Structural Folds and Innovation Dynamics

A recent article called Structural Folds: Generative Disruption in Overlapping Groups , by Balazs Vedres and David Stark is chock full of important research on innovation, collaboration and networks.

Vedres and Stark studied relationships among businesses in Hungary over the last 20 years. In contrast to Ron Burt’s concept of structural holes, they explore the concept of structural folds.

The concept of structural holes describes how individuals who span two different clusters or groups can become powerful by brokering the relationships and information flow across the clusters. Managers who span structural holes often move quickly up the corporate ladder.

Using the concept of structural folds, Vedres and Stark argue that moving ideas from one cluster or group to another is not enough to spawn innovation. Groups need to overlap. They need to recombine and do something together to generate innovation that leads to growth. However, this overlap is often disruptive, and can lead to disintegration of the groups.

The trick is to move to another level, looking at the whole set of groups as part of a larger network. Then you can see that the larger network has some stability over time – individuals or businesses continue to be part of this larger network, but are recombining with others in different configurations over time. This looks disruptive, but is actually the source of much creativity and growth. The larger network, meanwhile builds a culture of collaboration that encourages and supports even more collaboration.

These ideas are very compatible with our Smart Network model. A Smart Network has a core of overlapping clusters. Clusters could be different organizational types (such as entrepreneurs, non-profits and foundations), different geographies, different business sectors, etc. In most Smart Networks, people are recombining through self-organized, collaborative projects. Vedres and Stark remind us that it’s important that these projects contain at least several people who have worked together before, but that including new faces from different clusters is likely to increase the success and growth of the project.