Organisational learning: The social network

The significance of workplace friendships is highlighted by this survey finding in Gallup Management Journal: about 76 per cent of engaged employees, but only 21 per cent of actively disengaged staff, strongly agree with the statement: “I have a friend at work who I share new ideas with.”

In today’s economy, creativity – the ability to develop new and useful knowledge – is increasingly seen as a critical source of sustainable competitive advantage. Organisational creativity is impossible without the contributions of individual top performers, and as such the focus has often been on individual creativity. The old egalitarian approach to people management has often given way to emphasis on top performers and exceptional talents.

However, a growing body of research indicates that this fundamentally individualistic view is too romantic and unrealistic. Even worse, the myth of creativity as a “one-man show” may even be harmful. Countless examples demonstrate that the generation of creative ideas is mainly a collaborative process rather than merely an intrapersonal one. For instance, according to Andrew Hargadon from the University of California, American inventor Thomas Edison was described in the words of one of his fellow employees as “a collective noun and… the work of many men”.

In more recent times, Steve Jobs was asked to describe the “seed” of the distinctive innovation ability of Apple Inc. Despite having employed a large number of highly creative individuals, Jobs told Business Week: “Innovation comes from people meeting up in the hallways or calling each other at 10.30pm with a new idea… It’s ad hoc meetings of six people called by someone who thinks he has figured out the coolest new thing ever and wants to know what other people think of his idea.”

Numerous empirical studies have also demonstrated that social network ties are of crucial importance for the generation of creative ideas and other key knowledge-related activities. Thomas Allen from MIT, for instance, discovered back in the 1970s that high performers in R&D report a greater frequency of consultation with colleagues and spend significantly more time in discussions with colleagues than do low performers. High performers rely on more people. Thus, they are in closer touch with new developments in their own and in other technical fields.

In terms of knowledge, informal networks go far beyond current technological trends. Collaborative contacts help identify or solve problems through the division of labour. They also validate ideas and courses of action, offer critical perspective, and create new entrepreneurial opportunities. Moreover, learning from creative people can sharpen one’s own intellectual abilities.

But which kind of network is particularly conducive to creativity and learning? One answer can be found in the so-called “structural holes” argument suggested by Ronald Burt from the University of Chicago. Burt uses the term structural hole for the separation between social groups, such as that between different departments in the same building, or between branch offices located in different countries. In his words, structural holes are like buffers – people on either side of the hole circulate in different flows of ideas and experiences. Employees who are able to span a structural hole by establishing collaborative relations with the colleagues on both sides of the hole, have access to both information flows; the more holes spanned, the richer the knowledge benefits of the network.

These bridges across structural holes are associated with creativity and innovation: to generate new ideas, employees have to select and synthesise knowledge between otherwise disconnected groups. Since the people who work in different social groups tend to differ in terms of their knowledge, experiences and attitudes, collaborative bridging also encourages learning and promotes skills development.

Close collaboration among friends

Informal social ties are a particularly effective medium for acquiring and encoding information. For instance, a case study conducted by Robert Kelley from Carnegie Mellon University and management consultant Janet Caplan at Bell Labs revealed that top-performing knowledge workers were able to build highly reliable social ties with colleagues, and when they called someone for advice, they almost always got a quick answer. On the other hand, calls and email messages sent by middle performers often remained unreturned and unanswered. To solve non-­trivial, difficult technical problems, knowledge workers cannot just download a ready solution from the corporate intranet. They rely not just on one ad hoc piece of advice but on repeated interactive discussions. Reliable networks, therefore, become vital for problem-solving and work performance.

High levels of mutual responsiveness are a particular feature of social bonds that are emotionally close and trustful: in other words, friendship. Connections to friends have been found to play an essential role for problem-solving in organisational contexts. Karen Jehn from University of Pennsylvania and Pri Shah from Northwestern University argued, for instance, that friends are able to challenge one another’s ideas and manage disagreements in a different way from non-friends, offering more explanations and providing critical feedback in a constructive manner that the receiver is willing to accept.

In my own recent studies with Florian Schloderer from Insead, we explored the impact factors of creative collaboration in small and medium-sized companies. Family-owned innovative companies play a crucial role in some national economies, including Germany. Author and business leader Hermann Simon called them “hidden champions” – their names might be unknown by the general public but they are global market leaders in specialised niches. From an empirical study in a German aerospace firm, we found that the network ties between particularly creative people are associated with a high level of mutual responsiveness.

