What Is a Network?

Although the Hobbit example sketches out the general contours of a network in action, we want to be a bit more precise about what a network is. A network (see Figure 1.2 for a visual depiction) has several important characteristics:

• It forms around a set of assets, or resources. These assets might take many forms: a physical location, a particular technology, even an intangible set of ideas that people hold in common. We often call this set of assets the hub of the network.
• There is usually a set of people who are particularly closely related to the hub. They may be the people who formed the initial network. Communication is easiest within this core, particularly if they are geographically in the same location.
• There are other people who are more loosely connected. They may not even be connected to the hub directly, but rather connected through someone else. It's challenging to get a message to all of these people, particularly those on the periphery.
• The network is never static. There may be people who start off in the core but then become less connected, while there may be other people who become more deeply involved over time. The boundary dividing who is “in” and who is “out” of the network is a porous one.
• There is no “top” or “bottom” to a network. There is no one individual or entity that can give directions for the members to carry out.

Often, a network exists in relation to other networks, because there are people who are part of both networks. We call these people “boundary spanners.” These other networks may have some interests in common in some circumstances, but there are probably other circumstances in which their interests aren't so well‐aligned. If the networks are to work together in some way, they will have to find a way to align their resources so that their efforts are not at cross‐purposes.

Kinds of Networks

There are several different kinds of networks, each with a particular function. Some are advocacy networks, made up of people who work to advance a particular cause or idea. Members don't necessarily know each other, but all are part of the network because of its mission. Learning networks, such as professional associations, form because a group of people wants to increase their knowledge or skills in a particular area. At least some of the members usually know one another reasonably well. These kinds of networks have value in accelerating an individual's learning, but what we are really after is an innovating network. These networks are composed of people who have joined forces to create new value together. They are a bit like the children's story Stone Soup, in which a clever cook starts by putting a stone in a large pot of water and invites her neighbors to add whatever they have. One brings a carrot, another tosses in a potato, a third has a leftover bone with a bit of meat still on it. By the story's end, of course, the pot is full of delicious soup for all to share. In an innovating network, each person brings their own resources to the network, and together they create something that is more than the sum of its parts.

An interesting example of an innovating network is the group of companies that came together to create what we think of as the product of a single company – the iPod. While Apple was certainly at the center of the network, dozens of other companies had a hand in its birth, including hardware parts manufacturers, music distributors, accessory designers, and more (a graphic of this network, from one of the earlier iPods, is shown in Figure 1.3). Apple founder Steve Jobs may have been a genius, but part of his particular legerdemain was in assembling the right collection of partners to bring the iPod to market.

The Habitat of Networks

Networks are found in nearly every conceivable setting. Some networks, as in the iPod or Hobbit examples, bring together separate companies for a particular joint venture. On a much larger scale, the European Union is a network of countries, or more accurately, their governments. Nonprofit organizations often join forces to work on a shared issue of concern or to apply for a grant together.

These examples illustrate networks that cross organizational boundaries. Not all networks do so – there are also networks within single organizations. Different units of a company may form an internal network because of a particular new product that requires each of the units' capabilities.

Sometimes what looks like a hierarchy is actually a network in disguise. There may be an organizational chart, but the reality on the ground is that people have a great deal of discretion in whether to go along with what the people at the top want to happen. Universities are one example of this phenomenon – the tradition of tenure means that many individual faculty members can (for the most part) decide if and how they will support the president's latest set of “strategic priorities.”

Hierarchies, Networks, and Strategy

These two distinct organizational structures – the hierarchy and the network – have very different implications for thinking about strategy. In a hierarchy, the challenge is to communicate information about what to do down, and to get information about the results up.

In a network, on the other hand, the challenge is to get the members' resources and efforts aligned toward a chosen objective. The capacity to execute a particular strategy across the network may be very large, but only if the network's assets can be efficiently marshaled.

This is a key difference – and necessitates thinking about “doing” strategy very differently. A network is itself a complex system, which is often operating within a larger complex system – be it an industry environment, a regional ecosystem, higher education, or the web of influences that are part of a specific social challenge.

