Network holes and how to plug them

Notes on the practice of innovation and technology commercialization.

“There’s a hole in the bucket, dear Liza, dear Liza…” A children’s song with obscure origins in 18th century Germany.

My last blog discussed strong and weak links in networks. We should now talk about how to connect networks and what is meant by a network ‘hole.’ 

Networks, like the bucket in the song, may suffer from holes. In buckets holes need to be plugged; in networks, holes are bridged. In social networks they are called ‘structural holes’ formally defined by Ronald S. Burt, a leading researcher in networks and structural holes at the University of Chicago, as ‘when two separate clusters possess non-redundant [that is, complementary] information, there is said to be a structural hole between them.’ This suggests that a broker or boundary spanner – such as an entrepreneur – who bridges the hole could gain competitive advantage by engaging in information arbitrage. Connecting networks of entrepreneurs with their own strong and weak links by bridging structural holes may provide access to valuable new ideas, alternative opinion and practice, early access to new opinion, and an ability to move ideas between groups where there is an advantage in doing so.

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Previously we noted evidence from Innocentive http://www.innocentive.com that as the number of unique scientific interests in the overall submitter population increased, the higher the probability that a scientific or engineering problem was successfully solved through Innocentive’s crowdsourcing method. Bridging structural holes between disconnected networks brought a diversity of potential scientific approaches to a problem and was a significant predictor of problem solving success.  Innocentive and ideas coming from other industries than the seekers http://www.innocentive.com/blog/2008/07/25/5-questions-with-dr-karim-lakhani/

However, let’s control our enthusiasm because in a moment we will see that there may also be a downside.

Brokerage is about coordinating people between whom it will be valuable to trust, but where there is an inherent degree of risk. An earlier blog [http://innovationrainforest.com/2013/03/24/solving-the-right-problem-part-1/] discussed the importance of understanding context; the effectiveness, or otherwise, of brokerage is also highly dependent on context.

Much more can be found in Professor Burt’s paper Structural Holes and Good Ideas
http://www.econ.upf.edu/docs/seminars/burt.pdf

From what was discussed in my last blog we learned that within a closed network, with many strong links, no behavior goes unnoticed. Problems may be identified early and at low cost so that non-performing people can be removed from the network. In the early 1990’s, while working in Russia on technology commercialization issues I was surprised that the organization for which I was consulting employed several people who were related to the boss. Nepotism? No, said the boss; it’s an incentive for them not to screw up and have it immediately known by their relatives and be the cause of family shame.

Mentoring for early stage companies in venture accelerators relies of having robust knowledge of the business to apply the fail-fast fail-often principle, but this will be the topic of a future blog.

A series of new studies by Dr. Yuval Kalish of Tel Aviv University suggests that, in some cases, networking can do more harm than good. “If you’re at the intersection of two previously unconnected niches of a network, you’re occupying what I call a ‘structural hole,'” says Dr. Kalish. Filling that space can lead to prestige, opportunities and power ― or it may have quite the opposite effect.

“While it’s been reported that people who occupy these structural holes become more successful, some structural holes may be ‘social potholes’ that can harm you and your business,” he warns. For example, someone who cut across formal hierarchical organizational boundaries within a company may be resented.

Finally, networks are useless unless “transactions” occur among the networked parties. Communication is a transaction – an exchange of knowledge – and is also context dependent. The six degrees of separation theory that everyone is six or fewer steps away, by way of introduction, from any other person in the world is well known, but not much practical use unless at each stage a request gets transmitted. I figure I’m two links from the leader of one the world’s most powerful countries, but I very much doubt if any advice I send him would be received, and the transaction would fail.

Once when studying two linked group of researchers from a research center and a corporation in two different countries, my colleagues noticed an occasion when communications (transactions) between both groups were acting effectively, but then stopped. It was a mystery. Why? Answer: ‘culture’ prevented further transactions. The culture of the country in which the research center was located was that it was not good to transmit bad news. So, when the R&D ran into problems – completely normal and to be expected – they decided that giving no news to their corporate partners was better than giving what was perceived as bad news was the better action. Of course, from the company viewpoint it was essential for the company to know if there were problems so that the two partners could work together to correct them and proceed.

