Why “Systems Leadership” is hard in the best possible way

What is “Systems Leadership” — and what am I really getting at with that first word, systems? I define it as the ability to master processes and strategies from different perspectives at the same time: physical and digital, breadth of market and depth of market, short term and long term, what’s good for the company and what’s good for its ecosystem. Systems Leaders combine the IQ to understand their company’s technology and business model with the EQ to build effective teams and inspire them to new heights. They use short-term execution skills to hit their financial targets this year, while also driving changes that may not pay off for five or more years. They grasp the big picture and essential details simultaneously. They understand how all the elements of an organization affect both internal and external stakeholders, and how interactions internally and externally shape a company’s outcomes.

When I described Systems Leadership to one Fortune 500 CEO, his response was “Wow, that sounds hard.” He was right, of course. But Systems Leadership is hard in the same sense that running a marathon, playing guitar, doing calculus, or driving on a highway are hard. For all of those competencies, the baseline of required innate talents isn’t very rare. The key is putting in consistent effort over time to learn and then master the necessary skills. It’s about practice much more than talent.

If you’re reading this, I have no doubt that you have the intellectual and emotional right stuff to become a Systems Leader. I have seen these strategies and tactics work for department heads and mid-level executives in all kinds of organizations, including many who don’t have business degrees or other advanced education. Time and again, I’ve seen these ideas land powerfully with my executive education and corporate lecture audiences, many of whom report back on how helpful it is to think and act like a Systems Leader.

If you choose to commit to this goal, it can make a massive difference to your career. Systems Leadership might determine whether you’ll rise as far as your talents can take you or whether you’ll get stuck along the way. It can even determine your entire organization’s success or failure, whether you work for a large incumbent or a small upstart. The stakes really are that high.

Jeff Immelt and I began to develop Systems Leadership in 2017, just before his retirement as CEO of General Electric. We met to explore the possibility of teaching a class together at the Stanford GSB so he could impart some of what he’d learned the hard way to the next generation. I was very interested to partner with a leader who had been through so much — a leader who had experienced both the highest highs and some of the lowest lows possible in the corporate world. It was telling that he titled his memoir Hot Seat: What I Learned Leading a Great American Company.

Beginning with our first discussion, Jeff and I discovered a shared concern. We both felt that the typical business school curriculum — even at a top-tier institution like Stanford — had crucial gaps when it came to addressing the unique challenges of our time. We agreed, of course, that aspiring business leaders still need to learn finance, strategy, operations, marketing, and other traditional subjects. They still need a firm grasp of pricing models and the weighted average cost of capital, plus softer skills such as motivating and coaching their people. But all those isolated skills were no longer enough. Even the most acclaimed and cutting-edge business schools, which stressed the importance of both IQ and EQ, weren’t fully preparing students for the cross-pressures they would face in the real world.

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The response to the first iteration of our new course was very positive, and we kept refining it. When COVID hit in the spring of 2020, during our third year of teaching the course, we realized that Systems Leadership dovetails with crisis leadership. Many of the guest speakers who joined us remotely that quarter described confronting challenges they had never even imagined and for which they had no playbook. For instance, Ryan Lance, CEO of the giant energy company ConocoPhillips, spoke to our students on the day that the price of crude oil turned negative, due to the pandemic-driven shock to the global economy. How do you deal with a problem so unprecedented that it’s hard even to conceptualize it?

COVID was an especially good example of how leaders can confront extreme, sudden disruption without losing their bearings, their confidence, or the respect of their people. The pandemic became a teachable crisis to evolve our framework and tools for responding to truly unpredictable disruptions. We wanted to prepare our students, whether they faced such shocks soon after graduation or decades in the future.