It's easy to say that CEOs should be responsible for many things that seem important or urgent, but increasingly that seems just right. all Feels important or urgent. However, no matter how great our abilities are, there are limits to what humans can do. CEOs clearly need to prioritize and eliminate some of the myriad expectations that stakeholders have of their companies. But there is one thing CEOs should be responsible for. It's about becoming the organization's “lead system architect.” There are three main reasons for this.
First, the CEO is responsible for the vision and direction of the organization. She knows the organization's goals and can determine whether the organization is aligned with its fundamental purpose or moving away from it.
Second, the CEO is the only person in the organization with both the authority and visibility to create a coherent set of management systems, the formal processes and structures that shape the organization's behavior. By working with management systems, CEOs can drive collective action that moves the organization toward its goals.
Finally, CEOs are in a unique position to create and help resolve healthy tensions. Resolving tensions productively can be a great source of innovation.
None of this is particularly controversial… So what's new here? Simply put, many CEOs today don't think that way, or even if they do, they don't act like they think that way. Rather, they often see themselves as catalysts for change: outspoken visionaries, sponsors of change initiatives, and motivators of the masses. Once the problem is “solved”, we move on to the next big challenge and focus on that. This can unintentionally lead to a higher degree of misalignment, as the organization becomes more concerned with implementing special projects than with getting closer to its fundamental objectives. When an organization strays too far, polishing, our recommended method of making small changes to the system to align with the organization's objectives, is ineffective. They must then proceed down a path of transformation, which is often risky, expensive, and unsuccessful.
Guardrails for delegations
As mentioned above, CEOs cannot do “everything,” so it's natural to ask what parts of system design they can delegate. CEOs do not need to control every detail of the systems that shape the organization's behavior, but they do need to be responsible for:
- Articulate the design goals (the results and behaviors that the management system needs to produce)
- Select and prioritize key management systems that collectively produce these outcomes.
- Monitoring to ensure that the continuous control system is delivering the actions most likely to produce the outcomes the CEO desires.
We do not believe that the CEO is important in designing the specific details of each management system. Nor does the CEO need to be the person with the pen who designs the details of the operating model and organizational design.
But CEOs need to own important choices about key management systems, including what performance management systems prioritize, how promotion decisions are made, the overall structure of the business (by geography, product lines, customers, etc.), and the allocation of decision rights. CEOs also need to have a view of how these things work together to motivate action.
We recently had the opportunity to spend some time with Paul Polman, former CEO of Unilever. He spoke about honing Unilever to ensure it achieves its goal of acting as a single, purpose-driven, global company focused on long-term stakeholder value.
Let me give you an example. Paul found that many employees did not want to move from a low-tax jurisdiction to a high-tax jurisdiction. This has made it difficult to develop leaders who operate globally and have international experience. So he called on organizations to create management systems that would equalize salaries for similar roles in different regions on an after-tax basis. Additionally, we have eliminated quarterly earnings guidance to focus the organization on long-term value creation. Finally, he used ambitious goal setting to frame what “good” looks like (e.g. percentage of sustainably sourced goods, number of new consumers served).
Although not all of his ambitious goals in the Unilever Sustainable Living Plan were achieved, the company has made dramatic progress at a pace previously thought impossible. And all of this was achieved while delivering a total shareholder return of 300% during his tenure.
As system architects, CEOs are responsible for creating healthy tension and balancing the needs of all stakeholders. Companies that incorporate non-financial goals into their metrics, such as exceeding customer and employee expectations, create the prerequisites for long-term health. Longevity really matters because most of a company's intrinsic value lies in its so-called “terminal value” (essentially investors' expectations that the company will continue to make profits, not just in the next few years, but forever). One perspective that CEOs should bring to system design is the theory of which portfolio of objectives supported by a particular combination of management systems will lead to long-term value creation.
In the business world, we are witnessing a growing recognition among both investors and executives that a narrow and relentless focus solely on maximizing shareholder value can, ironically, be particularly harmful to shareholders. Taking care of all stakeholders creates more value in the long run because the system in which the organization operates is not thrown out of balance. An overemphasis on short-term shareholder returns can lead to short-sighted decisions and cost-cutting measures that undermine customer satisfaction and long-term success. Neglecting to take care of your employees' health can lead to higher than healthy turnover rates and a loss of organizational knowledge and capabilities.
These are just some of the ways CEOs can effectively leverage system design. When they embrace their role as lead systems architects—actively shaping, monitoring, and refining the management systems that support their organizations—they create the invisible architecture that sustains purpose, drives lasting value, and enables the company's long-term prosperity.
Excerpted with permission of publisher Wiley Hone: How purposeful leaders deal with drifting Written by Jeff Tough and Stephen Goldback. Copyright © 2026 by John Wiley & Sons, Inc. All rights reserved. This book is available wherever books and e-books are sold.
