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The CEO as Spiritual Leader: Mastering Shadow Culture

Updated: Sep 19, 2023

"Uncertainty breeds contempt." ~ Dennis Gartman

The Problem: If there is uncertainty (or fear) in your company, then the persons or narratives which control this uncertainty will be the ones who control your company. Interestingly, you will note there are two forms of such control: (a) controlling the actual uncertainty (e.g., a client who may leave), and, (b) controlling the narrative around the uncertainty (e.g., how the CEO constructs the story of this).

Let's start much more concretely. How do you know you’ve lost the faith or attention of the troops as CEO? When they are no longer buying the story that you are selling. Perhaps the promise of the company that got them so excited in the past is gone. In this case, the vision they rallied behind is somehow muddled. Instead, everyone is focused on their own immediate concerns. Firefighting and reactivity dominate, inspiration suffers, and the creativity that is required to innovate through your problems is somehow lacking. Or perhaps you are an entrepreneur and your latest fundraising round just fell through. You may be able to put together a new round in a few months, but you first need to improve your core technology to win investors’ confidence back. Which means that you and your team have tough problems you need to solve. But as much as you try to inspire them with your company’s potential, it’s today’s immediate, short-term problems which are on everyone’s minds. They may be dealing with overworked, underpaid teams or a culture of backbiting and disorganization. These are issues that are urgent to them - not to mention being painful and demoralizing. Until you can help them make sense of the multiple crises they are dealing with now, they just don’t want to hear about your far off future. What’s going on?

As they say in finance, “Uncertainty breeds contempt” and uncertainty about the future can breed resentment for your company and its management.

"Named must be your fear, before banish it you can." ~ Master Yoda

Why This Happens: While your distant future may be full of hope, your present problems contain your organization’s dark emotions - i.e., feelings of fear, doubt, resentment, and frustration. In individuals, this dark side is what psychologists call the human shadow. When it’s in an organization, I call this the Organizational Shadow.

When does it show up? Whenever there is bad news or great uncertainty. For instance, whether there is a big drop in sales, the loss of a major customer, or key staff quitting, the Organizational Shadow will start to rear its ugly head. “Will our sales ever recover? Is there a tragic flaw in our services? Did our product leaders quit because our prospects are doomed? Will I get fired or lose my job?” These are the types of questions employees raise when faced with corporate uncertainty.

But if you leave the Organizational Shadow to its own devices, it will start to mess with your employees' minds. This is because strong emotions generate questions and - as Tony Robbins or any business guru will tell you - *questions generate their own answers... and their own narratives.*

In other words, if you, as CEO, don’t talk to and make sense of the organizational shadow, your employees will be left to talk to that Shadow themselves, uncoordinated, in their own ways. And, thus, the Organizational Shadow will only amplify their individual fears and doubts. It can even lead them to look for opportunities at other firms.

And in the worse case scenario, it can lead to the creation of Shadow Culture, which is when the company works behind the leader's back to solve problems the leader won't address. Shadow Culture can include Shadow versions of all the normal parts of a company:

  • Shadow Roles that individuals play such "covering up for the boss's shortcomings,"

  • Shadow Relationships between employees such as political alliances to get more power,

  • Shadow Expectations based on undiscussed patterns like favoritism,

  • Shadow Goals that benefit certain individuals or groups at the expense of the company (such as getting promotions),

  • Shadow Agreements, such as "help me and I'll help you"

  • Shadow Strategies, such as minimizing or hiding bad news or overpromising

  • Shadow Competition when clear roles and authority have not be properly allocated and individuals secretly compete for influence,

  • Shadow Processes or "unofficial ways to get things done" such as manipulating the right managers, and, of course,

  • Shadow Narratives such as "We'll never change because we're too stuck in our ways."

Since Shadow Culture is "underground" (like a black market), it becomes dominated by office politics and secrecy and becomes extremely hard to root out, especially if it is serving a critical function in the company.

It's the subject of another post, but I cannot stress forcefully enough how toxic Shadow Culture can be. It can ruin a firm. This is why you have to learn to speak, early on, to the Organizational Shadow - in order to prevent the creation of Shadow Culture, or a repetitive, underground way of dealing with organizational problems you don't want to tackle as the leader. The goal is to intervene when the "Shadow" is mostly just feelings, i.e., the Organizational Shadow stage.

