How networks reshape organizations--for results.

Abstract

Recently a new term-networks-has entered the vocabulary of corporate renewal. Yet there remains much confusion over just what networks are and how they operate. Ram Charan, a leading international consultant, has spent four years observing and participating in the creation of networks at ten companies in North America and Europe. These companies--which include Conrail, Dun & Bradstreet Europe, Du Pont, and Royal Bank of Canada-are clear about why they are creating networks, what networks are, and how they operate. A network is recognized group of managers (seldom more than 100, often fewer than 25) assembled by the CEO. Membership criteria are simple but subtle: What select group of managers, by virtue of its business skills, personal motivations and drive, and control of resources is uniquely positioned to shape and deliver on the strategy? Networks begin to matter when they change behavior-the frequency, intensity, and honesty of the dialogue among managers on priority tasks. The process of building a network starts at the top. Senior managers work as change agents to build a new "social architecture." Once the network is in place, they play three additional roles: 1. Define with clarity the business outputs they expect of the network and the time frame in which they expect it to deliver. 2. Guarantee the visibility and free flow of information to all members of the network who need it. 3. Develop new criteria for performance evaluation that emphasize horizontal collaboration and leadership.

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