Don't just talk business

China Staff, Mar 2009 by Gratton, Lynda

Conversations at high-performing companies are never dry. Employees enjoy frequent opportunities to converse about topics outside work, and managers enliven corporate discussions by the use of Socratic methods. Lynda Gratton explains.

There may have been a time when highperforming individuals, or even highperforming teams, could make a real and lasting difference on their own. Now, much of the value creation and innovation in companies takes place as a consequence of the relationships between people, often in different functions, businesses, geographies and countries.

In a business environment characterized by uncertainty, the strength and reach of these relationships has never been more important. It is only through making and sustaining connections between people that new information about emerging threats and opportunities is obtained and assimilated, and that existing business relationships are strengthened and powerful new ones forged.

This positive impact of collaborating across boundaries is felt in many different ways. The value from mergers and acquisitions is rarely realised unless groups and individuals in both companies are able to work closely with each other. The increasingly sophisticated needs of consumers cannot be met unless employees from sales and marketing, research and production are able to pool their joint ideas and resources to come up with innovative products and services. The needs of global supply chains and global buyers are only fulfilled if a company can join up its product or service offering by integrating employees from across the globe.

Innovation, the sharing of leading practices and productivity improvements are increasingly the result of what people do and communicate across boundaries, whether between teams, functions, businesses or, indeed, between the company and its customers and partners.

At the same time, the extent and typography of these boundaries are becoming ever more complex: team memberships morph and reconfigure as talent moves rapidly around the company; functions are renamed, realigned and reconstituted; and business units change their name and shape with alarming regularity.

Value is now created as much outside a company as within, as suppliers, partners and outsourcers all become part of an increasingly complex value chain. Managers always had to manage across boundaries, but now the borderlines are porous rather than impervious, and fluid and dynamic rather than static.

So how do executives work with what Jack Welch, the former chief executive of General Electric Company, termed "boundarylessness"? As part of an ongoing study, we framed this question to the executives in four high-performing companies - BP, Nokia, OgilvyOne (part of WPP) and The Royal Bank of Scotland. In all these companies, managing across boundaries is a central part of their success, and the boundaries are becoming increasingly complex. What were the issues they faced, and how had they gone about solving them?

We discovered that managing across boundaries requires the active building of both hard and soft bonds - the former of which are formal relationships built around performance management and the latter of which are personal relationships and friendships. Perhaps surprisingly, these executives believed that the softer bonds had most impact on their capacity to manage across boundaries. In managing these soft bonds, they believed two elements to be crucial:

* First, they championed the practices and processes that supported networks of cooperative relationships between different groups of people both within and outside the company. They had an understanding of what was needed to maintain the knowledge within the company, and also what was needed to create innovation. While their role in supporting these norms of co-operation was complex, they believed their personal behaviour with their peers and their attitudes to co-operation made a significant difference;

* Next, they believed that the reflective conversations that took place across boundaries were crucial. They described how, in their own behaviours, they acted as role models for making possible creative dialogues and conversations.

Stay connected

In these companies, we found that a complex structure of hierarchical and formalized roles was supplemented by a vast network of friendships and social ties that crisscrossed the organisation. Executives believed that these co-operative relationships were crucial to the way in which boundaries were bridged and knowledge shared.

In these companies, the benefits of networks of co-operative relationships come from balancing strong network ties, or friendships, with weaker ties based on looser acquaintance. Strong ties typically occur between people who spend time with each other, sharing their views and developing reciprocal understanding. In such relationships, tacit knowledge, which refers to knowledge that is difficult to describe or to teach another person, is developed and exchanged.

The network ties that occur between people in different parts of the company, or with those outside the company, are typically weak ties, since they are likely to meet less often and know each other less well. However, these multiple, weak network ties that crisscross a company can bring real benefits. It is often these relationships across boundaries that shape fresh insights and perspectives and ultimately lead to the creation of new ideas. Much individual and organizational learning occurs through the vehicle of these weak companyspanning ties.