However, our primary approach to strategy – strategic planning – hasn't yet adapted to this enormous transition. In fact, we believe it cannot (at least as we have traditionally thought of the approach²). Strategic planning has its roots in World War II, as military leaders learned how to apply systems thinking to complex problems, like the invasion of Normandy on D‐Day. The approach then found its way into corporations in the postwar period. In the 1960s, the rational, linear school of strategic planning took root in business schools. In other words, it was designed in and for an age in which the hierarchy was the dominant organizational paradigm.

As was the case with the movie industry, strategic planning works well when two conditions are met. First, the environment must be visible and stable. It doesn't change much. Second, there needs to be a command‐and‐control structure in place to facilitate communication. A small group of leaders can be sure that everyone else will follow their direction. In other words, a small group of people at the top of the organization is thinking, and the rest of the organization does the doing.

Most of the world does not work like that anymore, which is one of the main reasons why strategic planning is so often ineffective. Instead the world is increasingly dominated – both inside and outside our organizations – by open, loosely connected networks. That is, the networks are more or less voluntary, as people (or organizations) join together not because they are all part of a single hierarchy, but because they have a particular task to complete which can best be done by all of them working together. Both the Apple and Hobbit examples describe just such networks.

Thinking Differently

First, we need to change the way we think about strategy. Let's start with a not‐so‐simple question: What is strategy, anyhow?

The word strategy comes from the Greek word straegia, which literally means “generalship.” The first understanding of strategy, then, was military. What did a general do? In war, he was responsible for the decisions about the number and location of troops to be deployed in order to fight for maximum advantage. That decision then triggered a host of smaller decisions about transportation, timing, weapons or other supplies, and so forth.

Stepping back, we could frame the general's role as asking two questions: Where are we going? and How are we going to get there? With this definition, think about the strategic plans you've recently read or been a part of developing. Many don't answer one or both of these questions. Many reflect a great deal of thinking about competitive environment, vision, and so on without getting down to the activities that would be involved in reaching those goals. Others have a laundry list of things to do, timelines, and project charts without a coherent understanding of how these fit into a bigger picture based on the needs of the community, organization, or market. Without both of these pieces, we really can't say that a plan describes a strategy – although there may have been a lot of good thinking that went into developing the plan.

Since we just finished describing how the world has changed, you may be asking whether an ancient Greek definition even makes sense anymore. The answer is yes – Where are we going? and How will we get there? are just a broader restatement of the general's challenge. However, there is a caveat: while the Greek general no doubt made most strategic decisions on his own, in a complex environment characterized by networks, it's simply not possible for one individual to develop effective strategy. Strategy has to be a team effort, and the more complex the environment, the larger the group – the network – that will need to be engaged. But the essentials remain the same: the network will need to make key decisions about where they are going and how they intend to get there.

The size of a network does reflect its capacity to some extent. More critical, however, are the number of connections in the network. Consider the inventor of the first telephone, Alexander Graham Bell – if he had built only one phone, it would have been worthless. Two phones would have been an improvement, but obviously still far short of the invention's potential. With just five phones, 10 different connections were possible, and so on.³ However, your immediate network doesn't need to be huge – remember that every network is also linked to other networks through boundary spanners. Taking advantage of this capacity so that it's not just a hypothetical potential for impact requires some kind of protocol for working together.

The word we often use for working together is collaboration. In fact, if there were a contest for a term that suffers most from overuse, collaboration would be a leading candidate. This is true in corporate organizations as well as nonprofit and civic environments, in which funders often require some level of collaboration.

True collaboration is at one end of a continuum of joint efforts. When people come together, they usually start by just exchanging information about who they are and what they do – we often call this networking. A bit more involved is coordinating. We alter our activities to some extent; for example, civic groups may decide to schedule their fundraising events so that they don't fall on the same weekend. Still further along the continuum is cooperating. When we cooperate, we agree to share some resources with one another. Employees in a small business may decide to cooperate by arranging to cover for one another so that everyone can take an annual vacation, for example.

