3.1. Organizational Network Analysis and CoPs at Halliburton
Over the past decade, Halliburton has regularly employed organizational network analysis (ONA) to build 19 CoPs across a variety of business disciplines and technical services. Each community initiative had to show measurable results directly linked to financial performance. By applying targeted interventions based on ONA assessments, Halliburton has been able to do just that. As an example, in one year, a global CoP within a critical business unit
Lowered customer dissatisfaction by 24 percent
Reduced cost of poor quality by 66 percent
Increased new product revenue by 22 percent
Improved operational productivity by more than 10 percent
Employees in this unit design, manufacture, and install equipment enabling the production of hydrocarbons from newly completed oil and gas wells. Although initial planning for the completion of a well is very important, the final design is highly dependent on the well's operational parameters. This means that during its completion phase, the final design may go through a large number of changes depending on how the drilling of the well develops, various reservoirs it may cross, expected production, and local logistics. Because of this dynamic environment, all those involved must collaborate closely to avoid errors in handoffs from one group to the next.
Halliburton created a "Completions CoP" to reduce nonproducing time, which costs the business unit 4 percent of net profits owing to penalty contracts—a substantial drain only likely to worsen because of increased complexity in new designs. Through its investments in building this CoP, Halliburton created a global, collaborative environment that mobilized expertise to solve problems at individual wells and helped others around the world avoid costly mistakes. For example, at one point, a member of the completions community experienced a specific problem with a deep-water well in West Africa. Through both virtual forums and specialist roles in the network, a solution to the problem was found and then propagated with such speed that three other similar completions to be performed within the next 24 hours avoided the same problem and saved important customers millions of dollars in nonproducing time.
3.1.1. Benefits of Using Network Analysis
A network analysis was integral to establishing the CoP, allowing management to take targeted actions to improve network effectiveness. Rather than a "more is better" philosophy to promoting collaboration with a technology or cultural change program, Halliburton focused on increasing connectivity at certain points and decreasing it at others. For example, some of the improvements included the following:
Identifying overly connected people. The network analysis highlighted the community's over-reliance on three Global Technical Advisors (inside the oval in the graph in Figure 3.1a). Prior to the launch of the community, employees in each operational unit turned to people in these formally designated roles for problem-solving help. Halliburton initiated the community in part to help employees connect directly with each other to solve problems and thereby eliminate the inefficiencies and bottlenecks resulting from excessive reliance on this group of specialists. Instead of capturing and sharing best practices, these highly valued experts often became consumed by repetitive and mundane requests from the field. This impeded critical knowledge dissemination and also made the community vulnerable to the departure of these employees.
Bridging invisible network silos. The ONA revealed a series of silos in the network across both geography and function. For example, operations in the Gulf of Mexico had developed several new best practices and, as a result, decreased the cost of poor quality there by 50 percent in 12 months. Yet during that same period, the rest of the countries involved in the ONA had experienced a 13 percent increase in the cost of poor quality. Clearly the Global Technical Advisors were not effectively transferring best practices—and only a few connections between the countries existed outside of these roles (connections between people in the Gulf of Mexico and Angola were due to the fact that four individuals in Angola had previously worked in the Gulf of Mexico).
Creating awareness of expertise distributed in the network. The Global Technical Advisors were ineffective in part because they were overloaded. But an equally important impediment was that they did not know many people in the field—the very workers who needed their best-practice insight. The ONA revealed that, on average, six people in the field knew one or more Global Technical Advisors; the Global Technical Advisors, however, on average knew only one person in the field. A significant focus for improvement lay with technical and organizational means to help build awareness of "who knows what" throughout the network. For example, the network analysis informed several strategic international transfers of high-potential employees. These transfers offered professional development opportunities for the individuals and established connections between previously disjointed operating regions.
Identifying and drawing in peripheral network members. The ONA also helped identify key individuals within the various countries who were very knowledgeable and experienced but were not actively engaged in helping to solve problems outside their area of operations. Halliburton targeted these individuals to become more involved and tapped into their knowledge and expertise to help others. In addition, the company assigned several highly skilled individuals to the role of knowledge broker.
3.1.2. The Business Value of Improvements
These highly targeted efforts generated substantial business results, as previously outlined. In addition, a follow-up analysis performed one year after the interventions revealed overall improvement in the network (Figure 3.1b). The ONA allowed Halliburton to focus on connectivity that had value for the organization—not just on an indiscriminate increase in collaboration. Measurable improvements in knowledge transfer were evident. For example, "cohesion"—a key network measure of the average number of steps it takes for each person in the community to get to every other person when in need of knowledge or expertise—improved by 25 percent. In addition, community members' estimates of the time it took to get answers and solutions were reduced by an order of magnitude, from 30 days to 3 days on average. These improvements, combined with anecdotal evidence, made clear to Halliburton that important business conversations were occurring without imposing an unnecessary collaborative burden on all employees.