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Good connections: Robert Wood on utilising a network of social relationships

June 19, 2018
Business strategy

Robert Wood is a professor and AGSM Scholar at UNSW Business School. His research includes problem solving and learning, unconscious bias, cognitive functions, leadership and diversity. Wood spoke to Julian Lorkin for BusinessThink.

An edited transcript of the conversation follows.

BusinessThink: What is Chinese guanxi, and what does your research show?

Robert Wood: Research in the Western tradition typically talks about human capital, which is your individual capability to do the job – what you know and your capabilities.

And that – in the past two or three decades – has been supplemented with the concept of social capital, which is broadly defined as who you know. And who you know is sort of then brought down to what information do they give you, what support, what resources can they bring, what ideas can they bring.

The idea is that people who are broadly connected have a more diverse set of ideas; they have more information; and they potentially can mobilise more support. And that takes us outside the traditional hierarchy of this [being] just a set of human capital. They've got the technical skills or the leadership skills for this role.

And so that's been fairly well established in the Western tradition, that people who have social capital are more likely to be successful, they're more likely to be promoted, and successful in a wide variety of ways. And that's not just in work organisations; it's community organisations and the like.

What we have discovered in Western research is that there's sort of mixed reactions. Some people see it as politics and some people don't like networking when it starts being done in a deliberative way. But the evidence is however you do it, it does make a difference.

'Some people don’t like networking when it starts being done in a deliberative way ... [but] it does make a difference'


Now, when we come into the Chinese idea of the guanxi, then it's slightly different because there the social capital is not uniquely work-related; it's very personal. It's attached to family and tradition and cultural groups. And this is also true in Western traditions, but it's more uniquely utilised in Chinese organisations.

Now, in the research we did, what we discovered, [was that] in China the social capital tied up in guanxi was much more potent in terms of people being promoted than their human capital. Their particular technical capabilities for the job were less important than their guanxi, their connectedness, their social facilities.

Now, that doesn't mean you could be incompetent. I mean, there are limits to this. But we're talking about quite often promotions are about relatively fine gradations, particularly when you get to the middle management level.

BusinessThink: What really are the implications for anybody in the workforce, particularly a middle manager?

Wood: I think they're pretty profound. When I first started teaching in MBA programs, it was all about technical skills, which is really about human capital with some social skills around leadership and the like. But I think the way MBAs have changed, and particularly here at the AGSM, we're much more about building the social capital capability of students.

It's not an either/or here; it's definitely an and. You need the technical capability, you need to be able to read a balance sheet, you need to be able to talk about it in persuasive ways with your staff, or a marketing plan. But equally, you need connectedness.

And that connectedness ties quite nicely to this whole idea of diversity, because really what you have with a diverse network is a diverse source of ideas – lots of uniqueness, lots of potential support. The big challenge for our alumni is working out where to build that network.

I recently worked with a multinational company, Amcor, and the CEO at the time made a very clear point to the graduates that you have to move around the world. You have to build networks. It was a multinational company; it was in South America, America, the UK, Europe, Australia. And he said if you get trapped in one location then you'll never make it to the top. You need to build connections quite broadly around the world. So build social capital so that you can facilitate the relationships.

And it goes beyond that into broader areas – suppliers and connections and the like. And I think the degree to which our alumni are thinking about their careers, they should be thinking not just about their career within a firm and building their social capital for the role, but what's my broader social capital in the firm, and then what's my social capital beyond that?

BusinessThink: Isn't this hard to measure? After all, we're used to setting KPIs with very neatly defined targets with how many widgets you produce, for example. It's very hard to measure some of this social capital. Is there any way of doing that, other than just talking to someone and finding out whether they're a nice person who talks to loads of people?

Wood: It's a really good question. I fear the answer may be no. But that's OK. Like a lot of these things it would be really nice [to be able] to say, "Here's a formula. Go and do it." But it's like leadership; there are lots of rules and guidelines but there's no simple formula.

If I was an AGSM alumni I'd think about it strategically – who are my key suppliers? Who are my competitors? Who are our major market? Knowing the market. Who are clear influencers and thought leaders in the industry? There are categories of people that have potential value.

'It’s like leadership; there are lots of rules and guidelines but there’s no simple formula'


And look, can I just say I wouldn't approach this in a purely instrumental way – what are they going to do for me? You need to approach it with a genuine curiosity – what can I learn and gain? – because quite often the ideas, the information and the support come from a sense of being authentic, being genuinely curious, and building a relationship with people that's based on shared ideas, not what you can  do for me. I mean, that's a very instrumental view of the world and I don't think it's one that our alumni really seek to practise. Some may, but I don't think that's common.

BusinessThink: But it sounds as if you're talking about a different way of working, a move away from the traditional hierarchical structure where you have the leader on top who will tell people to achieve certain targets, to a flat management structure where you have leaders almost working with people at the same point as they've got that whole-world connectedness as well, so everybody's part of a collegiate team. That's very difficult to achieve.

Wood: It is, but it comes back to one of your earlier points. It's really about mindset. If I'm sitting in a meeting with fellow managers from different divisions, or if I'm sitting in a meeting with industry collaborators, do I see it as a competition for resources or a way to win, or do I see it as an opportunity to facilitate their performance and build my social capability?

If you come in with the latter mindset, my guess is you'll usually get what you want, plus you get something else, which is this social capital pay-off. Many people go into these meetings with quite a combative or competitive mindset, or just to get the task done, and they don't recognise the facilitation capability-building process that they could engage in.

BusinessThink: Exactly. Quite often in the workplace it comes down to being nice to people and they'll help you out as well.

Wood: Absolutely. Be a decent human being and you'll go a long way.

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