Many organizational deficiencies are compensated by the informal organization, which works intensively to make the connections across the boundaries of the institutional reality. The formal and the informal organizations need each other, and traditionally the later is faster than the first. Many of the problems faced by organizations are addressed by these two types of arrangements. A very complex design or structuring question is if we can keep untouch the basic structure of an organization and resolve or fix the problems by strengthening the informal organization? The answer is that not quite.
In complex institutional systems the informal organization is groaning and overloaded. As the reality grows more complex, not to say problematic, the informal organization can not perform well on a voluntary basis all the tasks of integration that the hierarchy cannot provide. This is an empirical proposition: THE INFORMAL ORGANIZATION WILL ALWAYS HIT A LIMIT BECAUSE THE QUANTITY OF INTEGRATION, INFORMATION AND KNOWLEDGE TRANSFER NEEDED ALWAYS WILL EXCEED WHAT WE CAN EXPECT PEOPLE TO DO ON THE BASIS OF GOODWILL. In a complex organizational system the people who cross boundaries to serve the needs of the whole system are not necessarily rewarded for doing so.
When the interactions across boundaries of the organization involve the transfer of not just information and casual help but complex and expressive components and services, generosity is not enough. For this to happen, that is, people sharing substantial resources to other projects, these have to be directly in service of measurable output they are supposed to provide.
In a market economy, both outside and inside of organization, each project calculates whether the goods and services it provides are sufficiently valued by external or internal customers to make it worthwhile to go on providing them. Of course, in the short run there is always room for heroic behavior but in the short-run members can always invest in the future capabilities to serve other sectors, organizations or units and calculated the benefits of such investments. Networks of generosity are always vague, and they do not lead to sustain action or policy-making of how each sector, organization and unit can develop additional capabilities and contribute to the whole economic or societal system. If policy-makers want any part of the economic system to respond to their request they have to take into consideration these dynamics. If a network of skilled capabilities and expertise is required in a flexible or agile organizational system it is necessary to provide self-regulating and sustained relationships in order to make the system respond cost –effectively to the needs of external and internal customers.
All the things that build a stronger sense of civic virtue, including rights, equality, democratic participation, mutuality and win-win experiences also create a stronger principled networks and alliances. The voluntary networks, outside and inside, composed of intelligent organizations are driven by generosity, barter and economic benefit. If the culture of civic virtue is strong, both outside and inside organizations, people will be happy to help each other in a reasonable way, without quickly sending an invoice… As members of a community they healthy raise their recognition by being generous, and it is always good business to contribute to the strength of the whole.
After all, what leaders are called to do upon in a chaotic world is to shape and to provide meaning to their organization through profound concepts and ideas that will be put into action, not through elaborated rules, regulation and structures, but by wisdom and unity of purpose.
Copyright 2008 QBS, Inc.