Networked corporations can also have a hard time picking one enemy. At Chase Manhattan, for example, in the 1980s there remained a lack of strategic focus, despite persistent attempts to
refocus the business. This led one executive to remark, "We have a strategy and it is to be the best in every business we decide to be in—and we have decided to be in them all." (Subsequently, the intensification of market pressures and the merger with Chemical Bank in the early 1990s has triggered a more performance-focused culture.) In business situations when there is no clear and present danger of competition, then this characteristic of the networked organization doesn't really pose a problem. But these kinds of situations, truthfully, are few and far between.
Which leads us to the culture in its negative form. Like all the other cultures in the Double S Cube, the negative form of a culture exhibits the same kinds of behaviors as the positive—but to the detriment of the organization. Thus, a positively networked organization emphasizes kindness, which leads to tolerance and patience, which leads to loyalty—which can be a competitive advantage. In the negative form, the tolerance and patience around poor performance are so excessive that strong performers feel resentment and often burn out, since they are carrying the load. In the end, tolerance of poor performance is in itself inequitable and bad for the whole company. This dynamic can be seen in high relief in family-run firms, where Uncle George is drawing the chairman's salary and doing close to nothing, while the nonfamily employees work twice as hard and earn half as much. (At a mercenary firm. Uncle George would be gently but firmly helped out the door.)
But perhaps the most notable excess in the negatively networked culture is a result of high sociability veering into high politicking. Friendships become exclusive, cliques form. Information gets shared, but selectively. The currency of the office becomes gossip—people seek out others' secrets and then trade them. People who know the most secrets and trade them the most cleverly are at the top of the hierarchy, be it formal or informal. If you are really smart, you receive all the critical E-mails and then forward them to the right people—people
who will forward important E-mails to you when the opportunity arises.
Bring two jackets to work —so goes the rule. What it means is: In this environment, appear to be everywhere. You hang one jacket over the chair in a conference room and the other in front of your computer. No one knows exactly where you are or what you are doing. You save your best information for the boss. And when you come to talk about a poor performer, your comments begin, "Poor Bill, he means well."
If this culture sounds Machiavellian, it's because the negative networked organization can lean that way. Little of importance happens at meetings; that's because everything meaningful has happened ahead of time. We consulted with a negatively networked international media company involved in the production, distribution, and broadcasting of audiovisual entertainment that went to elaborate lengths to conduct "inclusive meetings." People who were not present because they were on the road or working in regional office were linked into meetings by video and telephone. These sessions were long and boring. The senior manager running them had conducted all important business beforehand, telling his insiders what to say and when and only giving lip service to those who bothered to raise dissenting views or venture opinions. And after the meetings ended, everyone broke off into cliques to discuss how ill informed other participants were. And those off-site would hit the phones to ferret out what was really going to happen.
In this environment, no one wants to stand out —Keep your head down , as the rule says. Risk avoidance becomes a critical career management skill. People are afraid, frankly, of being knifed in the back by someone from another clique. In the worst- case scenario, people in this form act like penguins. No one wants to be the bird at the edge of the flock, for fear of getting pushed off the ice floe. 7
Interestingly, the facade of high sociability often remains in
these organizations. There are still parties and softball teams. People still joke in the corridors and throw farewell gatherings for departing colleagues. But everything that matters—in terms of business—happens behind closed doors, between "friends."
There are few competitive situations in which a negatively networked culture makes sense. (This is true, as well, for the other negative forms.) In fact, it can be damaging. Consider a case from the old Philips Electronics, before CEO Jan Timmer transformed the organization.
Philips is one of the world's largest electronics companies— and Europe's last chance in an increasingly global business. Its sales turnover in 1997 was around $40 billion, and it employed over 260,000 people in sixty countries. It produces everything from CDs (with which it saved the record industry in the early '80s) to lightbulbs, sophisticated medical equipment, and security systems. It is also a major player in the semiconductor business. Philips is a massive corporation with huge organizational issues concerning the coordination of its considerable resources. For most of the 1980s it had a matrix structure, divided between product groups and national organizations. So if you sold lighting equipment in Italy, you reported to the head of the product division based in Eindhoven, the Netherlands, and to a national country boss in Italy. This design was meant to encourage flexibility so that products could be customized for local market variations. But in a negatively networked culture cliques soon formed and a structure that was meant to produce innovation and flexibility became a vehicle for hiding accountabilities and shuffling "blame" around the organization. To your product division boss you blamed the national organization and to the country boss you hinted darkly at the limitations of the product division, resulting in a recipe for inaction and negative politics. It also made financial accountability very difficult to establish. As tough CEO Timmer grappled with these problems he changed the structure by weakening the matrix in favor of the product divisions—making responsibilities and accountabilities
much clearer. At the same time he embarked upon a change program designed to kill off symptoms of negative networks and return Philips to sustainable profitability, leveraging its innovative R and D. It remains to be seen quite how successful Timmer was as his successor. Cor Boonstra, continues the change process at Philips.
