Performance improves when the enemy of an enemy is a friend

New research finds that balanced professional networks are more important than individual talent when it comes to high-risk decision making.

The study, published in Nature Communications, is the first longitudinal study to prove several key tenants of structural balance theory (SBT), which provides an analytical framework to characterize how relationships change over time. SBT consists of four primary rules for relationships among individuals:

A friend of a friend is a friend

A friend of an enemy is an enemy

An enemy of an enemy is a friend

An enemy of a friend is an enemy

When all these conditions are met, a network is said to be balanced. Through a two-year study of day traders, the researchers found that: (A) workers gravitate toward a state of balance in their relationships; and (B) performance improves when there is a high level of balance.

What the researchers say: "This data shows that companies reap the benefits when conflict among employees is reduced," said the lead author. "There are certain types of conflict that can't resolve themselves. This work can help managers identify those conflicts and actively step in to resolve them, ultimately leading to better performance."

For two years researchers analyzed day traders' instant messages to determine the relationships among traders and compared those relationships to performance data for individual traders, controlling for factors including market volatility and workdays. They found that the traders with the highest level of balance in their networks also made the best trades, regardless of the objective level of talent of any individual trader.

"We suspect that conflict in networks monopolizes some portion of workers' mental energy," said the researchers. "Resolving that conflict frees up mental energy to make better decisions and perform at a higher level."

The findings of this study apply to individuals who engage in extensive high-risk decision making, particularly in situations where polarization is common, such as politics or in the military.

So, what? Our own research has found that the same rules hold in other work situations, such as creative and innovative endeavors. We also found that although balance was beneficial and led to higher performance among individuals and teams, like the high performing teams I spoke of earlier, it is actually quite rare in the modern workplace. This is due to the rapidity of change, office layouts such as hot desking where people are isolated from other team members and increasing internal competition.