The author’s talk about organizations having two networks, a formal network based on the rules and regulations, and an informal network based on trusth that gets things done.  The author’s argue both are necessary for a healthy organization.

I couldn’t help thinking of the housing financial meltdown here in 2008.  It seems that the informal networks ran over the formal networks, which destroyed checks and balances.  When this caught up with the market, investors were stuck.  They couldn’t trust anyone at the investment banks.  Since the informal network is based on trust, they died, and the financial markets collapsed.  The injection of money from TARP didn’t accomplish anything.  The real problem was trust, which money doesn’t fix.  Likewise, the money injection would be exactly what the formal organization would propose because that is what they control.  Washington is still struggling to reestablish trust – the balance between reporting rules and restrictions on conflicts of interest (proprietary trading).  If the rules are too restrictive, then everyone learns to work around them, and tries to capture their regulators.