems: this extraordinary vision ruled American society, dragging everyone behind it, because in taking man to the moon America created new industrial sectors, it created innovation, and Silicon Valley was in large part driven by this research. The spin-offs generated by the technology developed for this venture were numerous, but when the space program began no-one could have imagined what the developments would have been: new materials, new technologies for calculation and communications, etc.; or that companies would have been created that today have an annual turnover of billions of dollars and that these new activities would have given jobs to millions of people throughout the world. These results after the fact did not drive the action. People developed the space program because they believed in a problem-solution process that would have allowed them to discover new areas of knowledge.

Now the situation is completely different: there is no driving vision; everything revolves around cost-cutting, and that is a very serious problem. Companies like Nokia, who had dominant positions on the market, are very cautious, and do not want to squander the advantage and destroy or deteriorate the ecosystem around them in which many benefit from the value chain they created. Take what happened, for instance,
with the arrival of IP voice servers that made the voice nothing more than another Internet application: everything that the business had been built on, and everything that had been defended for years by keeping others out, now seems like a common commodity, because anyone can create a voice application. Thus, these companies end up adopting very defensive behaviours, which in fact become major obstacles to innovation: the people inside these companies are isolated and the chance of them being able to do things that are truly new is becoming all but impossible.

These heritages are becoming serious obstacles; we have business models that are no longer up to date, that no longer allow us to generate past earnings: the CEO of a telecommunications company must think in the short term, three or four years at the most, trying to maximise the value of shares in that restricted period. This means that what the company can do is limit itself to what it already has, to what can give in the short term a certain return – even if small – and what it cannot do is invest in long-term research, necessary in order to have a future.

As a result, the staff within an organization end up destroyed, as they are deprived of an environment of exploration, of reasons to take risks, to do something truly new. It is no coincidence that the breakthrough innovations of the last 15/20 years did not come from telecommunication companies.

It is time to talk about social capital and innovation. Today we have real possibilities of creating great innovations if we are able to combine two things: the vision and leadership of a Steve Jobs with the potential of the people within the company, or rather its social capital. If a company can do that, it can take assume a dominant position on the market.

Social innovation: building communities for innovation

To focus on social capital, a starting point is the digital generation: a generation of young people have grown up with this technology and no longer consider it “technology”, but rather their way of being in the world. They are not digital children because of digital technology, but because they were children when this change happened. This technology has been internalised by them because it allows them to carve out spaces for themselves, where they can do the things they need whilst growing up: create their own identity, have fun, do crazy things. MySpace or Facebook were not successful because of the technology, but because there was a new form of expression by this generation, in which they could express and acquire knowledge or simply act like kids. The crucial point of all of this is that new generations are established on social relations, and their way of existing in the world is today mediated by this technology. When individuals from this generation start working at an organization – such as a large company – they feel suffocated if people start telling them what they cannot do, and if they are isolated by those social tools that have made them what they are. These tools, instead of being seen as a threat (as many CIOs do), should be seen as opportunities: the consequence of social networking that these individuals experience and that has created their identity, is that in this way they have created collaboration without wanting to, they are collaborating in ways that were inconceivable in the past. This is the potential that is found in what they do, but how can it be exploited within companies?

The social capital or, in other words, the network of formal and informal relations existing within the company, represents how the company itself truly works. Each organization has a formal structure, from which it can be deduced who holds what positions and who reports to whom; but when we try to understand how things really work, we discover a completely different network: people know who to turn to in reality to make fast and effective decisions, regardless of what the organization chart says. Each person knows who to turn to if he/she has to collect up-to-date information on a technology or on the product market. This relation network – the social capital – is what we must free up today if we want to exploit it to our advantage. So, how can we make it grow?

Today platforms exist that allow people to find others like themselves, who can be found in parts or roles that are very different from the company, but who share the same passions or the same experiences. For the first time people are allowed to discover and rely on this sort of intangible network within organizations, whose existence was not even known about before. It is a way of seizing the possibility for these people to find each other and start working together in ways that were unimaginable up until now. Organizational silos are bypassed. These platforms also highlight the contribution that the individual can bring to the group.

