There are two sides to every organization, system, structure or society: the formal and the informal.
Let’s start with the formal side. When most people think about an organization, they think of the things they can see—the people, the concrete objects, the structure, the hierarchy, etc. When you think of a school, for example, you likely think of classrooms, students, teachers, principals. The formal side creates efficiency, communicates authority, and is often the only way to get a large amount of work done.
But now let’s look at the informal side. The informal side of an organization is all of the things you can’t see – the constellation of collaborations, relationships, and networks that grow organically. These are the things that often drive most systems, for example, how the people in the system informally collaborate, communicate, and interact to achieve their goals. In the school example, the informal side is represented by the relationship between the teachers and the principals, the cliques of students, the ways that everyone gets their work done outside of the formal processes and protocols.
Anyone who has been inside a formal organization or system (and who hasn’t been?) knows that they have limitations. In fact, the formal may even stand in the way of what we need to accomplish because it often limits innovation, imposes bureaucracy, and emphasizes rules and protocols over human connection.
However, what makes the informal side so powerful is that it often helps to compensate for the weaknesses of the formal. Some of the most powerful examples of this can be seen in the informal networks that transcend formal boundaries: the Underground Railroad, the back channels of lobbying and influence in the U.S. Congress, and the rumor mill at any middle school. All of these examples serve a need or achieve an outcome that no planned, formal structure could ever accomplish.
Similarly, CO-Fund has built its mission on solving a problem with the formal system. The U.S. financial aid system has grown out of a desire to “do good:” help students who can’t afford to go to college. And it has done that over and over. But its limitations are enormous, and as CO-Fund has smartly recognized, it leaves out low-income students who cannot make up the difference between the financial aid amount they receive and the true cost of going to college. In response, CO-Fund has created a way for students to use their informal networks to make up that difference and make college a reality.
The brilliance of CO-Fund lies in the fact that it saw a problem created by a formal system and created a simple way to compensate for it. Rather than accept that some students are just left out, it strives to use the informal organization and the generosity of others to give students a chance.
Amy Gallo is a writer, editor and business consultant. She is a mentor to Brown’s Starr Fellowship Program (Co-Fund’s Katie Goddard and Graciela Kincaid are 2010 Starr Fellows). Her writing on management issues appears on HarvardBusiness.org.