Directorship networks and project management

Even though Brisbane is Australia’s 3rd largest city (with 1.6 million people), personal connections between board directors can be very close. This is no surprise to those familiar with Stanley Milgram’s “small world” proposition in the 1960’s that any two persons in the United States were connected by only six degrees of separation.

In The Tipping Point, Malcolm Gladwell emphasised the importance in society of connectors, people who know lots of other people.

Why do we need to be aware of these connections?

When working on any project it is always important to know who is interested in the project outcome and, even more importantly, who can influence the project (eg suspend or stop it, change its scope or available resources) without your knowledge.

Unknown stakeholders can affect your plans.

I'm not suggesting that directors  don't act independently but it is important to understand relationships.

In the corporate setting, you need to be aware of related business units and the board of directors of the client as well as shareholders, people connected with suppliers and even industry bodies, consumer groups, local communities, unions and government. It is important to know company connectors: especially directors or employees of a client who have interlocking connections with other companies or organisations.

Stakeholder management can help you ensure that your project is properly resourced and successfully completed. You need to identify and gather information on stakeholders so that you can predict their response to your project.

Two recent articles looked at the degrees of separation between directors in Australia and Brisbane respectively.

In Degrees of Separation: Personal Connectedness and Social Capital in Directorship Networks (pdf) (2002) by Malcolm Alexander Gavin J. Nicholson Geoffrey C. Kiel, the authors examined these networks.

In their study they counted the total number of directors on the boards of Australia’s top 500 public companies. They then counted the number of directorships each of those persons held: 80% only held 1 position, 11.5% had 2 positions, 5.4% had 3 and 3.1% had 4 or more positions. It is the last group who are the networkers or “big linkers”.

They found that whilst there were more available board positions in the USA, the number of positions per person was similar in both countries. “The measure of connectedness among networked corporations were surprisingly similar in the two countries”.

The report found that the number of interlocking directors per networked corporation (multiple ties excluded) was 5.89 in Australia and 8.83 in the USA.

Brisbane’s Small World by Malcolm Alexander in Griffith Review Autumn 2004 focussed on Brisbane’s corporate community.

The study defined “network connectors” as those board members who hold joint memberships (or interlocking directorships) on 2 or more boards.

Networkers potentially join otherwise separated groups of board members into a network.

This report found that in Brisbane 314 connectors linked a population of 1930 board members on 253 boards with an average of 4.68 degrees of separation. But the connection is principally through public sector advisory boards rather than through private companies; the connection is through the people not the boards.

The report found that the core of the network was 12 public boards which had the highest number of connections to other boards. These connectors are crucial to Brisbane’s community network.

For example, the recent Energex board changes caused an immediate domino effect through Brisbane’s corporate scene. (See this recent story from The Australian).

How do you collect such information? Ask people who know.

Also look at:

• annual reports
• news reports
• the internet
• newsletters/publications/databases
• the source of titles and qualifications

NOTE: I acknowledge Jeff Dutton's workshop for information on stakeholder management.
Bob Dick’s process for stakeholder analysis is worth reading.

Comments

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