Tuesday Email: The Invisible Rules Running Your Firm

Happy Tuesday!

Every Tuesday I'd like to offer strategies for the week ahead and a thought to fuel your action.

We had just launched another client on our technology solution.

And we started with three missions. Missions were the workflows we automated for teams.

These missions were built to the firm's standard processes.

They worked and met the specifications. So we launched the missions to the firm.

On delivery, we got pings from multiple people wanting adjustments, tweaks.

Upon receiving these, we felt they were due to a product problem. Or a general resistance by the team.

But it wasn’t until just recently that I identified the root problem.

Each person in that firm had evolved past the firm's own documented processes. They had created their own workflow. And this workflow lived in their head, not in a process document. The processes they used were built on small workarounds built over months and years.

The document we used to build the missions was based on a ghost of what the team was really using.

The reality is that every firm operates on two systems simultaneously.

They have a legitimate system, which is the visible system. This includes SOPs, compliance manuals, CRM workflows, and onboarding checklists. It’s everything that is documented and how the firm feels things should be run to deliver the highest level of output.

The second system is the shadow system. And it’s the system that people actually act on. These are the informal workarounds. Separate spreadsheets. These are the habits that have evolved since the individual started the job and last read the SOPs.

The longer someone works in an organization, the more ingrained and robust the workarounds get.

And the challenge lies in the fact that they feel they are following the process, but the process has now evolved and lives in their heads, not in the documentation.

When a firm wants to change, scale, or automate, we target the legitimate systems. We add a new technology, update our SOPs, and add a new workflow. We roll out training. And then we wonder why it’s not gaining adoption.

The reason? The shadow system quietly takes control and routes around all that was created.

This doesn’t happen because people are trying to go against management or rebel against it.

It’s deeper than that. And it’s harder to fix.

Edgar Schein, who spent decades studying organizational culture at MIT, found that every firm operates on three levels.

The surface level is what you can see: your office layout, your tech stack, your brand, your observable rituals.

Below that is what people say they believe: your stated values, your mission, your publicly shared philosophy.

And at the bottom: completely invisible, rarely discussed, but driving almost all behavior, are basic underlying assumptions. The things people believe so deeply, so automatically, that they don't even know they believe them.

And it’s at the bottom where the real rules live.

Basic assumptions form through experience. When something works repeatedly, people stop questioning it. They become part of who they are, and it’s hard to put a finger on why.

What Schein found, which I think is so important for understanding why change is so hard, is that when a structural change inadvertently threatens a basic assumption, it doesn't create curiosity. It creates anxiety. Defensiveness. A biological drive to protect the mental model that has kept everything ordered and predictable. People don't fight the new process because they're stubborn. They fight it because their brains tell them something fundamental is under threat, and the only way to survive is to route around it.

It’s an invisible system that is fighting back. And as leaders, we tend to struggle with identifying what is actually happening.

This also shows up in a way that I deem to be the “unchallengeable excuse.” And this excuse is a root reason why change can be so difficult within an organization.

Chris Argyris, the organizational psychologist, studied something he called the difference between "espoused theory" and "theory-in-use." Espoused theory is what you say you do. Theory-in-use is what actually drives your behavior. And the gap between them is where most firm dysfunction lives.

An example Argyris provides is one many of us can likely relate to.

A senior advisor suddenly leaves the office. As they leave, they mention it is for a client emergency. Everyone nods, and nobody questions it. Clients come first, always.

At times, though, underneath this sequence could lie a real theory in use. That being said, the advisor was actually leaving the office to escape something uncomfortable. Maybe it was a meeting they didn’t want to have, or a task they didn’t want to execute.

A client visit is socially acceptable. And it is completely unchallengeable. You literally can’t argue with them that the client comes first.

We see this play out in many different ways in organizations. A leader's desire to adopt a new technology or incorporate a new process often gets pushback. Teams say they have had success doing things one way, and that this will hurt the client relationship. That they must put the client first, and they feel the other way is better.

These are hard to challenge statements. And they are the team members' deep-rooted beliefs and assumptions.

The espoused value of client service becomes a protective shield around a deeper resistance that nobody has to name.

And people aren’t being dishonest. They truly believe it. And do right by the clients.

It’s just that they have built this belief into an unassailable fortress that happens to keep disruption at bay.

The transition I want to suggest is this: stop being a traditional manager. Become an organizational archaeologist.

An archaeologist doesn't assume they know what's underground. They dig. They swipe away the dirt. They ask careful questions, observe closely, go deeper by asking more questions, and follow the evidence wherever it leads. They have reverence for what was actually built, not just what they expected to find.

That's what surfacing invisible rules requires.

Not better documentation.

Not more training.

Conversation. Observation. Shadow sessions where you actually watch how someone does their job, not how they describe it.

We can start doing this by following four simple steps:

• Map the disconnects: Where are the gaps between what you said you built and what's actually happening? A technology rollout that stalled. A process nobody follows consistently. Those gaps are the tells.

• Conduct a shadow system audit: Ask people how they actually do this. Not the official version — the real version. You'll find the spreadsheets. You'll find the workarounds. You'll find the ten small deviations from the SOP that add up to a completely different process.

• Dig into the basic underlying assumptions: What do people in your firm believe, at a foundational level, about client ownership? About who deserves advancement? What does "doing good work" actually mean? Until you understand those, you're treating symptoms.

• Reprogram the triggers and enablers: If you want collaborative behavior, the comp structure has to reward it. If you want candid feedback, you have to demonstrate, visibly and repeatedly, that candor is safe. The formal system has to align with what the shadow system is actually teaching people about what gets rewarded here.

The thing is, none of this is found in a management book. It’s found in being human. Being personable. Connecting.

As we continue to accelerate into a world where AI is impacting our day-to-day and our firms, this topic becomes even more necessary.

The desire and need to create automation and scale through AI will depend on a firm's ability to understand what is working in the shadows, not the SOPs.

If we want to gain adoption, we must better understand the way people work. Not to just automate what they are doing. But to holistically rethink how we work.

This understanding will empower us to create a new way to work with a better view into the shadow tendencies they create.

All with the desire to create meaningful impact. To empower our teams to serve clients more deeply and holistically.

The best is ahead!

-Matt