Source: Healey, Matthew; Saldin, Lakshan: “The Social Network”. Rail Professional, June 2016, Issue 223.https://issuu.com/railpro/docs/june_issue_2719d1b7b4d1b1/82 (Accessed 2016-10-01).

RESEARCH SHOWSTHAT ENGINEERSARE FIVE TIMESMORE LIKELY TOTURN TO FRIENDSOR COLLEAGUESFOR INFORMATIONTHAN TOIMPERSONALSOURCES.

It is the second report from our three-year project: “The Internet and itsDirect and Indirect Effects on Innovation and the Swedish Economy” ourprimary objective is to examine how the Internet and digitalization haveinfluenced entrepreneurship and innovation in Sweden.

Our previous report “Chasing a Tale of the Unicorn – A study ofStockholm’s misty meadows” focused on understanding the roots of thecurrent “unicorn” success in Sweden and its capital city of Stockholm.(click here for the full report)

These are the infographics to our current report, in which we decided toexplore aspects of formal and informal networks as they enablebusinesses to leverage: experiences, knowledge, and resources.

We have analyzed the current stage of knowledge using both scientificpapers and professional literature to understand the connection ofbetween informal networks, interlocking directorates and companies’success.

Intensive informal networks have agrowing prevalence and an increasingimportance for innovation andknowledge sharing in the Internetera, building on mechanisms forproductive exchange of ideas provenbefore the Internet in the SiliconValley, but originally dating back tothe first cities in human history,10,000 years ago.

* Source: Steven Johnson, Where Good Ideas Come From – The Natural History of Innovation 2010, Riverhead Books; Reprintedition (October 4, 2011)

WHY SHOULD YOU CARE ABOUT INFORMAL NETWORKS

F I N D O U R F U L LR E P O R T S H E R E :

W E A R E C O N V I N C E D T H A T T H I S I SI M P O R T A N T F O R Y O U B E C A U S E :

A high level of knowledge flowswithin companies’ ecosystem, evenamong competitors, due to informalnetworking opportunities. Thisreport outlines what kind of impactinformal networks have and presentsthe insights about the knowledgesharing and innovation, and theirgrowing importance in the Internetera*

KNOWLEDGE

INNOVATION

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https://www.iis.se/docs/Chasing-the-Tale-of-the-Unicorn-A-study-of-Stockholms-misty-meadows.pdf

http://www.slideshare.net/MichalGromek/informal-network-innovative-internet-second-project

Source: Katzenbach Partners LLC. Survey Finds Most Workers in Big Companies (65%) Rely on One Another, Not Management, to SolveProblem Press Release. 2007-07-31. http://www.prweb.com/releases/informal/companies/prweb543720.htm (Accessed 2016-10-02).

"PROFESSIONALS WHOWANT TO WORKHORIZONTALLY ACROSSAN ORGANIZATIONCURRENTLY FINDTHEMSELVES FORCED TOSEARCH THROUGHPOORLY CONNECTEDORGANIZATIONAL SILOSFOR THE KNOWLEDGEAND COLLABORATORSTHEY NEED.

IN MANY COMPANIES,THESE MATRIX, ANDOTHER HYBRIDORGANIZATIONS HAVEBECOMEDYSFUNCTIONAL. THESYMPTOMS INCLUDEENDLESS MEETINGS,PHONE CALLS, ANDE‐MAIL EXCHANGES, ASWELL AS CONFUSEDACCOUNTABILITY FORRESULTS."

THE ADVICE NETWORK — prominent players inan organization on whom others depend on solvingproblems and providing technical information

THE TRUST NETWORK —tells which employeesshare delicate information and back one anotherin a crisis.

THE COMMUNICATION NETWORK —employees who talk about work-related matterson a regular basis.

IMPLODED RELATIONSHIPS- when employeesin a department only talk among themselves andnot with other departments.

THREE TYPES OF RELATIONSHIP NETWORKS

TYPICAL STRUCTURES FOUNDAMONG COMMUNICATION NETWORKS

Source: Krackhardt, David, and Jeffrey R. Hanson. "Informal networks." Harvard business review 71.4 (1993): 104-111.

