I came across an interesting article in the Mckinsey Quarterly today which argues that companies need to take the power behind informal networks and create formal networks. Their consultants state that:

- Most large corporations have dozens if not hundreds of informal networks, in which human nature, including self-interest, leads people to share ideas and collaborate.
- Informal networks are a powerful source of horizontal collaboration across thick silo walls, but as ad hoc structures their performance depends on serendipity and they can’t be managed.
- By creating formal networks, companies can harness the advantages of informal ones and give management much more control over networking across the organization.
- The steps needed to formalize a network include giving it a “leader,” focusing interactions in it on specific topics, and building an infrastructure that stimulates the ongoing exchange of ideas.

Whilst I agree wholeheartedly with the first three points above, it is point four where their findings seem to become unstuck. Have a look at the two images below. The first one illustrates a formal corporate structure versus an informal network operating within a company. The second image illustrates how Mckinsey visulaise a formal network structure operating. To me it looks like they are only slightly rejigging the corproate structure to create “formal networks.” This lacks creativity and in my mind doesn’t capture they true nature of how formal networks within a company can operate

Example of a corporate structure and informal networks operating within a company

Example of a formal corporate network

Have a look at the second image, what has really changed? This kind of structure is not new in corporates…Don’t you get the impression that they are trying to shoe-horn an informal network into a organisational structure?

I totally agree that companies need to be designed to harness the power and innovation inherent within both informal and formal networks but I believe it is wrong to be building formal networks around traditional business structures. Rather informal networks should be built around end goals which have been defined by end users. For example if a company wants to improve customer service then the formal network should be designed around achieving that goal. Formal networks should be fluid and dynamic in nature coming together, disbanding and reforming as and when required. We are doing a lot of work in the sphere and TomorrowToday’s organisational design team will be sharing their thoughts with you over the coming months.