Mar 22, 2010

Interlocking Boards of Directors

We often think of our networks as belonging to us, or our group/team/family. We imagine they have an identifiable beginning and end. We want to draw borders to define "yours" and "mine." Yet, in reality we cannot. We really cannot define where my network stops and yours starts... no matter if you are a person, group, organization, or country. We are all intersected and our connections overlap with those of our network neighbors. Boundaries are fuzzy, at best.

Let's look at a simple example. Organizations, whether for-profit, or not-for-profit, usually have a Board of Directors. We can think of this Board as a network that belongs to the organization. All members are linked if they sit on an organization's board together. We might view the Boards of the top 50 U.S. companies like the diagram below -- individual clusters, each belonging to the parent company. The gray links show co-membership ties between the individuals.

Directors are not limited to the number of Boards they can be members of. Board members are limited to the number of Boards they sit on only by time, energy and invitation. Below is an example of a Board member who sits on the Board of two companies. This may be Steve Jobs, who sits on the Board of Apple and Disney.

We now choose a different color for those Directors who sit on multiple Boards. We see how the Boards of the top US companies are actually interconnected in the diagram below. Blue nodes are Directors who sit on multiple Boards.

The blue nodes in the network above are conduits that move information, ideas, and knowledge between the clusters -- they are the intersection where two networks overlap. Contagion between corporations is often based on flows via Boards of Directors. We apply social network analysis [SNA] to this social graph and we see who may be key in this diffusion process. We apply a new SNA metric, I call Awareness [measures potential awareness of a node to what is happening around it (directly and indirectly) based on it's pattern of connectivity]. Those nodes with higher awareness are shown in a larger size in the diagram below.

It is usually beneficial to be connected to those who have a good view of what is going on. Information and knowledge is often shared [intentionally or unintentionally] with trusted others, close by. Information leaks and flows, but never too far. Board members who are connected to other highly-aware Board members, have a higher probability of finding out more -- but the range is limited. Even those who just sit on a single Board can increase advantage by being connected to multiple blue boundary spanners. This is reflected in the diagram below. Node size is derived from awareness of what is happening in the network. Some Boards have greater awareness of what is happening in the corporate world.

This was a simple illustration. The actual network between the Board members will be denser, based on their possible multiple ties -- employment, memberships, and other current and past associations. The full multiplexity of the individuals was not known, nor shown. Yet, we see how even some knowledge of a social system increases our potential to target messages to influence that system. Of course, the better our data, the better our targeting. A telescope may be preferred, but even binoculars provide advantage over the naked eye. And binoculars that reveal what is usually invisible, are even more useful!

What complex social systems do you want to look at, and interact with? What overlaps can you utilize?

My colleague, Balazs Vedres, calls these intersections between overlapping groups "structural folds". A person who spans a structural hole [Burt] connects two groups but is a member of neither. A person who connects two groups via a structural fold is a member of both! The social dynamics of connecting groups these two ways are quite different.


Verkostoanatomia said...

Great post. I'm doing a similar analysis on the Finnish top enterprises board members' social network. You mentioned the "Awareness" metric. How do define it?

B the II said...

Will Domhoff in Who Rules America (multiple years) does some good analysis of this. He goes a little further to state that what you call 'boundary spanners' tend to shape organizational culture and create some kind of 'class consciousness'.

In Sean Stafford's book Why The Garden Club Couldn't Save Youngstown, he broadens the discussion to talk about how corporate 'boundary spanners' having a presence on non-profit boards has a different affect on regional development.

Just having an awareness of what's going on in the corporate community may only be good for the corporate community, but having high-aware people connected to other communities can literally lift up a region.

Rense said...

How is your metric "Awareness" defined?

Dennis D. McDonald said...

This is actually one of those situations where the graphics don't really help. The basic concepts could be stated in just a few sentences without the pictures. Given the intelligence of the target audience I don't think that would be a problem. (No, I'm not a Luddite.)

Rick said...

But Dennis, I found that the graphics made the concept come alive for me in a way that the prose alone would not have. Different styles of learning I guess.

I love the applicability of this concept to all the connections in our own lives.

Balazs said...

It is interesting to think further, considering situations when "the group" is not clearly defined. A corporate board, a civic organization, or co-authors of a paper are pre-defined, in the sense that you don't discover them by doing network analysis. But if you need to discover friendship groups from just knowing about friendship ties, all these tools (visualization, group clustering) become indispensable. And then it is important to keep in mind that these groups can and do overlap, and this overlapping is the source of many interesting processes...