What is a System of Leadership – Designing a High Impact Culture

As I started doing the research for the book, Leveraging the Genetics of Leadership, I was looking for evidence of leadership systems. Which obviously meant I had to know what is a system of leadership? It also meant that I had to recognize a system of leadership if I saw one.

However, I also wanted to know if others were looking at leadership as an organizational system. Barbara Kellerman, Ph.D. is one of a small but growing group. She is a professor of public leadership at the Harvard University, Kennedy School. In an article published by The American Academy of Arts and Sciences, she boldly proclaims, Leadership, it’s a system, not a person! In essence, Dr. Kellerman is proclaiming the future of leadership is understanding it as a system of the organization. Unfortunately, we worship at the altar of personally driven leadership. My last Amazon search listed 197,000 books on leadership. Virtually everyone approaching leadership as a role played by the individual.

Dawn of the System of Leadership – Or the Future of Leadership

It would be foolish to suggest that individual leaders have not played major roles in organizational history. Steve Jobs comes to mind as an example of how one individual can impact the world in which we live. However, we also understand that an organization, much like the human body, is a network of integrated systems. Biologically, our human bodies connected by eleven systems. For example, the circulatory system supports the muscular system, which in turn is supported by the skeletal system.

In a similar way, organizations have a financial system, a system of employee engagement, and operating systems. While it is common to recognize these key organizational systems, when it comes to leadership, we look to the individual. However, this is not the case with high-impact organizations. High-impact organizations approach the practice of leadership systemically. I discovered that every organization has a system of leadership. The difference between average and high-impact was in the design. Average organizations have little if any design. High-impact organizations have well-designed systems. The result is sustainable long-term performance, higher employee engagement, and unparalleled customer value.

The Definition of a Leadership System

A leadership system is defined as the systematic 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 system of leadership:
1) Key resources of people, money, and specialized knowledge.
2) That interacts through behaviors, rules, and routines.
3) Together, the resources and the interactions create a purpose or outcome.

This is NOT Systems Leadership

Systems leadership means that individual leaders have the mindset that they are leading within the context of multiple organizational systems. This does not mean the system leader recognizes that leadership its self is a a system.

Purpose of the Leadership System – Creating Breakthrough Transformation

The Power of Purpose

The purpose of the leadership system is likened to an iceberg. Specifically, the ninety percent of the iceberg that lies below the waterline. Though unseen, this mass determines the iceberg’s course and speed as it drifts in ocean currents. The purpose or output of the leadership system is often unseen. However, it has the mass to determine the course of the entire organizatio

How the System’s Purpose Drives Transformational Performance (or not)

Seattle’s Swedish Hospital Neurological Institute evolved from an organization that focused on patient safety. It was the purpose of the system. Therefore, the safety of patients was the lens that drove decisions like how to compensate physicians.

In 2011, Providence Health & Services acquired Swedish Hospital. It made Providence one of the largest healthcare systems in the nation. Swedish Neuroscience Institute (SNI), a clinic within the Hospital, was restructured. The objective was to increase surgical volume and, therefore, revenue. This may sound like a simple change. However, moving from patient safety to revenue generation is a seismic change. By 2015, “It had the highest Medicare reimbursements per inpatient visit of any US hospital with at least 150 beds.” Five of the six highest revenue-generating surgeons in the State of Washington operated out of the Swedish Neuroscience Institute. It had become a money-making machine. Then disaster struck.

Then Disaster Struck

The system performed exactly how it was designed. In 2017, The Seattle Times published a four-part exposé on the institute. As a result, the hospital CEO resigned and the institute’s director lost his medical license due to high-risk, unethical medical practices and actual harm to patients. Federal regulators initiated an investigation that threatened to shut down SNI because of regulatory compliance issues. The exposé outlined critical systemic changes that resulted in significant short-term revenue growth but lost the culture that put patient safety first.

Every system is perfectly designed to get the results it gets.

Edwards Deming

The Genetic Resources of the Leadership System – Creating Massive New Value

Organizationally, there are three resources that every organization possesses.

  1. People,
  2. Money (including plant and equipment), and
  3. Specialized knowledge.

Resources are More Than Assets

There is a critical difference in the way elite organizations view these resources. Most view them as assets that require management. However, high-impact organizations see them as resources able to grow in value. Therefore, a primary function of leadership is to grow the value of their people, their financial resources, and their knowledge. This increase in value means delivering more value to customers, at less cost.