LEADERSHIP IN THE NETWORKED CULTURE
Be it positive or negative, the networked culture has significant implications for leadership. Who leads these types of cultures?
In its positive form, the culture is usually led by an individual with superb interpersonal skills. These leaders not only know everyone, but they have a keen awareness of status hierarchies; they know who is important, regardless of title. The former president of Heineken, Ray van Schaik, for example, was a master at working a room. He talked to everyone—in exactly the right order. That didn't mean he spoke to the most senior manager first and then down the line. It meant he knew if an individual was feeling bruised because of being passed over for a recent promotion—and that was whom he approached first. He also knew exactly what to say, how to soothe anger and smooth differences. He was, like the archetypal leaders of this form, a great politician. This is not meant critically. Politicians have a way of picking up on the subtleties of ambiance and atmosphere and correcting them if need be. They know how to lose battles so as to win the war.
To use a term that has become increasingly well known and accepted of late, these leaders have high emotional intelligence. 8 They understand themselves, and they seek to understand what makes others act the way they do—what drives them. Put more academically, they have complex motivational models: They believe people do things for many different reasons, and they adjust their own behavior accordingly. In other words, they
motivate one employee by giving him lots of encouragement and autonomy, and another with close supervision. (By contrast, a mercenary leader generally believes people are motivated by fear and greed and motivates by power and money) In one sense, the leaders of positively networked organizations are company psychologists. They see their employees as individuals and treat them as such.
Another good example of an effective leadership style in a network organization is to be found in the popular, even charismatic, figure of Greg Dyke, chairman and CEO of Pearson Television. Pearson Television has a turnover of about $600 million, is one of the world's largest producers of entertainment programming, and has recently completed the acquisition of All American, the owners of Baywatch. The culture is classically networked—friendly, apparently open, with lots of talk, low tolerance of bureaucracy, and a willingness to fix things around the formal system. As well as the kind of conspicuously creative executives you find in the television companies, there are also highly significant support functions—finance, business affairs, HR—which also need to be creative and to be effectively led.
How does Greg Dyke lead this heterogeneous bunch in what is an increasingly competitive business? The first thing to notice is his effective use of interpersonal skills. But they are customized for the culture of an entertainment business, so there is much use of humor, usually to encourage people but just occasionally with a slight edge. Meetings are conspicuously fun with lots of laughter as well as lots of work. His skills are not the polished devices of the diplomat but are nonetheless based on a shrewd reading of social situations. He collects much soft data about people's motives, capabilities, and values. If he is late for meetings, there is almost a pause while people await his arrival; when he does arrive, the pace picks up quickly and people join in willingly. Finally, and perhaps most importantly, Greg Dyke skillfully manages social distance—that is to say, he is good at getting close to people as a friend as well as being able to dis-
tance himself as a boss. He is also highly dismissive of those who parade their status differences. This competence creates an atmosphere in which people are encouraged—feel empowered—to raise critical issues and to question accepted strategies. It becomes easy to be constructively critical and to innovate without fear of failure. The sense of fun and stimulation this leadership style creates is almost palpable.
Indeed, in his previous job as boss of London Weekend Television Dyke hosted a series of breakfast meetings at which visiting consultants, business academics, and executives from other organizations were exposed to questioning from his top team. The atmosphere was great—filled with humor, exuberance, and critical insights. But of course there are costs. What would happen to Pearson Television if he left? Who could fill the energy gap? Will his friendships with key executives make it difficult to make tough decisions about bringing new people in at the top? For now, his leadership style fits the character of a networked business as he drives it forward into global markets.