TYPES OFINFORMALNETWORKS

IRREGULAR COMMUNICATION PATTERNS —employees are communicating only with othergroups and not among themselves.

FRAGILE STRUCTURES — group members thatcommunicate only among themselves and withemployees in one other division

HOLES IN THE NETWORK — places you wouldexpect to find network ties but you don’t.

”BOW TIES” — a network in which many playersare dependent on a single employee.

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THE INTERNET ERABRINGS THETECHNOLOGICALMEANS FORBUILDINGNETWORK‐BASEDADAPTIVESTRUCTURESCAPABLE OFDEALING WITHCONTINUOUSCHANGE.

CENTRAL CONNECTORS — The ones that linkmost people in an informal network with oneanother, and can match knowledge seekers withknowledge by either providing a human contact orretrieving such knowledge from a database.

BOUNDRY SPANNERS —Persons who connectan informal network with other parts of thecompany or with similar networks in otherorganizations. They play an important role inthose situations where people need to sharedifferent kinds of expertise. Network maps canbe used to check if the boundary spanners aremaking the right connections.

SUGGESTION: ANALYZE THE INFORMAL NETWORKS WITHINYOUR OWN ORGANIZATION AND REVIEW YOUR CURRENTROLE BASED ON FOLLOWING SUBCATEGORIES:

Source: Cross, Rob, and Laurence Prusak. "The people who make organizations go-or stop." Harvard business review 80.6 (2002):104-112., Awazu, Yukika. "Informal network players, knowledge integration, and competitive advantage." Journal of KnowledgeManagement 8.3 (2004): 62-70

ROLESOF INFORMALNETWORKS

GATEKEEPERS —Those who control whatknowledge leaves a given entity and what isallowed to enter. In doing so, they ensureknowledge protection and network stability. Onthe other hand, gatekeepers decrease the scopeand the flexibility of integration, therebycontributing negatively to competitiveadvantage

INFORMATION BROKERS or BRIDGES- Individuals who keep the differentsubgroups in an informal network together, andalso have the capability to understand a varietyof knowledge in different contexts. If they didn’tcommunicate across the subgroups, the networkas a whole would be split into smaller, lesseffective segments. There is, however, a degreeof danger in relying too much on informationbrokers, whose departure can tear apart aninformal network.

PERIPHERAL SPECIALISTS OR EXPERTS -Individuals who keep the different subgroups inan informal network together, and also have thecapability to understand a variety of knowledgein different contexts. If they didn’t communicateacross the subgroups, the network as a wholewould be split into smaller, less effectivesegments. There is, however, a degree of dangerin relying too much on information brokers,whose departure can tear apart an informalnetwork.

Source: Andrew Hunt: Creativity For Investors – Why It Really Matters. ValueWalk.com May 2016.http://www.valuewalk.com/2016/05/creativity-investors-really-matters/ (Accessed 2016-10-07).

“SO IT IS NOSURPRISE THATMOST SUCCESSFULINNOVATORS HAVEVAST, INFORMALNETWORKS OFDIVERSE PEOPLE,WITH WHOM THEYCONSTANTLYSHARE THEIRTHOUGHTS ANDIDEAS.”

HUNT'S TIP FOR AN EFFICIENT INFORMAL NETWORK

E X A M P L E S :

- of the respondents to a survey of 510 US workersrely on themselves and co-workers to providesolutions as opposed to reaching outside of theirbroader informal networks*

- of the respondents to an Economist Intelligence Unitsurvey of 1,000 entrepreneurs across ten cities withreputations as innovation hubs, are convinced that theinformal environment will be important or crucial totheir business over the next three years.**

58% of those entrepreneurs take part in business-oriented social networking groups on globalplatforms such as Facebook or LinkedIn.**

In a survey among executives of 100 software start-ups in Israel during the dot-com economic growthera, with information added eight years later abouttheir ability to survive the burst of the dot-combubble, it was found that start-ups that have largerinformal communication networks improved theirchance to survive the external shock. ***

The effect on innovation and knowledge sharing that informal networksand horizontal structures have from a generalized perspective—not theleast in the analysis of Silicon Valley’s successful growth of performancesince the 1980’s—makes it plausible that benefits should be expected,and that it is valuable to encourage, map and analyze informal networksin and between all kinds of organizations.