To grow the value of these resources requires a designed system of leadership. Only a system has the power to comprehensively integrate each system, including leadership, to maximize the value of each resource. This is especially true of people. High-impact organizations see their people as more than a collection of professional bits that produce “widgets.” They understand that people represent untapped energy to innovate, create, and transform. Therefore, they approach the development of their workforce as whole human beings. In other words, they intentionally seek to develop a workforce that is self-confident and empowered.

How System Resources Drives Culture and Daily Work

What I discovered in my research is that the leadership system organizations resources through:

  1. Behaviors.
  2. Routines.
  3. Rules

The Value of Behaviors Within the Leadership System

One of the major surprises in my research was how important behaviors are to high-impact organizations. I would even say behaviors are as important, if not more important, than core values. Values tend to be abstract ideas about what is important to the organization. Values that are considered to be “core” are trust, respect, and growth. Unfortunately, the behavior of leaders often overruled values. For example, a leader that is frequently angry will demonstrate to employees that a value of respect means nothing. Anytime a leader cuts off a subordinate in conversation she demonstrates a lack of respect. Subordinates then understand that values are meaningless.

The Value of Rules Within the Leadership System

I recently heard a great story of how rules helped transform the culture of a technology firm. With offices in Texas and India, the CEO and members of his team would frequently travel back and forth. He would traditionally fly Business Class, while everyone else would fly coach. Even though there was plenty of justification for the CEO to fly Business Class, it just reinforced the reality that his team was second-class citizens. Curing a financial setback, this CEO started flying coach. While the cost was less, he saw the impact of an engaged workforce when they all flew together. Today, there is a rule, the entire team flies together in business class.

The Value of Routines in the Leadership System

Working as a Team

When John Heer took over as CEO of North Mississippi Health Services he established a routine for every leader. Every day, they would “round” to their team. It was part of their standard daily work. In other words, they were expected to visit with their team each day. Furthermore, he established a rule – rounding was the priority. The Chief Medical Officer (CMO) of a Level 1 Trauma Department told me a story of how regular rounding impacted his staff. A prior hospital CEO never visited with him or his staff. All communication was through email and the occasional phone call. Then a new CEO comes in, and moves his office from the top floor, with the expansive views of the City. He placed his new office on the first floor, right behind the admitting office. Then he began rounding to the various departments and clinics in the hospital. This CMO observed that with just the weekly visits of the new CEO, that engagement levels and trust soared.

Conclusion: What Has More Power, the Leadership System or the Leader?

Deming said: 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.

Therefore, by understanding leadership as an organizational system, the power of a system can be leveraged to drive performance AND create a more caring and compassionate world. Leaving this up to the goodwill of the individual leaders too risky.

How the Leadership System Impacts the Individual Leader

There are many the leadership system will impact the work of individual leaders. This is especially true of new and emerging leaders. The unfortunate reality is that two-thirds of first-time managers and leaders receive no training or mentoring as leaders. Furthermore, those that do receive training find that cannot implement what they learn because of entrenched systems that are already in place.

However, with a designed system of leadership, the new or emerging leader has a clearly defined path to success. The system will come with a specific work system that will guide their success. Furthermore, she can be trained and developed to the specific requirements of the system. The system will leverage whatever her natural talents might be, and turn her into a star performer. Or as Dr. Gerald Midgley of the University of Hull states:

An organization becomes effective because it works as a system—a set of functional parts interacting to achieve a purpose, and leadership is one such necessary part. Indeed, what if leadership itself is a system—a subsystem of the wider organization. If leadership is a system, engaged in relationships with other systems to create a high-performing, purposeful whole, it means that anybody with integrity and a reasonable level of emotional intelligence can learn how to lead.

Gerald Midgley, Professor of Systems Thinking, Centre for Systems Studies, Business School, University of Hull, UK and 2013-2014 President of the International Society for the Systems Science

About the Author

Dan Edds is the author of Leveraging the Genetics of Leadership, cracking the code of sustainable team performance. He has spent the last twenty-five years as a practicing management consultant. He invites your comments to this blog and if you want, you are free to call his personal phone, (425) 269-8854

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