All of these activities are good – but they aren't collaboration (although we may claim otherwise in a presentation!). Collaboration involves linking, leveraging, and aligning resources in ways that enhance one another's capacity to create a shared outcome, a mutual benefit. It can sometimes be difficult to tell if two groups are truly collaborating. Beyond the kinds of work they are doing together, we can ask two additional questions. What is the level of trust that network members have of one another? and, conversely, are network members still holding onto their turf? In moving along the continuum toward collaboration, trust increases while turf decreases. We'll share many examples of true collaboration in the coming chapters.

For really complex challenges you'll need to pay attention to both of these drivers of performance: growing the network's size so that its capacity is larger and moving toward truly collaborative work. Neither of these happen overnight, but both will be crucial for addressing truly “wicked” problems.

Behaving Differently

The men that gathered in 1787 in Philadelphia had a big, complex problem on their hands. The American colonists had won the war for freedom from England, but in the years since, the new nation had sputtered, unable to find a way to effectively transition from 13 rebelling colonies to a functioning democracy. Fifty‐five delegates made their way to a “constitutional convention” to see if they could find a way to organize that would provide stability and prosperity.

Their work together took four months, and resulted in the US Constitution. The document wasn't perfect (as 27 amendments since then and a Civil War amply demonstrate), but it became the template for a completely new form of government.

And yet, their work began with a curious step: establishing rules of civility. The rules were much the same as you might wish to establish in meetings today: don't interrupt, pay attention to the speaker, and so on. The key point is that the delegates realized that the work they were embarking upon was exceedingly complex and fraught with tension. In order to navigate the discussions ahead, they recognized before they started that they needed to decide what the ground rules should be.

We noted earlier that in genuine collaboration, trust has to be high (and turf low). Since “trust” is another of those words that can mean different things to different people, here's what we mean by trust – not so much a definition as a test for its existence: trust is established when words and actions align. Rules of civility are one important component of establishing an environment where trust can flourish. They allow people to make commitments to one another and then to follow through. At the Constitutional Convention, for example, a person could speak and know that others would listen to their ideas, rather than carrying on a side conversation or otherwise being disruptive. We'll come back to this idea later with Skill 1.

In addition to having rules for everyone to follow, we also need to behave differently when it comes to specific kinds of people. In any change effort, there are three kinds of people, as shown in Figure 1.5 (you may recognize the shape as a “bell curve”). At one end, there are pioneers, the people leading the charge and eager to change. This is usually a small group, as depicted in the graphic. Then there is a much larger group, which we can call the pragmatists. Pragmatists will go along with change as soon as they see that it's prudent to do so – they want to see that their time and/or reputation won't be wasted. So far, so good. But, there's a third group – those that aren't interested in joining in. They say (and keep saying) things like, “That will never work,” “We've tried that before,” or “What we have is good enough.” We call this group the soreheads. Fortunately, their numbers are also few.

We are no experts in human history, but there probably has been no transformation in human civilization with no soreheads. However, too often we act as though if we just said the right thing, we could get the soreheads on our side. We let the tyranny of the few suck the energy out of our efforts. Instead, we should concentrate our efforts on getting the pragmatists to engage. As one university provost we know says about working with faculty: “I know there's one‐third that is ready to move, and if they come along, there's another third that will join in to join the first third. And I don't worry about the last third.” We don't mean that you should steamroll over the naysayers from the get‐go. There are often people who look like soreheads but turn out to be pragmatists – they're just a bit slower to join up. But after a reasonable amount of effort to make sure that you understand one another, just move on. We can't let the soreheads drag us all down.

As we move forward, we need to behave differently not just when we're discussing what we might do, but when we actually begin to make decisions. We need to balance two dimensions: guidance and participation. We see these two dimensions at work all around us. When there's no guidance but lots of people involved, you get chaos. Even a group of ten trying to decide where to go out to dinner together is usually a frustrating experience for everyone. When there's no guidance and low participation, that's apathy – the meet‐up that no one bothers to come to. There are also scenarios in which there's plenty of guidance but low participation – the classic backroom deal. In organizations, this is often cloaked in a veneer of participation (advisory committees, listening sessions, employee surveys, and the like), while at the same time everyone knows that there are a few people who will make decisions and frequently have already made up their mind.

There is another option – high participation with high guidance. Everyone's voice is heard, but the discussion is guided and has direction. This kind of decision‐making generally leads to success, because there has been plenty of input, but it's also efficient – people don't feel that their time has been wasted with meetings that don't go anywhere. The skills we introduce in this book allow you to create this kind of environment.