It does not do to leave a live dragon out of your calculations, if you live near one.” – J.R.R. Tolkien

Organizational Shadow can happen to the best intentioned CEO, before they even realize it. Say you are the head of a very fast growing start-up company, based in San Francisco. As CEO, you are completely overwhelmed and have not been to the New York office for 2 months, even though the head of the NYC office recently quit. Employees in the New York office may start to feel that you don’t care about their projects, even though the reality is simply that you are too overwhelmed to make the trip. But the wheels in your employees' minds are already turning, especially if there is other uncertainty or fear already about the firm’s future.

Organizational Shadow can lead to Attentional Debt, where employees blow off critical action until it’s too late (the Freeze portion of the Fight, Flight, Freeze, or Fawn response). It also increases overall mental inflammation and conflict in the firm, fuels office politics, and takes your staff offline psychologically. Let Organizational Shadow fester, and you lose the troops. To prevent this, you must own the negative energy in the organization. Focusing on sugar and spice and everything nice only wins half the battle. The shadow is where your team’s psychological energy and attention is going. But without your leadership, they can’t channel this energy for change. Instead, they channel it towards their own self-protection and that energy is wasted.

The seeds to changing this dynamic is to see that Organizational Shadow can neither be ignored nor is it all bad. The Organizational Shadow is a form of emotional truth - and this emotional truth is where tremendous power for change is.

In other words, a highly charged, undirected Organizational Shadow can destroy your company. And a powerfully guided Organizational Shadow can transform the firm.

The Solution: The CEO needs to *own* this uncertainty using their most powerful tools: (a) honesty and (b) narrative. This will allow them to tell a new story, including what has not yet been discussed and, thus, change the organizational belief structure. How is that done?

The anthropologist Clifford Geertz in his book The Interpretation of Cultures, outlines 3 components of belief change (actually, this is my loose interpretation of Geertz with a few ideas added):

  1. Defining the ideal,

  2. Creating a plan on how to manage suffering until you get there, and

  3. Defining your starting point, or the current reality.

When trying to rally the troops, most CEOs focus on (1) the ideal, followed by (2) the plan on how to get there. This is what many call strategic planning, i.e.,. “Here is the vision and how we achieve it.”

But focusing on either of these two is actually the *weakest* intervention possible. Instead, the most powerful business leaders focus on (c) redefining the current moment, because that is where the most immediate energy is.

In fact, the framework Geertz is describing is the cultural anthropology of how to build a religion. It’s been my experience that if you can redefine the *current Now* then that is the most powerful visioning tool in existence. This is because *everything* we do follows from what we think the current reality is. When you change the current reality in people’s minds? Completely new solutions suddenly seem “obvious.” This is how belief change is done. And this is never more needed than when the current moment is filled with uncertainty, doubt, fear, despair, resentment, and frustration.

To speak to Shadow powerfully, you can’t do it casually. You need to get down and dirty in the mud and misery of the current Now.

Story Crafting: The following story crafting steps will ultimately go into a Persuasive Arguments story (more on that here), but first you need to get details down on paper!

  1. Interview staff privately to find all the sources of uncertainty that are material to the company right now. What feelings do employees have around these? Why? What is the uncertainty lingering in the back of their minds? What is their worst case scenario? Put names to all these feelings and sources of uncertainty. Be thorough - this process may take days to weeks. As Susan David explains, naming is an extraordinarily powerful psychological tool for stress reduction.

  2. Reflect upon how this uncertainty has affected you personally, emotionally and cognitively. When you share this later, it will create emotional authenticity and will allow employees to mirror their uncertainty and fears in you. If they can see their uncertainty mirrored in you as the leader, they will then (subconsciously) be open to modeling how you deal with this uncertainty. This will allow you to replace their coping narrative with yours. They will be all ears and your emotional leadership will sink right into their subconscious.

