The Sage Handbook of Complexity and Management

From Adaptive Cycle
Jump to: navigation, search

Authors: P. Allen, S. Maguire, B. McKelvey

Publication Year: 2011


Categories: Digital Transformation, Virtual Organizations


The ability of a firm to be productive depends not only on the talents of its employees, but largely on the way in which they interact. The value of an organization or institution lies largely in the network that sits between its members. Organizations are networks formed by heterogeneous groups of individuals that accomplish tasks that no single individual can. Organizations, however, are networks that exist within networks. Since firms and institutions are networks that operate in environments that are formed by thousands of other organizations, firms and institutions can be seen as nodes in a large network of organizations themselves. Organizations are networks embedded in other networks and their survival depends as much on their internal structure as on the position they hold in their networked environments. Organizations that understand their own networks will likely have a better chance adapting, as knowledge regarding their current configuration can help the design, evaluation and performance of working teams. Ultimately, this self-awareness can improve the ability of an organization to adapt and survive. But in order to look at themselves, organizations need to be able to see not only the performance of their members, but the ways in which these are connected. Details in the structure of an organization's informal social network are related to an organization's performance. In order to adapt, organizations need to be flexible, as the ability of organizational networks to morph into different configurations could be the key allowing organizations to perform properly and survive over the long run. To properly adapt, however, organizations need to achieve a certain degree of self-awareness, they need to see themselves as the networks they are, a task that is extremely difficult to achieve for organizations involving more than 30 or 40 individuals. A power-law degree distribution tells us that there are a few nodes in the network that have a number of connections comparable to the total number of links in the network, while most other nodes have only a small number of connections. Nodes with a disproportionately large number of connections are known as hubs, and their existence carry important dynamical consequences for the network. This class of networks is called scale-free. Scale-free networks are relatively more robust to the failure of random nodes than random networks, but at the same time are considerably more susceptible to fall apart under targeted attacks. In some networks there are groups of nodes that belong to densely connected groups, or communities, which themselves are only sparsely connected to other communities. Research showed empirically that the links located in more densely connected parts of a network tends to be stronger, than the links located between groups. Palla et al shows that large social groups that survived for relatively long periods of time tended to exchange a large fraction of members. This was contrary to lasting small social groups, which tended to survive as long as the memberships remained. Sociometers (wearable devices that record the location, sound, acceleration and direction of those who wear them) have been used to accurately classify the different roles undertaken by different individuals in a small group to help predict the outcome of group decision making. For example, if there is only one protagonist in the group, a typical outcome is that everyone follows the leader without exploring the entire set of options. Sociometers are now being used to create real time feedback systems that can help keep groups on track. Techniques like these should enhance the survival probability of those organizations who adopt them. As the survival of organizations will be the one that determines whether network science becomes a frozen accident in the evolution of management strategies or if it will be selected out until a future rediscovery.