November 8, 2006 3:27 pm

Putting the house in order

Business executives that talk about “networking” are often referring to building productive relationships with people from other organisations. However, when it comes establishing the kind of internal collaboration that will improve efficiency and foster the cross-pollination of ideas and knowledge, companies often run up against a major obstacle: the natural tendency to ignore what colleagues in other business units are doing.

“We’re battling our own human nature to some extent,” says Rick Freeman of Capgemini, the consultancy. “We seem to have a phenomenal ability to forget the fact if people work together it will be better for everyone. Businesses need to teach people how to overcome that natural reflex.”

While formal structures may operate in silos, the informal networks within a business hold great potential. Zia Khan, senior partner at Katzenbach Partners, a New York-based consultancy, argues that companies need to recognise the existence of two organisations within any business: the formal organisation and the informal organisation. The formal organisation consists of the structures, hierarchies and processes that are set down on paper and in job titles, while the informal organisation is made up of a complex network of relationships between employees in different departments or business units and at different levels of seniority within the company. “The formal organisation is largely based on predictions of how work will happen,” he says. “But increasingly, work doesn’t really happen that way. It’s like getting dressed according to the weather report and not adjusting when you step outside.”

By contrast, the informal organisation relates to how the company actually operates. “It’s things like culture, networks, relationships and the emotional motivation people have for work that is not related to bonuses or pay – all those things that are hidden,” he says.

Professor Peter Senge, a senior lecturer at the MIT Sloan School of Management, also stresses the need to foster informal networks. “We look at ‘internal network leaders’,” he explains. “These are people who essentially connect people. They might be HR, engineers or sales people, but they’re the ones that have a sense about things going on in one part of the business that others don’t have a clue about.”

Prof Senge says that companies can actively promote these networks. He cites the example of BP, which realised that while many of its refinery managers around the world were working in innovative ways, they never talked to each other. It established processes through which they could share knowledge face-to-face, and then through internal virtual communications.

Technology has facilitated these sorts of communications, particularly for global companies whose teams may consist of members working in different locations around the world. For Inttra, an e-commerce portal that processes freight transactions, communications technology is a key collaboration tool since the company has more employees working outside the US, where it is based, than in it. Its global operations are in Hong Kong, its IT staff are in Singapore and quality assurance is conducted out of India and the New Jersey headquarters.

Andy Barrons, vice-president of marketing, says technology allows staff to work together across borders and time zones. “A lot of it is sharing information, collaborating on documents and collecting market feedback from the commercial team. It’s about creating a community online.”

For example, communal web pages known as wikis, provided by JotSpot, a small private company recently acquired by Google, can be written or edited by more than one person, eliminating the need for endless rounds of group e-mails. Calendars, contact lists and spreadsheets can be accessed from anywhere and groups of employees can jointly edit and contribute to them.

But as Prof Senge points out, simply putting in place the right technology is not sufficient to spark the sharing of knowledge and best practice across a complex organisation. “That’s right on one level but if you do that without paying attention to the relational side of it, you soon realise information infrastructure is enabled or disabled by personal networks behind the scenes,” he says. “The most sophisticated organisations are working to encourage these natural personal connections.”

Of course, while technology can facilitate virtual communications, face-to-face meetings remain essential, says Raj Subramaniam, senior vice-president for international marketing at FedEx. “My previous job was president of FedEx Canada, and I made a commitment to meet every single employee across the country at least once a year,” he says. “And every quarter, my officers were out in front of the employees.”

FedEx – whose business units now include FedEx Express, FedEx Ground and FedEx Kinkos – also has what it calls its “Market Councils” where, for a given region, staff drawn from all the FedEx units working in areas such as sales, marketing and operations come together to address customer-related issues. “They’re obviously solving specific customer problems,” says Mr Subramaniam. “But they’re also building internal networks.”

The need to break down organisational hierarchies and departmental barriers is acute during the launch of a new initiative. New Zealand Post discovered this in 2001 when it was preparing for the launch of Kiwibank. “They had all the right boxes, from marketers to IT systems, and they had individual plans for the bits and pieces – product specialists developing mortgage products and cheque books – but none of these plans fit together,” says Pip Peel, founder of PIPC, a project management consultancy that was brought in to manage the launch. “They hadn’t provided the coherence and cut across the corporation in a common cause.”

PIPC created a single action plan, uniting the different players in the project with a single achievable goal – to launch a basic chequebook and credit card – and created a timeline through which other, more complex products would be brought in later. “It was only by having that holistic view of the programme that we could get them to realise that to get these activities right, they had to focus on what was really important.”

The lesson is clear. Whether it is through setting single, achievable, goals or building on the informal networks that exist in organisations, companies need to be active when it comes to fostering internal collaboration.

“There is a collaboration gene but it’s more a dormant and recessive gene,” says Capgemini’s Mr Freeman. “And the smart businesses have the ability to re-engineer themselves and create that new environment in which the recessive gene can come out.”

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