Doing Differently

Thinking differently and behaving differently “set the table” for the third thing that needs to happen in order for companies, organizations, or communities to successfully navigate challenges – doing differently. The ten skills in the remainder of this book break that “doing” down into specific components that are simple to understand and put into practice. They are not, however, a “one‐and‐done” formula. Change is constant – there is always another S‐Curve, sooner or later. The doing differently needs to become a permanent way of working – a set of habits, if you will. When Ed was first casting about for a new approach in the early 1990s, he found himself in Singapore at a lunch with the chief technology officer of one of his client companies. A fellow diner, a PhD physicist, suggested that there were two new developments that would completely change how we viewed the world, and that strategy would need to change as well. The two? The internet and software design.

Unlike other forms of mass communications—radio, television—the internet is interactive. That's a big deal. The internet is our first interactive mass medium. We are still trying to figure out what that means, but with the launch of the first commercial web browser, Netscape, in 1994, it was now possible for different types of interactive connections to happen: one‐to‐one (email); one‐to‐many (e.g., YouTube), many‐to‐one (Kickstarter), and many‐to‐many (eBay). While entrepreneurs are continuing to create new business models to take advantage of this power, one fact is clear: the internet has disrupted the classical top‐down hierarchy and the traditional strategic planning methodologies that supported it. The changes wrought by the internet and their application to strategy are fairly evident: every organization now operates in a global environment, and freely available information makes changes in the environment (whether competitive, social, political, etc.) visible in nearly real time.

As for software design, the model of agile software development provides a framework for thinking about strategy in this new world. New software is always produced in a team environment. The members of the team are each working on just a bit of the program at a time, and these fragments are tested immediately, and adjustments made if needed. The team meets together frequently so that they can stay on track and aligned with one another and ensure that there aren't any compatibility issues. The software is released in stages: first a 0.9 or “beta” to help shake out the bugs, and then a version 1.0, to be followed by 1.1, then 1.2, and so on. At some point, the company decides a whole new set of features is needed – version 2.0, perhaps. From the user perspective, our experience has also changed, very much for the better. At the beginning of the “personal computer” age, you bought a program in a box with a version number, and then you waited several years for the new release, which also came in a box. Once most people had internet access, companies began issuing “patches” that could be downloaded periodically to fix major issues. Today, these improvements are available much more frequently and are often automatically installed – if we're even using software that is “ours” rather than hosted in the cloud.

Additionally, much software is developed in an open source environment, an entirely new approach to conduct complex work. Linus Torvalds popularized this approach when he decided to design a new operating system for computers. The story is remarkable: Torvalds, a 21‐year‐old computer science student in Finland, released the “beginnings” of a new computer operating system in 1991. We say beginnings because it was and is an open source operating system, with code contributed by thousands of programmers around the world. Called Linux, it now has 23.3 million lines of source code.

Both of these aspects of software development – constant experimentation, with lessons shared among a collaborative network – characterize effective strategy today. Strategy is developed and refined by implementing modest ideas and evaluating the impact, adjusting and scaling up as you go. What is critical is that the team has a process to manage this kind of ongoing effort – ways of working together that have become firmly established with practice and discipline.

*   *   *

We've now set the stage for the ten skills by introducing some of the key concepts that explain why strategy needs to be approached differently and a few of the assumptions you'll glimpse in the pages ahead. As you encounter the skills, you may think to yourself that they seem quite simplistic – and possibly, not worth the price of this book. A few observations, then: first, we may be tempted to think that in a complex world we need a complicated strategy process. Nothing could be further from the truth – when faced with complexity, the right approach is one in which there are a limited number of principles, but ones that are robust enough to allow for many possibilities and strategic shifts where necessary. Second, while the skills are simple, that's not the same thing as simplistic. They are simple, but not easy; they require practice and attention to master. Third, the real power of the skills is in combining them – perhaps not all ten at any one time, but identifying the skills most called for in a particular situation. The whole is truly more than the sum of its parts.

But enough with the preliminaries – it's time to lift the curtain.