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Monday, November 04, 2002

Trust Networks

Strategy + Business features Social Network Theorist Karen Stephenson [registration required], emphasizing her work on trust networks:

Professor Stephenson’s quantum theory of trust holds great potential as a diagnostic method for the unquantifiable aspects of business. Imagine that at any given moment, you could analyze the health of an organization’s networks. For instance, a company might have a healthy work network (with a great deal of open information flow about processes and very little workaholism), a medium-grade social network (with little real contact but also little pressure), and a low-quality network for what Professor Stephenson calls “continuous improvement” — the ability to innovate new processes easily. Any organization can be stunted in one of these areas and bountiful in another.

Professor Stephenson suggests that most organizations do not remain static. Their network health profiles continually change. An organization’s path from one network health profile to another not only is predictable, she says, it can be influenced. There are archetypal patterns that repeat, over and over, and, depending on the prevalent pattern, make it possible for one company to thrive where another fails. A startup technology company might begin with a low work/high social/medium improvement profile, as people first get to know each other. Then, as venture capital and deadlines kick in, the profile would move to high social/high work/medium improvement. And then there might be a betrayal by one of the senior executives. At this moment, the fate of the company’s networks hangs in the balance. Does its improvement capability, for instance, go up or down? Does its social capability flatten to the point where people leave the company? Or can the strength of the networks, fortified by the trust people feel for one another, override the crisis?

She also expands upon the original 3 networks (trust, advice and communication) in her surveys and analysis:

Six Varieties of Knowledge Networks

In any culture, says Karen Stephenson, there are at least six core layers of knowledge, each with its own informal network of people exchanging conversation. Everybody moves in all the networks, but different people play different roles in each; a hub in one may be a gatekeeper in another. The questions listed here are not the precise questions used in surveys. These vary on the basis of the needs of each workplace and other research considerations (“Don’t try this at home,” says Professor Stephenson), but they show the basic building blocks of an organization’s cultural makeup.

1. The Work Network. (With whom do you exchange information as part of your daily work routines?) The everyday contacts of routinized operations represent the habitual, mundane “resting pulse” of a culture. “The functions and dysfunctions; the favors and flaws always become evident here,” says Professor Stephenson.

2. The Social Network. (With whom do you “check in,” inside and outside the office, to find out what is going on?) This is important primarily as an indicator of the trust within a culture. Healthy organizations are those whose numbers fall within a normative range, with enough social “tensile strength” to withstand stress and uncertainty, but not so much that they are overdemanding of people’s personal time and invested social capital.

3. The Innovation Network. (With whom do you collaborate or kick around new ideas?) There is a guilelessness and childlike wonderment to conversations conducted in this network, as people talk openly about their perceptions, ideas, and experiments. For instance, “Why do we use four separate assembly lines where three would do?” Or, “Hey, let’s try it and see what happens!” Key people in this network take a dim view of tradition and may clash with the keepers of corporate lore and expertise, dismissing them as relics.

4. The Expert Knowledge Network. (To whom do you turn for expertise or advice?) Organizations have core networks whose key members hold the critical and established, yet tacit, knowledge of the enterprise. Like the Coca-Cola formula, this kind of knowledge is frequently kept secret. Key people in this network are often threatened by innovation; they’re likely to clash with innovators and think of them as “undisciplined.”

5. The Career Guidance or Strategic Network. (Whom do you go to for advice about the future?) If people tend to rely on others in the same company for mentoring and career guidance, then that in itself indicates a high level of trust. This network often directly influences corporate strategy; decisions about careers and strategic moves, after all, are both focused on the future.

6. The Learning Network. (Whom do you work with to improve existing processes or methods?) Key people in this network may end up as bridges between hubs in the expert and innovation networks, translating between the old guard and the new. Since most people are afraid of genuine change, this network tends to lie dormant until the change awakens a renewed sense of trust. “It takes a tough kind of love,” says Professor Stephenson, “to entrust people to tell you what they know about your established habits, rules, and practices.”


3:19:51 PM    comment []

Morgan Stanley CIO Survey

Morgan Stanley's Chuck Phillips discusses CIO priorities in reference to their September 2002 CIO Survey in Optimize Magazine.  Survey highlights:

  • One third of the 225 CIOs polled have cut their IT budgets since January, but one in five still plans to do some shopping this quarter. That1s fewer than the 50% who traditionally go on a spending spree in the last quarter to use up their budget allocations. Nevertheless, Morgan Stanley sees it as an encouraging sign that sellers will see a 3mild budget flush2 this month and next.
  • CIOs are much more optimistic about an economic recovery than they were in June. Almost all of the respondents (95%) say they expect an economic recovery in 2003Ðup from just half of the CIOs in the June survey. Still, the number who have a positive feeling about their own companies1 recovery fell slightly, to 56% in September from 60% in June.
  • Half of the companies surveyed say their hardware spending will likely rise in 2003; a third say they1ll increase network-equipment and server expenditures. Application integration, security, and Windows XP upgrades will be continuing IT priorities.

ERP has found its footing while wireless, portals, document management, and database software are advancing fast
Sept. 2002
July 2002
Jan. 2002
Net change
Application integration 1 1 1 (tie) --
Security software 2 2 1 (tie) --
Windows 2000/XP
upgrade, desktop
3 4 4 +1
ERP software or upgrade 4 3 8 +4
Wireless initiatives 5 17 11 +6
E-commerce initiatives 6 5 3 -3
Employee/enterprise portal 7 14 15 +8
Windows 2000 upgrade, server 8 8 7 -1
Document-management software 9 14 22 +13
Microsoft Office upgrade 10 (tie) 6 16 +6
Network equipment 10 (tie) 11 9 -1
Database software 12 24 29 +17
DATA: 225 respondents to Morgan Stanley CIO Survey, September 2002

Prevalent in these priorities is applciations with time saving value propositions (Portals, Document Management) for the increasingly overburdened worker, the WiFi trend, and maintainance and upgrades in ERP, Databases and Microsoft (effect of their new licensing scheme?).   Chuck makes another important point:

"The 10 top software companies represent 109% of the profit and 54% of the revenue. And if the economy doesn't turn soon, the spoils are likely to be even more concentrated."

9:20:24 AM    comment []

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