Largest ever organizational network analysis shows how social networks drive performance


For years now I have been trying to get the message out to senior executives that effective social networks are critical to business performance. By now that is well understood, in part supported by the large body research and academic literature on how social networks in and across organizations drive results and performance.

Now researchers from IBM Research and MIT have undertaken the largest study of its kind ever. BusinessWeek writes that Researchers at IBM and MIT have found that certain e-mail connections and patterns at work correlate with higher revenue production.

The report itself, Value of Social Network — A Large-Scale Analysis on Network Structure Impact to Financial Revenue of Information Technology Consultants, provides detail on their findings – for those interested in these issues it’s well worth a read.

In summary, there were four key results:

1. Structural diversity and centrality of social networks are positively correlated with performance for both individual consultant and project teams.

2. Strong ties to powerful individuals, such as access to executives, is positively correlated with work performance, however having many weak ties to management is negatively correlated with work performance.

3. A team with strong ties to the management can be beneficial for work performance, having many managers working on the same project exhibits an inverted U-shape relationship with performance.

4. Participating in projects with the appropriate social capital can boost consultants‘ work performance in addition to their own social capital.

All of these findings tally with my own research and experience, and very similar results are shown in the California Management Review article Managing Collaboration: Improving Team Effectiveness through a Network Perspective that I co-authored with Rob Cross and others.

These findings, together with other insights from research by myself and many others, provide specific insights into what will drive organizational performance. As companies are increasingly connected in how they work, these drivers will play an increasingly large role in organizational performance. Executives will ignore these issues at their peril.