In another study we completed in a “hidden champion” in the electronics industry, we found that creative peer-to-peer collaboration is associated with mutual emotional closeness and friendship. In other words, to generate new and useful ideas, friends collaborate more. In addition, thanks to friendship ties across structural holes, knowledge workers are able to tap into the knowledge and expertise of their friends’ friends – which, of course, contributes to their creative and problem-solving potential.

Our results are also in line with other current empirical studies. For instance, Tiziana Casciaro from the University of Toronto and Miguel Lobo from Insead demonstrated that, on average, liked but less competent employees were more likely to be sought out for task interaction than were the peers who were competent but disliked – whether the task interaction involved routine work-related advice or creative problem-solving.

Implications for HRM

The insights from past research clearly advocate putting the emphasis in management of creativity not only on creative individuals but primarily on collaborative relationships between them. There are at least two good reasons why collaboration on the development of creative ideas should be important to HR professionals. First, as mentioned above, creativity contributes to new products and services and thus helps the organisation achieve sustainable competitive advantage. Second, creativity is genuinely a people business: it builds on peer-to-peer relationships.

Friendships build bridges across structural holes, so the first step to encourage these ties is to recognise that the formal, standardised instruments of innovation management (such as new product development processes) are important, but not enough. A survey conducted in 2005 by the business consultancy Booz Allen Hamilton among the top 1,000 global innovation spenders showed that money cannot buy creative results: this survey found no statistical relationship between R&D spending levels and nearly all measures of business success, including sales growth, gross profit, or market capitalisation.

The recognition of informal, interpersonal, human creativity is the start for the development of new ways of thinking. We could call it “strategically encouraging informality”. Friendship, mutual emotional closeness and sympathy can, of course, hardly be ordered. But the good news is that it can be supported. The organisational climate that is free from politicking, infighting, antagonistic norms, destructive opposition to new ideas, and a “knowledge-hoarding” mentality creates a solid foundation for collaboration and friendship.

HR managers do, however, have to be aware of the dark side of close friendship ties. One of the most influential effects in social networks is the “like me” principle. It means that people tend to interact with those who are similar to them. When accompanied by bureaucratic, rigid formal organisational structures that inhibit collaboration between various units, this basic tendency can lead to cliques, complacency, and an “us against them” mentality that fundamentally destroys creativity. Hence, companies have to pay particular attention to facilitating friendships that create bridges across organisational ­structural holes and therefore are particularly conducive to knowledge creation. Regular meetings between departments, teams that cross functional and geographic borders, job rotation, off-site conferences, as well as training workshops at which people from various organisational silos come together, can contribute to building ties across the structural holes.

For instance, at a mid-sized electronic company that we studied, product developers who are located in different ­cities in Germany meet for a general meeting at least three times a year. Large organisations that enjoy a reputation for being creative also clearly recognise the role of informal networks. A case in point is 3M, as reported by Business Week (2 September 2009): “for spreading knowledge across the company, the database is invaluable, but the real work of collaboration happens face-to-face, often at events organised by TechForum, an employee-run organisation designed to foster communications between scientists in different labs or divisions.”

Corporate HR can create more and better conditions for informal contacts among employees by giving them a chance to meet one another and deepen collegial relationships. Social events such as the Christmas party or sports and recreation facilities cannot, of course, make an employee like a colleague and build an emotionally intense friendship. But they can create opportunities for people to run into one another in an atmosphere free from workload and time pressure and start to talk to one another. Training focused on social skills is also of critical importance.

Collaborative relationships with smart and creative colleagues enrich the knowledge and strengthen the cognitive abilities of individuals, increasing work performance. HR managers who still hang on to the individualistic view of creative performance should start to rethink. As mentioned by Valdis Krebs, one of the most recognised international experts in social network analysis, while the goal of HR in the past was to hire the best individuals, in today’s knowledge organisations, this goal expands to “hire and wire”. The facilitating of informality and friendships across organisational barriers and borders helps make the best use of the most human resource companies have – the collaboration between creative people who like and trust one another.