There are also good indications that well developed informal networkscan be a significant competitive advantage, both for firms and regions:

Source: *Katzenbach Partners LLC. Survey Finds Most Workers in Big Companies (65%) Rely on One Another, Not Management, to SolveProblems… Press Release. 2007-07-31. http://www.prweb.com/releases/informal/companies/prweb543720.htm (Accessed 2016-10-05). ** The Economist Intelligence Unit (EIU): “Informal innovation: Networks that Power Start-up Cities.” May 2016.https://www.eiuperspectives.economist.com/sites/default/files/EIU_IDA_Informal%20Innovation_Intro%20and%20summary.pdf (Accessed 2016-10-07). ***Raz and Gloor, 2007. “Size really matters – new insights for start-ups’ survival.” Management Science 53(2):169-177. February2007.

MANYCOMPANIES DON'T UTILIZE THE POWER OF INFORMALNETWORKS INTHEIRORGANIZATION

78%

65%

Source: Raz and Gloor, 2007. “Size really matters – new insights for start-ups’survival.” Management Science 53(2):169-177. February 2007.

“ENTREPRENEURSHELPINGENTREPRENEURS ININFORMALNETWORKS ARE ACORE COMPONENTOF WHAT'SBECOME KNOWNAS A ‘START‐UPECOSYSTEM”

S H O R T L Y A B O U T U S :

The Internet Foundation in Sweden (IIS –Internetstiftelsen i Sverige) is an independentorganization for the benefit of the public thatpromotes the positive development of the Internetin Sweden. IIS is and intends to remain the naturalchoice for companies, private individuals, andorganizations that want a domain name associatedwith Sweden. The Foundation’s ultimate objective isfor everyone to be able to harness the internet’spotential. Questions connected to the InternetFoundation of Sweden, please [email protected]

CSC, Center for Strategy and CompetitivenessCenter for The Center for Strategy andCompetitiveness (CSC) was founded in 2005 andfocuses on five research tracks: Strategy and MarketSystems, International Business, Knowledge inNetworks, Clusters, and Competitiveness Policy.Center for Strategy and Competitiveness is a centerat Stockholm School of Economics Institute forResearch which is an independent researchfoundation, founded in 2010. The overall aim is toconduct qualified academic research within theeconomic sciences, which aims to unite scientificstringency with empirical relevance. The Institute’sBoard Consists of Professors and otherRepresentatives from the faculty of StockholmSchool of Economics. The Institute encourages andsupports the affiliated researchers to communicatetheir research findings. The purpose of theInstitute’s publications is to disseminate researchconcerning corporate enterprises and society.Questions connected to the review, please contactthe coordinator of this review:[email protected]

The project “Innovative Internet” is funded by The Internet Foundationin Sweden (IIS – Internetstiftelsen i Sverige). The project is beingexecuted by researchers from Center for Strategy and Competitiveness.The next phase of the project will review the impact of FinTech andSharing Economy.

This is the first time when we have decided to create an infographic fromour report to make our research more accessible and would like to knowif you like it. Additionally in case you see cooperation potential, wouldlike to invite us for presentation to share our findings or like to join ourresearch team send us an email to [email protected]

Center for Strategy and Competitiveness is a part of Stockholm School of Economics Institute for Research

JOIN OUR RESEARCHNETWORK ONFINTECH AND SHARING ECONOMY

ALBIN SKOG: [email protected] ALEXANDRA SEVERIN: [email protected] KATARZYNA.JERECZEK: [email protected] MATS LEWAN: [email protected] MICHAL GROMEK: [email protected] PROF. ROBIN TEIGLAND: [email protected] SERGEY MORGULIS-YAKUSHEV: [email protected] SHAHRYAR SIRI: [email protected] YIXIN LU: [email protected] ISBN 978-91-7731-059-4 DESIGN: MICHAL GROMEK

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