Should we tend towards incremental innovation or towards radical innovation? We believe that this is the wrong question, and that the right question is: can we have both? Is it possible to have the leadership, vision and culture that allow an organization to take risks, at the same time allowing people within the organization to come together in completely different ways than in the past, in order to use this strength to guide the change? It is possible if we are able to create the right motivation and the right context.

The answer is not just in the technology. Everything depends on the organization and its culture. It is not about “capturing” ideas, but rather about building communities. The fundamental point is that key players be identified, the right people at the right time, to transform their network and their informality into a business value. From these assumptions – of social capital as a true element of a company’s distinction and advantage – approaches such as Idea Management and Social Innovation are born.

For decades business process mapping (BPM) has been the starting point for analyzing work processes. Total Quality Management, Lean Manufacturing, Six Sigma, and Business Process Re-engineering are all methods of work management that have the “Business Process” as their point of reference – and centre of attention – for business improvement.

When we try to break down the “Business Process” term we realize that its usage stretches far beyond the mechanical workflow processes, ideally pointed out by BPM techniques. For example: are the subtle negotiations between a seller and a customer adequately represented in a process map? What about the relationship between a social worker and client, or its network of reference? And what about the network that inspired the sale of Apple’s entertainment products? The understanding of a university professor’s lesson? The treatment from an expert doctor?

We can of course describe the above operations in terms of business processes, but in order to improve such processes we need to go beyond traditional mapping and analysis methods.

Stabell and Fieldstad in their pioneering work on “Value Chains” identified how business value can be generated through methods other than those of traditional simple process analysis. They also introduced the concept of “Value Shops” to satisfy the business processes driven by experts, such as medical centres, law firms, consultancy companies or research institutions, and “Value Networks” for businesses that thrived on client interdependence, as in the case of telecommunications, banks and entertainment businesses. All of these alternative business models have traditional process chain activities, but in no way do these activities represent the key process. Subjecting these models to traditional analysis techniques essentially means improperly using available resources, thus running the risk of not achieving satisfying results.

So if your business is not centred on Value Chains, what are the alternatives? Two mature approaches are used to analyse businesses related to Value Shops and Value Networks: Social Network Analysis (SNA) and Value Network Analysis (VNA).

Schermata-2012-07-02-a-21

SNA is able to identify the people within your organisation that others depend on in terms of work processes, information and support. In this sense SNA does not mean a method that simply covers technical expertise. In fact, in our experience, SNA has often uncovered matters related to organisational expertise, i.e. to those competencies that answer the questions: “how can we make sure that things work around here?” or “how can we make sure that the procurement system works for us?”, which also help to understand the relationship channels between your experts inside the business and the rest of the organisation. This is similar to a BPM for the more mechanical processes and offers the same level of analysis and benefits.

SNA can provide information both on Value Shops and on models based on Value Networks. VNA can underline – from its perspective – Value Networks and Value Chains by pointing out the client interdependencies and shaping the tangible and intangible flows that connect the different “roles” within the organisational network. SNA works, therefore, at the personal level and VNA works at the role level.

There is a gap between the two analyses that allows us to observe how organizational roles interact at the more personal level than at the work process level. We call this analysis gap Organisational Network Analysis (ONA), which simplistically can be traced back to an SNA with the “roles” as the network nodes, instead of the individuals. It differs from VNA because the connections between roles are not detailed and explicit like value flows, but simply identified by their degree of inter-role dependency. ONA can be complementary to both SNA and VNA and can address, in different ways, all three value configurations (figure 1).

In this document we will introduce the concept of ONA and illustrate it in detail with a case study.

Where would ONA be used?

