25-04-2025
Today's Most Crucial Leadership Skill Is Systems Thinking
Map the system
In the face of global uncertainty, how are top executives and board members delivering genuine insights for their organisations? The answer is systems thinking: arguably the most crucial skill in today's strategy toolkit. As geopolitical tensions, technological change, and economic shifts move quickly and unpredictably, understanding how your business relates to a web of interconnected systems is essential for decision-making. Systems thinking enables leaders to see beyond isolated events and identify the underlying patterns and feedback loops that drive outcomes. It is, in essence, a framework for navigating complexity.
At its core, systems thinking is an approach to strategy that focuses on shifting the conditions holding a problem in place. Recent examples of such 'problems' include fragility in global supply chains, challenges with governance of AI and technology, widespread mental health complications affecting employment, and intensified environmental strain ranging from water scarcity to pollution. Each of these problems impacts business and is impacted by business in turn. However, it is not always clear how a firm should direct its resources towards mitigating risk from such challenges, let alone seeking to resolve them.
Systems thinking enables leaders to recognize the dynamic relationships within and around their organization, focusing on root causes rather than symptoms. The concept, developed by systems theorists including Donella Meadows, provides practical tools for mapping the complex systems that affect your organization's sustainability and success. This holistic approach enables leaders to anticipate unintended outcomes and identify smart leverage points on which their organizations can focus resources.
In today's volatile, uncertain, complex, and ambiguous (VUCA) world, the need for systems thinking is more pressing than ever. Businesses that fail to account for the broader context of their environment find themselves blindsided by change and fail to capture significant opportunities for sustainable value creation.
Global risk reports highlight the unpredictability of today's political, economic, and environmental landscapes. The World Economic Forum's Global Risks Report consistently underscores the interconnectedness of risks, including cyber threats, political instability, and diminished trust in institutions. The 2025 report not only presents global risks in the familiar form of a ranked list to which leaders have become accustomed, but also as a visually compelling map depicting the connection between risks. This change – from a list-based view of outcomes to a focus on their strategic links – epitomizes the mindset shift that makes systems thinking a powerful tool for strategy.
Systems are 'a set of things… interconnected in such a way that they produce their own pattern of behaviour over time'. This is a core insight of systems thinking: systems, by definition, have emergent properties that no one within the system designs or even anticipates. For this reason, it is essential to approach systems challenges with tools that equip your organization to understand how the outcomes your business observes are generated at the systems level. Without systems thinking, interconnected challenges can overwhelm leaders and organizations, leading to reactive and ineffective responses, and even responses that perpetuate the problem.
Working with resources such as the open-source Omidyar Systems Practice Workbook or Meadows' iconic Thinking in Systems: A Primer, you and your teams can become confident in your ability to lead effectively and navigate complexity through a systems-based lens. While systems thinking offers a wide range of approaches and methodologies, five core pillars of systems thinking are:
The ability to think systemically is no longer a nice-to-have for leaders. It is a crucial capability for leading a sustainable, credible business in today's unpredictable world. Systems thinking has a home in the curriculum of every business school. With the interconnectedness of global risks, leaders who embrace systems thinking will not only understand how their company operates within the broader system but also be able to anticipate change and lead their industries. Systems thinking tools, including good problem statements, comprehensive stakeholder mapping, smart iceberg analysis, and well-designed causal loops, are gold dust for strategy in today's world. But the most important contribution of systems thinking – the ability to see the context in which your organization sits – is the true distinctive that will enable you to lead for sustainable growth in an uncertain future.
