Edgeware - Principles

Complexity theorist Ralph Stacey points out that every organization actually consists of two organizations: the legitimate and shadow systems. Everyone in an organization is part of both. The legitimate system consists of the formal hierarchy, rules and communications patterns in the organization. The shadow organization lies behind the scenes. It consists of hallway conversation, the grapevine, the rumor mill and the informal procedures for getting things done. Most traditional management theory either ignores the shadow system, or speaks of it as something leaders must battle against (as in, “overcome resistance to change” – it’s that military metaphor again).

Stacey further points out that because the shadow system harbors such diversity of thought and approach, it is often the place where much of the creativity resides within an organization. While the legitimate system is often focused on procedures, routines and the like, the shadow system has few rules and constraints. The diversity, tension and paradox of these two organizations that coexist within one can be a great source of innovation if leaders could just learn to listen to, rather than battle against, the shadow.

One health care executive entered the shadow system when he joined a group of doctors and nurses talking in the cafeteria one day. He was so fascinated by their discussion of improving the process for delivering anti-coagulants, he soon became part of this underground ad-hoc team. In doing so, he quietly sidestepped the difficult, formal process for approving quality improvement projects instituted by the hospital. The resulting work was so successful, it led to a close re-examination of the approval process that had been unintentionally discouraging such innovation.

When we see our organizations as CASs, we realize that the shadow system is just a natural part of the larger system. It is simply more interconnections among agents, often stronger interconnections than those in the legitimate system. Leaders who lead from an understanding of CASs, will not have a need to discredit, agonize over, or combat the shadow systems in their organizations. Rather, they will recognize and listen to the shadow organization, using the interconnections it represents as another avenue for tuning information flow, diversity of opinion, anxiety, and power differential.

"When the legitimate and shadow system operate against each other, an organization is in the phase transition at the edge of chaos; it is only here that it is changeable, because it is only here that it is capable of double-loop learning …. When an organization is in this state, at least some of its members play by engaging in exploratory dialogue, utilizing analogies and metaphors, and employing self-reflection to develop new knowledge …. If this change is then amplified throughout the organization to become the dominant schema of the organization, potential innovation has occurred."
–Stacey