Informal Networks: the Company Behind the Chart

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Informal Networks: The Company Behind the Chart
by David Krackhardt and Jeffrey R. Hanson

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Reprint 93406

Harvard Business Review

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HarvardBusinessReview
RICHARD NORMANN AND RAFAEL RAMIREZ DAVID A. GARVIN GEORGE STALK, JR. AND ALAN M. WEBBER DAVID KRACKHARDT AND JEFFREY R. HANSON BARBARA PRESLEY NOBLE

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JOSEPH M. JURAN

ROBERT KELLEY AND JANET CAPLAN

ALISTAIR D. WILLIAMSON

LAURENCE HECHT AND PETER MORICI

NANCY A. NICHOLS

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JULY-AUGUST 1993 Reprint Number
FROM VALUE CHAIN TO VALUE CONSTELLATION: DESIGNING INTERACTIVE STRATEGY BUILDING A LEARNING ORGANIZATION JAPAN’S DARK SIDE OF TIME 93408

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INFORMAL NETWORKS: THE COMPANY BEHIND THE CHART REINVENTING LABOR: AN INTERVIEW WITH UNION PRESIDENT LYNN WILLIAMS HOW BELL LABS CREATES STAR PERFORMERS

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HBR CASE STUDY IS THIS THE RIGHT TIME TO COME OUT? WORLD VIEW MANAGING RISKS IN MEXICO

FIRST PERSON MADE IN U.S.A.: A RENAISSANCE IN QUALITY

IN QUESTION WHATEVER HAPPENED TO ROSIE THE RIVETER? PERSPECTIVES IS THE DEFICIT A FRIENDLY GIANT AFTER ALL?

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Mapping employees’ relationships can help managers harness the real power in their organizations.

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Informal Networks: The Company

by David Krackhardt and Jeffrey R. Hanson

Many executives invest considerable resources in restructuring their companies, drawing and redrawing organizational charts only to be disappointed by the results. That’s because much of the real work of companies happens despite the formal organization. Often what needs attention is the informal organization, the networks of relationships that employees form across functions and divisions to accomplish tasks fast. These informal networks can cut through formal reporting procedures to jump start stalled initiatives and meet extraordinary deadlines. But informal networks can just as easily sabotage companies’ best laid plans by blocking communication and fomenting opposition to change unless managers know how to identify and direct them. Learning how to map these social links can help managers harness the real power in their companies and revamp their formal organizations to let the informal ones thrive. If the formal organization is the skeleton of a company, the informal is the central nervous system driving the collective thought processes, actions, and reactions of its business units. Designed to facilitate standard modes of production, the formal organization is set up to handle easily anticipated problems. But when unexpected problems arise, the informal organization kicks in. Its complex webs of social ties form every time colleagues communi-

Copyright © 1993 by the President and Fellows of Harvard College. All rights reserved.

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cate and solidify over time into surprisingly stable networks. Highly adaptive, informal networks move diagonally and elliptically, skipping entire functions to get work done. Managers often pride themselves on understanding how these networks operate. They will readily tell you who confers on technical matters and who discusses office politics over lunch. What’s startling is how often they are wrong. Although they may be able to diagram accurately the social links of the five or six people closest to them, their assumptions about employees outside their immediate circle are usually off the mark. Even the most psychologically shrewd managers lack critical information about how employees spend their days and how they feel about their peers. Managers simply can’t be everywhere at once, nor can they read people’s minds. So they’re left to draw conclusions based on superficial observations, without the tools to test their perceptions. Armed with faulty information, managers often rely on traditional techniques to control these netDavid Krackhardt is associate professor of organizations and public policy at...
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