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Kathleen E. Allen headshot

Why Today’s Business Leadership Requires a Living System Mindset

Though traditional management structures are still around us, business leadership is moving toward a more flexible approach - i.e. a living system mindset.

Impacts from the pandemic, civil unrest, generational preferences and other changes in our world are accelerating an organizational shift I’ve been observing for some time, from Fortune 500 companies to the smallest of businesses. While traditional, hierarchical structures are still all around us, many corporations are moving to a more interdependent, flexible management perspective, what some management consultants like myself have termed a “living system mindset.” As we think about this new type of leadership, it’s helpful to understand its roots, if you’ll pardon my pun.

Although management consultant and best-selling author Margaret Wheatley helped bring the idea of an organization as a living system to the forefront in the mid-1990s, the idea that businesses are dynamic, constantly evolving and regenerative entities has only recently begun to resurface. The good news is that it’s happening fast right now, as we’re seeing examples of this philosophy not only with smaller, more nimble companies; but this living system mindset also gaining traction at giant corporations like Delta Airlines and even Walmart.   

Instead of control, leadership in a living system focuses on the best ways to “unleash” the assets of the workforce, trying to identify where they can promote things like creativity and positivity, which increases energy. The organization seeks to collaborate at all levels of the workforce and doesn’t try to drive performance solely from the top down. We can redefine collaboration through a regenerative worldview as the amount at which employees feel invested in and motivated by their work – and it is key to employee engagement.

Just like thriving natural habitats, regenerative businesses are often much more diverse in their leadership and their workforce. This diversity goes beyond ethnicity to embracing a culture that welcomes a variety of cultures, beliefs, workstyles and preferences. Leaders see the potential of all employees by recognizing they have an “essence” or potential beyond classifications. Helping them realize this potential leads to them taking ownership and pride in their work. Their skills and the challenges they undertake grow and shift like a living system, too. A key step to achieving this is letting workers choose the role they play in a project, thus awakening their essence and potential. The regenerative worldview constantly reminds us every individual is different regardless of the role they play in the company, and by freeing them of the boxes we usually put them in we see them grow more productive, more ambitious, more skilled and more engaged.

Living organizations can make more effective changes on the whole by focusing on information and feedback. By understanding the patterns within an organization and valuing the organization’s relationships with external partners, investors and the environment, a company’s leadership can position future strategies based on what it is seeing today.

Consider that the ultimate living system, nature, is constantly evolving based on feedback – such as what helps or hinders survival – then companies embracing living system principles also need to keenly watch data and be flexible. Any successful company already makes adjustments based on data, but living systems focus on the long term by making predictions based on current feedback and then remaining open to agile changes if data shows progress strays from the predicted course.

The drive toward more regenerative business is not just a philosophical choice. It’s a solid business decision. Newer generations of workers are demanding that their employers be more purpose-led, another important hallmark of a living system organization.

We’ve seen this trend well before the pandemic hit. A 2019 study by Deloitte found that “Purpose-driven companies witness higher market share gains and grow three times faster on average than their competitors, all while achieving higher workforce and customer satisfaction.”     

Beyond motivating employees, living system organizations are able to adapt more quickly, and evidence of this resilience is clear as we turn the corner one year into the global pandemic. The U.S. Chamber of Commerce recently released a list of the top characteristics common among businesses that have pivoted and grown during the pandemic. Social responsibility, flexibility, creativity, communication and not surprisingly, empathy, were all at the top of this list. Given what we now understand of living systems, it’s clear to see that these traits map very closely to those of living systems organizations. 

Fortunately, shifting to a living systems mindset is not a “one and done” endeavor. Learning to work in an interdependent fashion, embracing diversity and focusing on a bottom line that includes more than just profit are all steps we’re taking collectively as a business community. While I wish that the momentum toward more regenerative business models had increased on its own, instead of as a result of so many crises in our world, we are seeing some major patterns emerge that I think will be better for business leadership, individuals, our communities and our planet. Just like nature, living systems simply make more sense now.

Image credit: Holly Mandarich/Unsplash

Kathleen E. Allen headshot

Dr. Kathleen E. Allen is the author of Leading from the Roots: Nature Inspired Leadership Lessons for Today’s World (2019) and President of Allen and Associates, a consulting firm that specializes in leadership, innovation and organizational change. She writes a blog on leadership and organizations that describes new methods of leadership based in lessons from nature and living systems.

Read more stories by Kathleen E. Allen