The growing interest in internal networks within organisations has been spawned by the apparent ineffectiveness of the traditional hierarchical organisational structures to deal with the complexity of today’s business environment. Even with matrix structures, which can generate their own operational complexities, there is always an extra dimensional lever that executives would like to have access to. In designing organisational structures executives can choose to design around product or service lines, geographies, business processes, supply chain flows, customers, core competencies and the like. With the desire to facilitate faster decision making, executives are looking to flatten organisational structures, pushing accountability further down the line. The consequences are that hierarchical power and the power of position is now being eroded. The proportion of work activities needing to be achieved through influence and negotiation, rather than direction, is continually growing. As identified in the previous chapter, this is having a major impact on the competency requirements of managers operating in a more networked environment.
TopThe Hidden Organisation
The rise in the informal organisation can be traced through articles on the topic published in the business press over the past decade or more. The impetus for the work has been the acknowledgement that company executives can no longer rely on giving directives and expecting staff to obediently follow orders. Many a new CEO has discovered to their chagrin the “organisational immune system” that can frustrate attempts to institute organisational change. In 1993 Krackhardt and Hanson (1993) wrote about the informal organisation behind the formal company organisation chart. The authors liken the formal organisation to a skeleton and the informal organisation as the central nervous system. The informal organisation is uncovered through a Social Network Analysis survey, asking respondents who they go to for advice, who their trusted friends are and who they communicate with the most. The responses can then be used to map the advice, trust and communication networks operating in the firm as previously illustrated in Chapter VI (SNA tutorial). The authors reported on a CEO who experienced a lack of progress with a special task force that he had convened. An SNA survey identified that the task force leader had only a peripheral position in the firm’s trust network. By appointing someone who was central to the trust network to the task force, the CEO was able to avoid having to close down or substantially restructure the task force, and the change in group dynamics, for the better, was obvious within weeks.
In terms of IT Governance, could that be just like the task force mentioned above? Could members of the governance team share no trust network connections? How can trust be built within the governance team if they are only exposed to each other at the periodic review meetings? How can the governance team members become part of the trust networks existing in the business? How can vendors join this trust network? How much more effective would they be if they were? While the IT Governance team may be formally identified under the CIO in the organisation chart, unless it is also identified with the informal organisation, its task could become “mission impossible”.
The communication network reflects how information flows through the organisation. Again one would anticipate that information would flow through the formal hierarchy, which is designed to communicate the intent of the executive through to the staff charged with delivering on the mission. Large investments are made in developing corporate data bases and data warehouses to facilitate rapid access to operational information to all concerned. At least this is a formal organisation’s process view of the world. Reality as revealed by SNA studies of communication patterns can often be quite different. Firstly, when asked where they source their information from, invariably the sources are from unstructured repositories like e-mail, the Internet, face-to-face, telephone or SMS. Only a small proportion is sourced from the designed information sources like data warehouses, data base applications and Intranets.
Figure 1. Survey of a global IT services firm (n = 550)
The above survey is symptomatic of several similar surveys of organisations across different industry sectors, both in the public and the private sector. The message is clear. People prefer to source and share their information informally. In other words, information has a social life (Seely Brown & Duguid, 2000), such that it cannot be easily separated from the people that create it, add value to it and eventually share it. Often the added value of receiving information from a trusted partner rather than sourcing it from a data base is the qualification that often comes with the delivery. For example, “I would be careful how you used this as the source is suspect”, or “you can trust this data, it has been verified several times by our group”.