Over the years we have conducted numerous SNA and VNA activities. These investigations were not only limited to Value Shops or Value Network businesses but also to Value Chains. Inevitably there are elements of both techniques that can limit the choice of adopting them. For SNA, for example, reluctance is typically connected with privacy issues and the presence (or non-presence) of some people within the social network map emerging from the concluded analysis may be observed as “uncomfortable”. All of this can be mediated by avoiding showing the names of people on the map, but we must not forget that an SNA in fact asks people to mention individuals by name. For VNA privacy is not a problem as the unit of analysis always refers to the “role”. Tangible value flows within the map created with VNA are familiar to those practised in traditional analysis techniques. Intangible value flows are instead often related to people – or centred on relationships – which can be perceived as “foreign” by VNA participants and can take some time to practise before they are acquired. As in BPM, the entire mapping process can be time consuming as each individual role is analysed for the contents of its value flows. All of this can often limit the level of organisational analysis that can be achieved.

Schermata-2012-07-02-a-21

By considering ONA as a meeting point between SNA and VNA, it is possible to achieve the benefits of both approaches while avoiding many of the limitations.

ONA is essentially an SNA conducted at the role level. Participants are asked to nominate “roles” rather than “people” they depend on for performing their job correctly and well, together with the degree of dependence they can have on certain roles. In this case, the privacy issues that emerge with SNA are therefore avoided (or at least they are for roles that have more than one occupant!). It is also much simpler (especially compared to VNA) for participants in the analyses to indicate the roles they depend on and refer to for their work processes.

The real positive side of ONA is that it could be much easier for organisations to adopt, given that it does not require the long analysis and processing time of VNA and it does not interfere with privacy and personal issues of employees, thus avoiding becoming an “uncomfortable” and expensive procedure.

Schermata-2012-07-02-a-21

We therefore deem that ONA is best placed to be adopted by organisations intending on doing a quick and broad organisational analysis that goes beyond sim
ple business processes.

It will typically be Value Shops and Value Networks that will be able to benefit the most from ONA, although Value Chains could also be positively influenced by it. ONA can highlight these aspects in a much faster and more efficient manner than analysis processes such as BPM and VNA.

ONA Case Study

The best way to illustrate how ONA works, along with its actual benefits, is through a case study (figure 2). For our case we have chosen a large financial organisation with over 120,000 employees. The project was focused on the Information Technology Services department of over 4,000 people. Problems related to privacy and the protection of employees prevented the department from adopting a traditional SNA. The classic procedure was therefore adapted to ensure that people could nominate “roles” (and no longer nominate “individuals”) that they depend on to efficiently and effectively carry out their own work. The roles were therefore analysed at multiple levels by observing, on the company’s organisation chart, the links connecting them directly. At the top level 8 service line roles reported directly to the CIO. At the second level there were 44 business units, below which were 200 activity roles. All of these roles were well documented within the department and each service was detailed in an operations manual.

The work process. As could easily be envisaged, by a top-down management organisation, the department has performed a considerable job over the years of identifying the roles and breaking them down precisely into responsibilities and tasks. However, what were not taken into consideration were the (informal) peer-to-peer exchanges within the business. One of the main objectives of the ONA was in fact to highlight these peer-to-peer exchanges within the company.

The questionnaire. The initial study collected results only at the management levels (for a total of around 200 officers), with the intention of broadening the research at a later stage. The survey was structured so as to present activities belonging to the business units, which in turn depended on service lines, and the organisation was therefore described in classical hierarchical terms. Respondents could, however, nominate any other role – including from other areas – that they interacted with in the performance of their work, and they also had the possibility to indicate the degree of important of that interaction. The questions on interactions concerned:

  • Daily operations (day by day);
  • Problem solving support;
  • Information sharing;
  • Desire for more contact.

As the organisation was described in hierarchical terms, a report of a connection between two activities could infer a connection also between a business unit and service lines, thus facilitating analysis at different levels. In practice, however, the limited sample of 200 respondents meant that the analyses at the activity level were less significant and made it clear that a larger sample would be required.

Schermata-2012-07-02-a-21

Mapping and Analysis. The ONA results have shown data on relationships among roles and on their dependency and the strength of the links. At the highest level, the relationships are defined as a “critical dependency” of one role on another. Such links can be reciprocated, indicating a bilateral dependency of two nodes of the network (i.e. when one depends on the other and vice versa).

