The Hidden Shadow System in Your Company

Complexity Theory - The Shadow System

You have the official rules and processes, then you have what people actually do.

Does that sound like your job or your organization?


The Legitimate System Vs. The Shadow System

The Shadow SystemOrganizations need rules, They need the structure. It won’t survive long if it doesn’t have those. There is a need for processes to be in place for getting the work done. This is the legitimate formal system for doing work.

Within that, there will be a shadow system. There are going to be gaps in the standard processes that need to be filled in by innovative employees. There could be rules that don’t make any sense or hinder the progress of the employee and the employee develops ways around them.

You are always going to have a shadow system, in fact, you should rely on it to help improve your organization. I recall my days of manufacturing where they had detailed books on how to create each part made in the factory. Those books were sometimes modified because of the shadow system that cropped up. Employees found better ways to do things than the formal structure allowed or accounted for. Those better ways were embraced by bringing formality to them, they brought the shadow into the light.

How much this shadow system controls the organization and how big it is will determine how chaotic your workplace is. Trying to control that chaos with more and stricter rules could make this shadow system ignore all the rules. Inversely, eliminating the rules and processes will force the shadow system to grow and control the organization. This means that too much of a reliance on the shadow system or a shadow system that has to fill in the entire structure of the organization due to management negligence will create pure chaos.

It is not a bad thing to have a shadow system, but it shouldn’t remain in the shadows. It should also be balanced and kept in check.

…when the Legitimate and Shadow Systems are at a level of optimum interaction, an organisation can sit at the Edge of Chaos or be in a state of bounded instability. In this state the organisation hovers between equilibrium and chaos and is the ideal setting in order to promote change and maximise innovation and creativity – (Brown and Eisenhardt, 1997).


In Simple Terms

Complexity TheoryWhen I first moved to Northern New York, I noticed this trend among small restaurants that weren’t affiliated with large chains. You go to eat and have a great meal, you wanted to come back another day. The second time you go the meal was horrible. Thinking they had an off day, you go back a third time and the meal is great again. The fourth time you go and the meal is completely different yet again.

As it turns out, the meal was heavily influenced by whoever was cooking. The cooks were allowed to make the meals pretty much however they wanted. So when a different cook was in, the meal tasted different. Each cook followed their own recipe and there was a lack of consistency between the cooks. The organization either failed to provide or failed to enforce a consistent standard. Customers could only predict the quality or contents of their meal based on who was cooking that day. The shadow system controlled the restaurants, there was no balance.

I have ordered the same salads and received clearly different ingredients in the salad each time. It was made on the whims of the person preparing the salad. I hate black olives and I got a meal once that had black olives on it. I wasn’t expecting black olives. I was never served them before with a prior order of the exact same meal.

From a customer perspective, it makes it harder to know what I am getting before I buy. Each time I go it is a new restaurant. From a business perspective, they are wasting money on black olives I could have told them I didn’t want if I had known in advance. The frequent change-up of meals could also cause customers to be turned off and go elsewhere.


In Conclusion

Let your employees help your organization get better, make them a catalyst for positive change. If they express that a rule or process is hindering progress or just doesn’t make any sense – pay attention. Don’t just brush them off and ignore them, thinking you know better because you have that MBA and you know everything there is to know about plastic production, software engineering, or cooking.

On the flip side of that, don’t let the employees control things so much that each employee has developed their own way of doing things and you lack any consistency in the rules or processes. The key is to create a balance. Give employees enough room to innovate, but ensure there is enough structure to provide a consistent and reliable process to follow.



Brown, S., & Eisenhardt, K. (1997). The Art of Continuous Change: Linking Complexity Theory and Time-Paced Evolution in Relentlessly Shifting Organizations. Administrative Science Quarterly, 42(1), 1-34. doi:10.2307/2393807. Retrieved from (You can create a free account to view this research)


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