"In most companies, the formal organization is still seen as the right approach, the default structure. Especially if you have been trained in the hard disciplines (finance, technology, or operations management) as so many senior leaders have, you tend to work most naturally through tangibles like job descriptions, organization charts, process flows, scorecards, and physical structures. There is nothing wrong in that. However, you may be less comfortable dealing with the fuzzier aspects of an organization (informal networks, cultural norms, emotional realities, and peer pressure) even if you recognize their importance. Leading outside the lines is harder than managing within the formal lines, partly because that territory is less well defined, less studied, and less written about.

Even so, the formal and informal organizations invariably find some way to coexist. For years the informal typically prevailed mostly in small organizations or "skunk works," while in larger organizations the formal tended to prevail. This will not be true much longer. In the current business environment — characterized by a rapid rate of change, increasing globalization, and the rise of Web-based social networks — more and more companies are finding that the best way to create lasting value is by nurturing all kinds of informal and non-hierarchical initiatives rather than by relying so heavily on formal top-down rules of engagement.

To make a shift toward the informal is not easy. It is, however, an effort that is really worth making. Increasingly, those companies that can mobilize the informal organization as effectively as they manage the formal — that is, integrate the two and achieve a balance of complementary benefits — are the companies that can create a real and sustainable competitive advantage. "The best of both" is the name of the game now."