Figure 3 on the previous page shows the dependency links between the role activities for the daily operation relationships. The nodes represent a role activity, coloured based on the service to which they belong. The size of the node reflects the number of “mentions” received (in-degrees), underlining the importance of the node: the more a node is requested the larger it is on the map. In this case the map only shows the critical dependencies.

What is immediately noticeable is the difference between the mapping produced by the ONA and the organisation diagram typical of process mapping. As we can see the map is not at all structured and shows a lot more connections than those highlighted by the organisation chart. While we can see some areas grouped together, we can notice that the connections between service lines are not as structured as they would seem. So the question is: which is closer to reality: the organisation chart, the business process map or the ONA?

Business process mapping, when used for functional improvement, is intended to represent the performance of working processes. The analysis of the “as-is” situation is then aimed at providing the opportunity to design strategies from which the “as-is” processes can be adapted or even removed in order to improve the organisation’s performance.

But what happens when the “as-is” representation is only a false reflection of what is really happening? In an organisation based on the Value Shop style a Business Process Map could effectively show, as we have said, a patient’s stay in a medical centre, but it is very unlikely that it would be able to show the critical dependencies between roles in the centre relating to information, experience or knowledge flows existing in the organisation. In an organisation based on the Value Network style, BPM would only be able to identify linear flows, inevitably missing all the critical feedback or connections that exist in reality. Even the most sophisticated business processing tools are used to collect feedback and to facilitate the modelling of processes, and we can verify the possibility of collecting these data with classic techniques, soon realising the level of complexity that the analysis would require.

So what innovative techniques would an ONA offer? The final objective of an ONA is no different than the objective experimented with a BPM: the search for interventions that are able to improve working flows within the business and lower costs by increasing the quality of products or services offered. The analysis techniques and the related methods differentiating the two approaches are shown in the following table:

BPM Analysis Techniques ONA Techniques
Mapping of transactional flows Mapping of dependence between network nodes
Starts with “stock and flows” Starts with relationships among people
Looks for inefficient flows Looks for complex interactions and interdependencies
Analyses capacity and use Analyses capability and involvement
Optimisation has a mathematical interpretation Optimisation has a behavioural interpretation

As the table shows, ONA is an approach much more centred on people than BPM. The success of this type of analysis is enhanced for all organisations that are focused on relationships among people and on the supply of services, such as the medical, legal, financial, educational or social work sectors, which, as we know, nowadays dominate the most advanced economies. The following analysis techniques, applied in this case study, have been adapted or extended by consolidated and largely tested SNA techniques, and re-studied specifically to be applied to the organisational context.

Demand (and supply) analysis

The netwo
rk diagram shown in figure 4 identifies the connections between roles by directional arrows. If role A is pointing to role B it means that someone in role A has nominated someone in role B as a “critical” connection for him/her. From a supply and demand point of view we could interpret this context as role A as demander and role B as supplier. In this sense, the roles that have many recurrences (called “in-degrees”) are high in demand. The following table shows which of the 44 business units were most in demand by the observed network.

The business units most in demand can be easily represented as bottlenecks. In fact, a simple efficiency measure of a company could be calculated and guessed simply based on how much the work is spread out within the organisation.

Criticality analysis

Networks placed where there are concentrations of demand on only a few nodes suggest the presence of critical units that are potentially at risk of becoming bottlenecks in the organisation. We can measure and carry out benchmarks of these bottlenecks by making an estimate of criticalities (figure 5):

Schermata-2012-07-02-a-21

We can notice how 27% of activities correspond to 50% of connections. Although we would not expect all activities to be equally in demand, this diagram provides us with a scale of the organisation’s robustness. For example, if we found a business in which the main activities (10%) represented 50% of the connections, we would have to deduce that the organisation in question was much more vulnerable (from the point of view of achieving inferior performance) than the company that we examined in our case study.

Value Sources and Value Sinks

When we look at a map of an organisation from the point of view of supply and demand of value, it is possible to understand how various roles and the activities they perform relate to each other by identifying the roles from which there is higher demand for help and those which supply more help. If a correct mapping is carried out, it is also possible to identify the balance of the company by identifying the Value Sources (those in demand) and the Value Sinks (those who demand).

