We worship at the altar of personally driven leadership. My last Amazon search listed 197,000 books on leadership, virtually everyone approaching leadership as the characteristics of the individual. Annually, we spend approximately $40Billion in leadership development. Yet there is not a shred of evidence there is any measurable organizational impact. Training is disconnected from organizational mission, vision, culture, and systems.
We understand biological systems. We know digital systems, and we know systems of marketing, finance, and customer engagement. The last remaining frontier of organizational systems is leadership. When applied, a well-designed system of leadership generates sustainable long-term performance.
A leadership system is defined as A systematic model of leadership that comprehensively designs the way key organizational resources interact so that they achieve a desirable and measurable purpose. This definition applies classical system thinking to the practice of organizational leadership. There are three parts to the leadership system:
1) Key resources;
2) That interact in a specific way:
3) That they achieve a desired outcome or purpose.
Of the three parts, the purpose is the most important. Here is why:
Seattle’s Swedish Hospital Neurological Institute evolved from an organization focused on patient safety to one of revenue generation. In doing so, they changed the surgeon’s compensation formula from one where revenues were shared between surgeons, to one that compensated surgeons for production. This resulted in higher surgical production and higher surgical revenues. Competition for surgical production replaced surgical collaboration. Patient safety was compromised. They received exactly what the system was designed to produce.
The result was harm to patients and lapses in ethics. The CEO of Swedish Hospital resigned, and the director of the Institute lost his license to practice in the State of Washington. The CEO of the parent organization was forced to take out a full-page ad in the local newspaper apologizing to patients and staff.
Changing the purpose of a system is significant. Changing the purpose of a system from patient safety to revenue generation is seismic. Were the individual leaders of the Institute stupid or unqualified. Exactly the opposite. Each leader within the system was smart and extremely well qualified. However, as Deming is also often quoted as saying: I should estimate that in my experience most troubles and most possibilities for improvement add up to the proportions something like this: 94% belongs to the system (responsibility of management) 6% special events.
So was it is more important, the individual leader, or the leadership system?