One of the things that I’m known to say is this: "The informal organisation is much stronger than the formal one".

Sometimes when I say this people nod wholeheartedly, but others look puzzled. The ones who look puzzled are normally near the bottom of the formal organisation, people further up the organisation seem to understand this implicitly. Karen Stephenson (an expert in this area) quotes a Four Star General as saying "I can lead men and women into battle but I’m a prisoner of war in my own organisation" and I think that many senior people in organisations feel the same way.

Karen codifies these informal organisation structures as knowledge networks and trust networks. She then goes on to classify the different types of network:

Six Varieties of Knowledge Networks

In any culture, says Karen Stephenson, there are at least six core layers of knowledge, each with its own informal network of people exchanging conversation. Everybody moves in all the networks, but different people play different roles in each; a hub in one may be a gatekeeper in another. The questions listed here are not the precise questions used in surveys. These vary on the basis of the needs of each workplace and other research considerations (“Don’t try this at home,” says Professor Stephenson), but they show the basic building blocks of an organization’s cultural makeup.

1. The Work Network. (With whom do you exchange information as part of your daily work routines?) The everyday contacts of routinized operations represent the habitual, mundane “resting pulse” of a culture. “The functions and dysfunctions; the favors and flaws always become evident here,” says Professor Stephenson.

2. The Social Network. (With whom do you “check in,” inside and outside the office, to find out what is going on?) This is important primarily as an indicator of the trust within a culture. Healthy organizations are those whose numbers fall within a normative range, with enough social “tensile strength” to withstand stress and uncertainty, but not so much that they are overdemanding of people’s personal time and invested social capital.

3. The Innovation Network. (With whom do you collaborate or kick around new ideas?) There is a guilelessness and childlike wonderment to conversations conducted in this network, as people talk openly about their perceptions, ideas, and experiments. For instance, “Why do we use four separate assembly lines where three would do?” Or, “Hey, let’s try it and see what happens!” Key people in this network take a dim view of tradition and may clash with the keepers of corporate lore and expertise, dismissing them as relics.

4. The Expert Knowledge Network. (To whom do you turn for expertise or advice?) Organizations have core networks whose key members hold the critical and established, yet tacit, knowledge of the enterprise. Like the Coca-Cola formula, this kind of knowledge is frequently kept secret. Key people in this network are often threatened by innovation; they’re likely to clash with innovators and think of them as “undisciplined.”

5. The Career Guidance or Strategic Network. (Whom do you go to for advice about the future?) If people tend to rely on others in the same company for mentoring and career guidance, then that in itself indicates a high level of trust. This network often directly influences corporate strategy; decisions about careers and strategic moves, after all, are both focused on the future.

6. The Learning Network. (Whom do you work with to improve existing processes or methods?) Key people in this network may end up as bridges between hubs in the expert and innovation networks, translating between the old guard and the new. Since most people are afraid of genuine change, this network tends to lie dormant until the change awakens a renewed sense of trust. “It takes a tough kind of love,” says Professor Stephenson, “to entrust people to tell you what they know about your established habits, rules, and practices.”

From Karen Stephenson’s Quantum Theory of Trust

There’s a PDF of this report available here

She also states that 80% of the knowledge in the organisation resides in these knowledge networks. That’s a powerful message for people who spend all of there time driving organisation change through the organisation hierarchy. It’s also a powerful message for those of us who live inside the networks and ignore their effect upon us and our influence over them.

If you prefer to watch there are a number of videos here.