Figure 6 shows a map highlighting the connections between nodes of the same network in relation to supply and demand. In this case the colours identify the Value Sources or the Value Sinks. The size of the nodes depends on the number of connections and the thickness of the linking lines identifies the strength of dependence. Value Sinks are roles that tend to demand more than they supply, whilst the opposite can be said of Value Sources.

What should we try to deduce from this analysis? On a first, more superficial, level, we can note that Value Sinks are negative because they drain energy and demand more than they supply, so they require constant work. On a second level, we can understand how even Value Sources, if too strong, can be negative. This is because the widened size of one of the nodes shows a lack of capability to respond effectively and efficiently to the organisation network. And perhaps a lack of capability could be due to a lack of desire to draw knowledge from other sources.

In this case study, showing the analysis results to individuals in charge of the organisation caused a considerable amount of discussion, also due to the fact that an ONA had been conducted for the first time. We highlighted for the executive committee the example of the change management unit as a Value Sink, which appeared as a node able to absorb large resources compared to the amount it supplies. The CIO informed us that the unit had been broken up just a few days before, suggesting that the analysis conducted was valid.

Schermata-2012-07-02-a-21

New visions and future implications

We have already underlined our belief that ONA can be a useful method able to provide a detailed business process analysis without wasting excessive resources, especially compared to BPM and Value Network Analysis.

The analysis of Value Sources and Value Sinks allowed us to immediately identify the areas requiring a more detailed analysis or a greater amount of attention than others. When we identify some business units as Value Sources or Value Sinks, we can ask ourselves why our business has assumed this organisational dimension. For example, we can review the competency level of the individual units that have been identified as Value Sources or Value Sinks.

Figure 7 suggests some possible improvement interventions for the Value Sink/Value Sources issue. A low competency Value Sink can be explained in light of a new position, of a new hire or in any case of any skill-set being formed and that is still gaining the correct competencies to interact with the other roles. The action to take could therefore be to support the role (in terms of time and competencies) in an attempt to make it become more efficient. If the Value Sink is instead highly competent, it is possible that it is not so visible – or accessible – within the organisation and a possible solution could be to promote its role or review the network configuration. In other cases, such as the Change Management Business Unit of our case study, we could consider breaking up and reassigning that role to other roles.

As regards Value Sources with low competency, their roles should be trained and helped to access different roles, so that they can improve their own competency and grow. If the Value Sources are already competent it is therefore possible that their existing resources are insufficient and the demand cannot be efficiently met.

The ONA results can also be usefully used to focus on the processes and activities carried out by Value Networks. A specific focus on the interaction with a good number of Value Sources and Sinks is likely to provide the best return when applied to these complementary analytical techniques.

Schermata-2012-07-02-a-21

Conclusions

We have presented Organisational Network Analysis as a technique to review the approach to Business Process Mapping and more focused on the personal and organizational dimension.

We have called these new business models Value Shop and Value Networks, which are much more dependent on the optimisation of the processes within them, on the general improvement of competencies and on the certainty that information and knowledge are truly shared within the whole organisation. In cases like these, simply mapping the work processes prevents us from grasping the real essence and concrete configuration of the business.

We have distinguished ONA from SNA suggesting that, by maintaining the focus on the role, rather than on the personal level, organisations were freer to operate without running into legal constraints caused by the management of employees’ privacy. The case study was used to show how a simple application – on a limited sample – of ONA is able to provide useful information for interpreting the organisational context and the functioning of processes at multiple levels of association. Through a simple analysis of Value Sinks and Value Sources, businesses can easily identify internal problems and take quick action in ord
er to curb them. Alternatively, it provides a valid starting point that can be crossed with other analyses already experimented with, such as Value Network Analysis and Business Process Mapping.

Originally posted on Social Business Manifesto – An Harvard Business Review Italia publication. Written by Laurence Lock Lee and Rosario Sica – http://socialbusinessmanifesto.com/