Best Practice Case Study

BEST PRACTICE

You know your company depends on informal networks, but what can you do about them? Decide which of three different types of networks will deliver the results you want, and then set up frameworks to help them flourish.

A Practical Guide to Social Networks by RobCrossJeanne Liedtka,and Leigh Weiss

W

HEN IS A COMPANY GREATER

than the sum of its parts? When its once-siloed business units find a way to harvest innovations in the white space between them. That's exactly what happened at heavy-equipment manufacturer United Technologies Corporation. Each of UTC'sfivedominant business units-Pratt & Whitney, Sikorsky Aircraft, and Hamilton Sundstrand in aerospace; and Otis Elevator and Carrier on the commercial side-had
Of course, these network characteristics-devising a novel approach to a complex problem and assembling the right expertise to solve it-did not arise on their own. Management made strategic decisions that encouraged such a network to develop. First, Novartis's organizational structure was deliberately designed to have permeable boundaries. The global oncology business unit, for instance, comprises marketing, sales, and research functions in different geographies. As Matter explains, "We bring together different disciplines, functions, and geographies to try to break up silos." Second, while many organizations' planning processes unwittingly compel functional- or business-unit heads to focus on their own objectives, Novartis takes a different approach. The company pushes executives to consider ways that unique packaging of expertise both within and outside the organization - could create new market opportunities to which they could respond. For example, the company routinely forn:is strategic alliances with industry partners and academic institutions to develop new products, acquire platform technologies, and access untapped markets. For instance, scientists in the company's disease area strategy group, which focuses on alliances and acquisitions for disease areas that are expected to drive growth, work closely together across boundaries that would separate them in most other companies. Using their extensive networks, they share
Comprehensive databases help researchers assimilate volumes of extemal data, and various collaborative tools facilitate knowledge sharing among high-end experts. In keeping with its commitment to create an atmosphere for effective collaboration that will produce innovative drugs, Novartis recently announced plans to convert its headquarters in Basel, Switzerland, from an industrial complex to a campus with plenty of meeting areas to encourage the spontaneous exchange of ideas. In January 2004, Novartis was voted one ofthe ten best European companies to work for by Fortune. It was the only heaith care company to make the list, and one reason employees cited was the collaborative nature of the organization and the many networks that run across hierarchical,geographic, and other organizational boundaries. In other words, Novartis excels at creHARVARD BUSINESS