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TALKING MANAGEMENT

Transcript: Why leaders are only as good as their networks Add to ...

KARL MOORE – This is Karl Moore of the Desautels Faculty of Management at McGill University, Talking Management for The Globe and Mail. Today I am delighted to speak to Charles Galunic, who is a professor at Insead [graduate business school] in France.

Good morning, Charlie.

CHARLES GALUNIC – Good morning, Karl.

KARL MOORE – Charlie, some interesting research you have been looking at is the influence of networks, not on the senior manager but on their people. What are some of your key findings?

CHARLES GALUNIC – There is a lot of research on networks todays, a massive amount – this is probably our growth industry in organizational theory and strategy.

First of all, we have had a little different take on it. We didn’t want to see how the network was just influencing you, the selfish reasons for having a network – you get more money, you get ahead faster, you have more power in the organization and whatever else. We wanted to look at the positive externalities of that network, the spillover effects – does a network help you to add value to the people around you?

Secondly, we wanted to look not just at your network’s ability to do that but whether your leader, whether your boss, his or her network (if they have a particular kind of network structure), whether that helps you to add value to the people around you.

In a paper that is coming out at the end of the year in AMJ, the Academy of Management Journal, we found significant effects that there are these positive externalities of having certain types of networks that will help you to add value not to yourself, necessarily, but to the people around you.

KARL MOORE – What kind of networks – you mentioned different types of networks – and what kind of value? Maybe you can tell us a bit more about that?

CHARLES GALUNIC – Let me take them in reverse order. The value we are measuring is the assessment of your contribution by other people around you. So this is an investment bank, a large global investment bank, and yearly they evaluate each other on how much or how little that banker is adding to them.

We were able to assess whether your peer group finds you useful – are you actually helping in the job and getting stuff done? We find that is quite an important thing to have, adding value to the peers around you. The network structure that mattered was something Ron Burt has made famous, Structural Holes. People who were brokers in the system, leaders who were brokers in the system, that is, they were attached to diverse and distinct groups within the organization – they were getting fresh flows of information and knowledge of what was going on in the company – these were the leaders who were more likely to create value-creating subordinates within this bank.

KARL MOORE – So the career take away is get the right boss – a boss that is connected throughout the, in this case, bank, because he or she will be very helpful to you in delivering real value.

CHARLES GALUNIC – That’s exactly right. What it does is that it says our models of leadership shouldn’t only be trait-based or character-based. So we look at that individual and say, ‘Well, are you a good communicator? Do you have charisma?’ or whatever other trait we want to look at, a list of a thousand of them.

Leadership is also about your network; leadership is also about the social capital that you can bring to your employees. It is also about your ability to deliver on knowledge and information, sometimes distinguishing gossip and rumour from fact, all of these things you can bring to your employees and then make them more capable to deliver value to the people around them.

This is particularly important in knowledge-sensitive organizations where you need accurate knowledge to get things done. Leaders should worry about their networks.

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