Network Analysis: What is it?

Abstract

This technical note is used in Darden's first year Business Communications course. This technical note examines the organizational structure of the network and provides a brief introduction to network analysis: What is it? Why do it? What are the implications? How can companies best implement it to highlight the strengths and power of networks and minimize the flaws and fragilities? Excerpt UVA-BC-0247 Rev. Mar. 19, 2013 NETWORK ANALYSIS: WHAT IS IT? Defining Networks Versus Hierarchies: Why You Should Know the Difference Organizations have two kinds of structures, one a formal hierarchy, the other an informal network. The two coexist, are interconnected, and have a symbiotic relationship. Hierarchies are usually obvious and displayed through organizational charts and diagrams. They are a mechanism created to organize a system of problem solving and reporting. Hierarchies have a tight control on behavior and rarely change in design. The main purpose of hierarchies is to simplify complex problems and find solutions. Hierarchies are usually very rigid, with determined and strict chains of command. The hierarchical structure often is praised for the way it helps organizations resolve problems. It often receives criticism, however, for restricting employees and stifling their ability to find creative solutions to unexpected problems. Both the strength and the limitation of a hierarchy is its ability to transform complex problems into simple substitutes. In contrast, networks are informal organizational structures with few formal constraints on behavior. They are based on relationships, built on trust and the reciprocal exchange of information and communication. When forming a network, people often seek out others who are similar to them in both appearance and how they think and view the world. These similarities allow groups to form bonds of trust more quickly but can result in the creation of exclusionary groups. These networks are fragile because all the power is concentrated in one group—which also means all the vulnerability is focused in that group. For example, if a relationship within the network fails and a person leaves the organization, a wealth of knowledge goes with him or her. . . .