  3. Write down some places where you see opportunity in your corporate uncertainty. If the future is uncertain, that means that good things, also, can happen. As one of my former managers said, “Things are never as good or as bad as they seem.” If nothing else, point to the tremendous, bottled up energy this frustrating predicament has created. Don’t go overboard or try to be too rosy at this point - the point here is simply to challenge the belief that “all uncertainty must be negative.” That is *never* true. At a minimum you can say, “As much as this hurts, it also gives us huge motivation and energy to get out of this predicament!”

  4. Show places in your personal or corporate past when you dealt with similar uncertainty. A shared corporate experience that is fresh in everyone’s minds is better than a story from your personal life, but use *both* if you have them. This is where narrative becomes transformative, bordering on religious. Talk about how you got through the suffering of that dire situation. Show how a negative belief that “the whole world is ending!” was decisively proven wrong in the past. This is a narrative challenge to their “sky is falling” mindset.

  5. You may want to point out that it’s very human to be faced with (1) a huge swath of uncertainty and assume that (2) your feared outcome is as big as that entire uncertainty. As one of the wisest people I know, John Overdurf, has taught me, it is not. Your good possibilities exist in that very same uncertainty zone - that’s why it’s uncertain! And it’s irrational to not to see that. The possibility within the uncertainty is what you need to focus on.

  6. If relevant, tie the current uncertainty into your Founders story - in other words how does the current uncertainty tie into *exactly why* you started the company?

  7. Reframe your current situation into a Persuasive Arguments story (see here). Please note, there is an entire article devoted to this step, so assume that this step alone may take many days.

  8. You may want to include 2-3 of your top managers or advisors in this process to help build consensus using Change Management techniques (more on that here).

People Strategy: Once you have your new narrative, you need to roll it out. This is a multistage process:

  1. Start sharing this story in iterations, starting with your most enthusiastic supporters followed by your less enthusiastic supporters. Nasty nellies need to be outflanked - they often deal with uncertainty by catastrophizing. But by building a coalition of the hopeful, you will create multiple reinforcement points for your narrative (plus you get to practice it along the way).

  2. Opportunistically throughout this process, you may discover Shadow Agents - I call them Organizational Ghosts. They are the negative employees who cannot focus on anything but the negative. They ruin morale by telling ghost stories about the Organizational Shadow, meant to increase the fear, uncertainty, anger, and resentment in the firm. We will avoid going too deeply into the psychology of why, but suffice it to say, it gives them a sense of power and significance. Whether consciously or not, they are impeding the healing of the firm. These are people you should put on warning about their behavior. If you can definitively say that they are: (i) not sounding an alarm to help the firm, but (ii) are actually fighting organizational healing, and (iii) refuse to change when confronted, you may consider firing them. Doing so will also signal your seriousness and commitment to the new path.

Why This Works: Simply put, the best way to control negative energy is to subsume it by naming it and putting a narrative around it. This is how the human mind manages suffering - it taps suffering energy as fuel and uses stories as a GPS to navigate a way out. This is what Geertz is talking about in terms of how to build a religion. If you are able to address Organizational Shadow, you will finally be talking to a fear you have avoided discussing. When you avoid addressing shadow emotions the first time they show up, you signal that these emotions are so unimportant, you don’t even notice them. But the longer you avoid glaringly obvious shadow issues, you, in fact, signal that they are *so* scary that you can’t even face them. By naming and addressing shadow issues, you immediately weaken them. Employees then do not need to find their own ways to deal with the Organizational Shadow. Collectively calling out and naming the shadow also allows for a “strength in numbers” effect as you communally experience the story of how you will deal with the uncertainty. Remember, it’s especially powerful to tie this uncertainty to stories about how you have dealt with similar uncertainty in the past in order to provide hope. When you have nothing else, narrative is the most powerful way to transform reality and emotions (well, that and huge cash infusions!).

Where You May Get Stuck: If the current situation is too overwhelming, you may already be stuck in a Shadow Culture, which is what happens when the Organizational Shadow is ignored for too long. Additionally, it may help to look at what stage in the Problem Progression you are in to help inform your storytelling (article forthcoming). Finally, it may be helpful to get an advisor or mentor to walk you through the above. If you are still really stuck, examining cognitive distortions that are biasing your thinking with a trained psychologist or coach can help you free yourself from debilitating beliefs that prevent you from facing up to your current challenges.

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