Since the dawn of time, primates have relied on social networks to help the whole group with their environments. This of course applies to humans and our enterprises as well. First of all, information disseminates easier and faster through networks than through hierarchies. This makes it possible for us to gain access to and act upon new information faster. We have the ability to be more responsive. Second, the lack of bureaucracy and hierarchy encourages communication and interaction. This makes it easier for us to share more information continuously. If we put these two things together, networks can help both individuals and groups of individuals make better decisions faster -- decisions that benefit the whole group.

Most people intuitively know that people who are well connected have an advantage. Informal networks have always been important to get the work done or making things go your way. We use our informal networks on a daily basis to solve problems, get access to expertise and information we need, discover and act on opportunities, get buy-in on decisions and so forth. People who are well connected have the powers to get the work done, even if they are not experts or doers themselves. And as an increasing part of the workforce in most Western organizations are involved in knowledge work, with collaborative and complex problem solving as the essence of their work, informal networks are becoming even more important. The people who are well connected become even more powerful.

Harnessing the Power of Informal Networks

Everyone has informal networks, and informal networks are the operating system of every enterprise out there. Yet surprisingly few organizations and knowledge workers seem to understand the dynamics of their informal networks and harness their abilities. Some look suspiciously at the new social networking technologies emerging from the social web, thinking and talking about them as security threats and productivity drains. What is less surprising is that the resistance typically comes from those who are already well connected and who feel threatened by the idea of more people getting well connected. It comes from people who either don’t understand the power of informal networks or who like things as they are.

Treat Relationships as the Foundation

The power of relationships is often underestimated by organizations. They overemphasize the value of transactions at the expense of their relationships with customers, partners and employees. It might seem as the value is being created where it becomes visible and tangible. If you find fresh water at the well, what use is it to try to understand where the water in the well comes from? Go get some more buckets!

Since good relationships are much more likely to lead to transactions and value being created than bad or non-existing relationships, businesses necessarily need to focus much more on building and nurturing relationships than they do today. Relationships need to be treated as the foundation for all value creation in a business. Organizations need to shift focus from being purely transaction-oriented to become more relationship-oriented. This in turn requires a corresponding shift away from the currently dominating one-way and transaction-oriented communication to a richer, more personalized, honest and transparent two-way communication with customers and other stakeholders as well as internally within the workforce.

Understanding the Dynamic of Your Networks

Today we also have information technologies such as social software that anyone can use to build, nurture and make use of their informal networks. And as the informal networks become visible, they become more usable to both individuals and organizations as we can better understand their dynamics and how to make proper use of them. In an environment where change is business as usual and being more responsive, agile and innovative is the only way to adapt to the environment, who can afford not to understand the dynamics of networks and harness their power with the use of social technologies? Why and for how long?

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