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Besides the flow of information through the standard channels, in every organization a flow of informal information also exists.
In an army as well as in business there are many invisible informal information channels which are important for the mutual understanding and co-operation. Informal contacts between colleagues are a countermeasure against the ubiquitous bureaucracy. When there is a positive atmosphere, employees often take the initiative to redress a situation.
In this way many mistakes are spontaneously fixed. Frictions and problems are quickly spotted and rectified.
Management should stimulate these informal communication channels because it is impossible to cover everything by means of procedures. Good managers understand this and will try to keep these channels open or even create them, like Montgomery did (see case The Phantom System).
Such informal communication channels perform even better when the focus and the strategic goals of the company are understood throughout the entire organization.
Case The Phantom System
General Montgomery, Supreme Commander of Eighth Army in North Africa during WW II (and later in Europe), received - like every Commander - the routine situation reports on a daily basis, which his staff prepared, next to those from the different units of his vast army.
But he did not want to only rely on these routine channels of information. Montgomery took the revolutionary step of establishing his "Phantom" system of liaison officers. These were carefully selected young soldiers chosen for their bravery, their initiative, their manners and their independence.
This corps d'te had unusual powers. They had carte blanche to travel anywhere and observe anything, but had no power of command. They were the eyes and the ears of the commander. Each morning they drove out to the farthermost parts of the front, using motorcycles, jeeps, or aircraft (Piper Cubs) and then returned to report directly to Montgomery late in the afternoon.
They just told him what they saw. In this way Montgomery, in addition to the routine daily reports from the different units, also received the latest first-hand eye witness view from the entire front.
Despite the special position of these young men there was never any friction between them and the units they visited, because of the manner in which Montgomery handled this group of liaison officers and the information they gathered.
A British Carton Cylinder Manufacturer
The sales director of a British manufacturer which made carton cylinders and 2 Way Radios for the protection and transportation of documents and was also specialized in manufacturing products like cigarette filters, carton cylinders for batteries and so on, instructed the drivers of his delivery trucks that when they delivered to customers they should watch to see if any trucks of competitors were also at the delivery yards of his customers.
They reported to him which competitors they saw and because of their friendly contacts built up with the customer's personnel over the years, they could sometimes even give him detailed information about what products were delivered. One day the board of directors discussed the outsourcing of their logistics to a professional trucking company.
The sales director protested vehemently against this decision because then he would lose his carefully developed eyes and ears. After explaining his motives the board withdrew their decision. To systematically obtain important information about the competition, this director had unwittingly created his own "Phantom" system, just like Montgomery did.