Leveraging the Informal Organization Mobilizing Your Ad Hocracy

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Leveraging the Informal Organization
Mobilizing Your Ad Hocracy

• May 16, 2006

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Questions I Will Try to Answer

• What does it mean to balance the formal with
  the informal organization?
• How does this balance work at different levels of
  a company?
• What can you do to manage the informal?

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What Is Formal and Informal Organization?
FORMAL
INFORMAL

• Explicit strategies
• Boxes and lines organization charts and
  defined processes
• Incentive programs based on promotions and money

• Culture and values
• Teams and squiggly lines networks
• Motivation based on pride in the work itself

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The Balance Company Level

• FORMAL CONSTRUCT

• INFORMAL CONSTRUCT

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The Shifting Balance
START-UP STAGE(Mostly Informal)
CORPORATE STAGE(Mostly Formal)
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Customer Service Through Strategy and Culture
Strategy . . . to deliver industry-leading
performance. . . . two overarching initiatives
in 2005 . . . take us towards that goal Drive
top-line growth () improve operational
efficiencies. Nordstrom 2004 Annual
Report Culture Use good judgment in all
situations. Since 1901, Nordstrom has been
guided by its owners philosophy Offer the best
possible service, selection, quality and
value. From Nordstrom company handbook
and mission statement
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Elements of Enterprise Performance Success
STRATEGIC INTENT
Vision, Aspirations, Mission, and Strategies
Programs

• The Adhocracy
• Networks
• Small groups

Structures Forums
Processes
THE CULTURE Values, Norms, Beliefs, and
Behaviors
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Organization Through Structure and Culture

• A client example

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Probing the Adhocracy Insights for Leaders
Marketing Group at a Major Enterprise Software
Company

• This groups communication network is tightly
  organized around a few major nodes

• Disrupting this network arrangement could lead to
  lost information flows

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Probing the Adhocracy (Contd)
Finance Leaders Interactive Software Company

• An intense network reflecting a lack of proper
  structure and process

• Several leaders command respect from peers for
  their ability to work effectively on critical
  strategic initiatives

• This relatively balanced network actually
  indicates the absence of structure/process
  typical of many start-ups and smaller companies

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The Balance Working Group Level
FORMAL STRUCTURES
INFORMAL NETWORKS
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The Balance Individual Level

• INFORMAL PRIDE

FORMAL REWARDS
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The Pride vs. Money Tradeoff
Pride Is More Important Than Money (n644)
1.9N/A
Do Not Agree
Slightly orModeratelyAgree
Mostly or StronglyAgree
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Motivating with Pride in Difficult Times

• The GM Assembly Plant in Wilmington, Delaware
• 1991 GM decides to close the plant
• Ralph Hartings courageous response
• I will tell you what we can do about it
• We can make them feel really stupid!

The plant operates to this day as a top quartile
performer!
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Motivating the Front Line Through Pride
Organizational performance
Top Leaders
Pride-Building Capability
Alignment
Motivation
Front Line
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The Formal Aligns the Informal Motivates
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Driving Change Through the Informal System
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Organizing the Un-Organizable

• So what do I do to encourage informal leadership?
• Emphasize emotions
• Create a few meaningful themes
• Map the informal networks
• Seek out hubs and pride-builders
• Develop repeatable stories
• And never forget the motivational power of PRIDE
  IN THE WORK ITSELF!

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Concluding Observations
Tapping the adhocracy is increasingly essential
Striking the right balance between the formal and
informal is also key
Pride is an essential component of higher
retention
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Group Discussion
Starting Questions

• How might these ideas be useful in your business?
• What aspects of your companys adhocracy or
  informal organization are most important for
  business performance?
• Can you think of examples of pride builders in
  your organization?