Knowledge Generation: Informal vs Formal Networks

What are the advantages of formal vs. informal networks? Any way to have it both ways? Or is it an inevitable conflict?

I tried to tackle these question in class this week (yes, buried deep within the bowels of Blackboard never to see the light of day). I'm bringing the post out here (cut and paste magic) as I'm sure I'll be kicking around these ideas many times in my future. I think these questions are very important to the topic of knowledge generation, but my thoughts around them are very raw. Purely from personal experience, my impression is that informal networks which are formed organically tend to be the most innovative. Generally, folks who come together informally have some shared passion (but often NOT shared goals) and are highly motivated to discuss, share, and connect on solutions to their different (yet similar) individual needs / problems. This is not to say that I haven't experienced effective formal networks, but some of my best examples seem to be from the informal connections.

Thinking about the many open source software communities, there are many examples of organically grown informal networks that are highly effective, incredibly innovative, and deliver incredible products that must make Microsoft green with envy. For example, I am a big fan of the open source software Drupal, a content management system. I use it as my blogging platform and personal online space. The software was written (and is updated) by clusters of individuals whose interests intersected just enough to connect on solutions that satisfy their individual needs. This notion of individuals with similar (but not shared) needs intersecting is key. No one "told" people (or organized people) in the Drupal community what the overall goals for the project were. Each individual was not working toward a shared goal for Drupal development. Instead, a guy from an Internet radio station needed an way to upload audio, a girl from a community college needed to have a way to distribute lectures (... and so on) ... and suddenly (with the help of a host of other people with their own needs / problems) the Drupal audio module was created.

However, the problem for formal organizations that do have overall "organization" needs and goals is that these highly effective informal networks are created and sustained to satisfy individual goals and motivations and NOT some shared common goal. Herein lies the "collaboration" toward a common goal versus "connection" over shared individual interests difference. Unfortunately, informal networks tend to break down when pushed to "collaborate" on an externally mandated shared goal. Given the informal nature, there is no incentive to stick around (stay connected) when the group is no longer meeting your individual needs.

Again, this notion of individual needs, goals, and motivations seems to be key to effective knowledge sharing. It is one thing to have a pressing personal need that must be satisfied and quite another to have someone TELL YOU that you have a need that must be satisfied. However, that is the reality of formal teams where the goal is collaboration toward a common goal. "Someone" is typically in charge, the group is working toward some edict sent down from above, and this collective goal may or may not have anything to do with the individual goals and motivations of the participants. Therefore, it is very difficult to compare formal and informal knowledge networks or to try to make one look or act like the other.

While my perception is that it makes no sense to try to make a formal network act like an informal network (and vice versa), I do think it makes sense to foster both. Both have a purpose. For example, if Jane Doe and I both work for an insurance company with specific sales growth goals, but she is in charge of selling auto insurance and I am in charge of selling business insurance, she and I likely have completely separate production or sales goals. Hers is likely based on number of auto policies that are sold and mine is based on the number of bound business insurance contracts. However, our individual needs (to generate new customers) intersect and the situation is ripe to set up informal connections to share ideas on how to attract THE SAME customers. For example, being extremely bright people (EXTREMELY bright), Jane and I see how we can both increase our chances of meeting our individual sales goals if we work together to sell auto insurance to business insurance customers and to sell business insurance to auto policy holders, so we informally decide (over margaritas after work) to find ways to reach the same customers (such as making monthly joint sales calls to our prospective customers, or targeting certain businesses).

Therefore, in this example, both corporate and individual needs are present and I see a mix of formal and informal network connections making sense. The formal network is needed to drive attainment of overall corporate goals (such as a team put in place to develop a customer tracking database so that cross selling can occur), but it is also important to create a culture where informal network creation is fostered ... yes, I am advocating margaritas in the lunch room ... joking (sort of). Again, informal networks seem to work best in supporting areas where individual needs intersect. It is in the formal networks where common goals and strategies can be set and monitored, but it is within the networks of informal connections where the real magic seems to happen.