The remainder of the children’s song describes an increasingly frustrating tale of attempts to plug the bucket’s hole. Network brokers balancing cultures, transaction effectiveness and costs, trust, and so forth, may have a similar experience.

Next time: Notes on the practice of innovation and technology commercialization blog will be on vacation during August, and will return in September. Blog topics for the rest of this year will include how to create effective support ecosystems for technology transfer and commercialization in developing countries, agile commercialization systems, slow systems, and re-usable learning objects for technology transfer and commercialization.


The Rainforest Revolution: T2’s weekly newsletter

Every week T2 finds the most interesting, relevant articles on ecosystem creation and compiles them in an email newsletter. Check out this week’s here.

If you’d like to get emailed these weekly, sign up on the T2 website here.


The 5 Rules for Silicon Valley Success That Can Work Anywhere

Victor’s Latest piece for Entrepreneur 

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It doesn’t matter where you are or what kind of business you’re starting, you can learn to be a better entrepreneur by looking at what makes Silicon Valley tick. Even if you own a small neighborhood business, the ability to innovate, adapt and grow is crucial to keeping your company alive. What looks like a sustainable business one day can quickly become obsolete the next. I’ve seen this happen too many times over the years.

How do entrepreneurs in Silicon Valley adapt? By staying flexible. That flexibility is maintained through a set of unwritten rules about how people interact with one another. These rules form an invisible social contract that supports entrepreneurs as they innovate and adjust to the ever-changing marketplace.

Read more: http://www.entrepreneur.com/article/227465#ixzz2aSWALPNo


The full 33voices interview

The full 33voices interview with Victor, being featured on the main page this weekend.

And a short clip of it.

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Three Critical Innovation Roles: Broker, Role Model, Risk-Taker

Henry Doss’ latest Forbes article:

Send lawyers, guns and money . . . to get me out of this.

Warren Zevon

When the mythical narrator in the above-quoted Warren Zevon tune found himself  in a bit of trouble, he knew he needed three things:  “lawyers, guns and money.”   Presumably, whatever the problem or scale of the trouble, the combination of these three things would be a likely solution.

A picture taken on November 15, 2012 shows an ...

If you are faced with understanding, building, or nurturing a culture of innovation in your organization, you may be looking for a similar combination of resources that can be a total solution . . . sort of the “lawyers, guns and money” approach to innovation challenges.  One place to start looking for this answer is in the informal roles that often serve as the unseen engine of innovation cultures:  Brokers, Role Models and Risk-takers.  Where you find these functions or roles being filled,  you’ll find innovative cultural states; where these functions are not being filled, you’ll will find a relatively bland, safe and predictable organizational dynamic.

 

 

Innovation is a powerful engine, fueled by brokers, role models and risk-takers.

 

Read the article here.


Victor Hwang – Achieving Hyper Growth

Victor Hwang – Achieving Hyper Growth

A short radio clip on growing startups from 33voices


Victor to keynote Bright Buffalo Niagara, Western New York’s premier venture forum

Bright Buffalo Niagara seeks company presenters for fall venture forum

By Kerry Jones Waring

Release Date: July 18, 2013

“Bright Buffalo Niagara helps high-tech companies grow while building our business environment to be increasingly fertile for new ventures.”
Marnie LaVigne, associate vice president for economic development
University at Buffalo

BUFFALO, N.Y. – Bright Buffalo Niagara, Western New York’s premier venture forum, is accepting applications from early-stage high-tech companies that wish to present at the annual entrepreneur showcase on Sept. 30 and Oct. 1.

Companies interested in raising capital to grow their venture may register and submit an application at www.BrightBuffaloNiagara.com. A new partnership with Buffalo’s upcoming international business plan competition will offer extra incentive for local entrepreneurs to participate.

The Bright Buffalo Niagara venture forum will be held at Statler City in downtown Buffalo and feature the opportunity for presenting companies to pitch their business plan in brief to investors and business leaders from across the region. Participants will be given either a 10-minute or one-minute slot to present to a panel of angel and venture capital investors.

 

Continue reading here.