You Manage 60 People, On Average

March 04, 2013

Working with a client recently, a senior R&D leader was asked how many people in the company report to her. She answered 20. On an organization chart, she’d be right. But in the innovation world, the correct answer is close to 60.

There’s a critical difference between the organizational boundary of the firm—those staff and contractors that directly report to a manager—and the knowledge boundary of the firm, the semi-formal network of consultants, advisors, suppliers, and others who regularly supply innovation and knowledge into an organization.

We’ve found many leaders at innovative companies understate the span of their reporting structure. 60 employees, contractors, consultants, etc., is emerging as about the right number in larger companies.

The scale of the number matters because if you don’t know the extent of your knowledge network, you certainly can’t be optimizing the flow of information and knowledge across these contact nodes.

Smarter processes require assessing and exploiting those sources of knowledge and innovation within one’s network. Some contacts are Bashful Benevolents, knowledge suppliers who take and receive little credit, often intrinsically motivated by the pursuit of science and engineering. Others seek ready recognition even before an idea if fully fleshed out. Call them the Bullhorn Braggarts. The cost of keeping them in the herd may be greater than the value of their contributions.

To start optimizing your knowledge boundary, ask three questions:

  1. How many employees, contractors, consultants, and other advisors formally report/contracted with you and your direct reports in the past year?
  2. Which of these individuals worked on the greatest number of projects that created valuable knowledge asset for the organization?
  3. How often do contractors and consultants outside your organization work together on other projects and offer possibly redundant information?

The popularity of Open Innovation is leading to a separately defined function within the company. However, research and development (R&D) groups have been working with external partners and experts for decades. The one mistake that many R&D groups are making is not explaining how they are already at the vanguard of open innovation.  (you’re leaving value on the table).

A typical senior research manager has more than twice as many external collaborations teams working for them than internal reports. The external teams may include suppliers, academics, or consultants. Regardless of the type of relationships R&D professionals have, they remain the gatekeepers for the majority of the company’s open innovation activities.



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