Article: A Networking Approach to Innovation

Innovation is not necessarily born out of individual genius or the well-worn cliché of ‘blue-sky thinking’. Judith Perle FRSA argues strongly in favour of the role of networks in driving new ideas and bringing established insights into new disciplines.

Networks are vital to innovation. True or false? I make my living by teaching people about networking – what it is, why it’s helpful, and, crucially, how to do it better – so you won’t be surprised if I answer, unequivocally, True. There’s ample research to support my stance.

First is the work of Ronald Burt of the University of Chicago, who surveyed 673 managers at a large US electronics corporation. Firstly, he looked at the shape and size of their professional networks, and how they interacted with colleagues internally and externally. Secondly, he measured the likelihood of their expressing a new idea, and the likelihood that senior management would judge that idea valuable.

Burt demonstrates that individuals who build diverse networks, so that they themselves become bridges (or brokers) between different social or professional groups, are at greater ‘risk of having a good idea’. Why? As he puts it: “An idea mundane in one group can be a valuable insight in another.”

The notion that good, innovative ideas have ‘social origins’ is powerful. In Burt’s own succinct phrase: “This is not creativity born of genius; it is creativity as an import–export business.” Innovators aren’t necessarily exceptionally smart people with exceptionally creative minds; bright sparks who think differently. They can be people just like you and me, who do two important things: they mix with a wide variety of individuals, not just their close friends, and they listen as well as talk.

Not all networks are the same, of course. Louise Mors (of Copenhagen Business School) studied a global consulting firm in order to understand how “network structure affects the ability of individual managers to innovate”. To innovate successfully, partners and senior managers in knowledge-based businesses have to deal with two challenges: they have to find novel information and ideas, and they need to be able to evaluate, publicise and, finally, implement them. Successful innovation is not just about having good ideas; putting them into practice and getting buy-in from colleagues are equally important.

Mors found that managers deal with these challenges by nurturing and tapping into different sorts of personal networks. Finding innovative ideas is best achieved through an open network, in which relatively few people are connected to each other. Interacting with a very wide variety of people, from different backgrounds and with different mindsets, exposes managers to more and more varied ideas. On the other hand, when you want to implement a new idea or persuade others to do so, it is easier if your network is denser, with more overlapping connections, so you do not necessarily need to convince every member of your network separately; by talking to each other they spread the word, and do some of the work for you.

In a very different study among open source software developers, Karim Lakhani of Harvard Business School came up with similar findings. Often it was “outsiders – those with expertise at the periphery of a problem's field – who were most likely to find answers and do so quickly”.

Many companies recognise the power of networks and encourage their staff to chat, both internally and with colleagues in the wider business network on a social, as well as a purely instrumental, level. Water coolers, canteens, social activities all have an important role to play, as do more formal professional contexts such as conferences and seminars. It is also why so many mega-corporations are turning to open innovation in order to maintain their competitive advantage. Instead of confining innovation within a fortress-like, internal ‘R&D’ lab, corporates such as Proctor and Gamble and GlaxoSmithKline are demolishing those walls and asking the network to provide new ideas and solutions.

Burt’s data also revealed that the active networkers, who act as brokers between groups, reaped personal benefits too: “more positive performance evaluations, faster promotions, higher compensation and more successful teams”. In other words, by nurturing a wide-ranging network, you are more likely to be successful in your career. So what is good for your employer in terms of successful innovation turns out to be good for you too.

The benefits of socially generated innovation are not confined to us as individuals, or even us ‘joined together’ as companies. Cities and societies can benefit too. Richard Florida of the University of Toronto has developed a ‘gay concentration index’. The tolerance a city shows for gay people, it seems, correlates rather well with how successful that city is in today’s fast-moving world. That is not because gays are more creative or intelligent, but simply because diversity leads to innovation and innovation leads to prosperity. The index is just a shorthand technique for measuring diversity. To quote Florida: “Cities with thriving arts and cultural climates and openness to diversity of all sorts… enjoy higher rates of innovation and high-wage economic growth.”

Shell recently transformed this real story into a short film for an advertising campaign. Engineer Jaap van Ballegoolien is struggling to exploit small pockets of oil in an oil field in south-east Asia. Drilling thousands of wells would be both uneconomic and environmentally unacceptable. Jaap also has a problem with Max, his teenage son back in Amsterdam. On a visit home, he takes Max out for a milkshake. As they talk, Max turns his straw upside down, bends the top and uses it to suck up every last bit of gloopy milkshake from the glass. Jaap is mesmerised – and an innovative solution to his technical problem in south-east Asia is born.

At the end of the film, we see Jaap proudly presenting his ‘Bendy Straw Drill’ to colleagues. This innovative technology, born of an observant mind and a chance encounter, allows a single bendy pipeline to reach numerous pockets of oil. 

Networking alone probably won’t give rise to a flood of innovation. But networking actively, and encouraging it among colleagues and staff, certainly shorten the odds in favour of creating an innovative culture.

Judith Perle specialises in teaching people about networking. She’s a co-founder of training consultancy Management Advantage and is co-author of The Network Effect, a practical guide to making – and keeping – the connections that can make your world go round.