A Most Undervalued Leadership Skill

Daniel Goleman is author of the international best-seller Emotional Intelligence and Optimal: How to Sustain Personal and Organizational Excellence Every Day. He is a regular contributor to Korn Ferry. 

When Yvon Chouinard founded Patagonia in 1973, his goal was clear: build the best product for outdoor athletes. But as a craftsman who had witnessed firsthand how his own climbing pitons damaged rock faces, Chouinard understood that quality couldn't come at the expense of the environment he loved. This early recognition of unintended consequences evolved into something much bigger: a mission to use business to save the planet.

What makes Patagonia so studied in business is how Chouinard has thought systemically to advance that purpose. He understands that everything is connected—cotton farming affects water systems and soil health, food production shapes climate outcomes, and his clothing business can either contribute to the destruction or the regeneration of the environment.

This “systems” thinking is what, in emotional intelligence language, is called Organizational Awareness, and it's one of the most undervalued competencies in leadership today.

Too many leaders operate with tunnel vision, seeing their organization as a collection of departments, reporting lines, and quarterly metrics. But organizational awareness asks a leader to see something far more complex and powerful: the living system of relationships, influences, and interdependencies that actually make things happen. It's the ability to read the emotional currents and power dynamics within an organization. It's identifying the influencers and key networks, and understanding both the formal structures and the informal, "unspoken rules" that shape behavior. It's being able to sense the invisible web of connections—between individuals, teams, the organization and the wider world.

Consider Patagonia's approach to cotton. An environmental audit revealed that conventional cotton, despite being a natural material, had a surprisingly heavy environmental footprint. When employees at a Boston store became sick from formaldehyde-treated cotton shirts, it became clear the issue extended beyond environmental impact to human health. Rather than finding new suppliers, Patagonia committed to 100% organic cotton across its entire line. This wasn't just about procurement—it was leadership grounded in systemic intelligence, understanding that business decisions ripple through networks of relationships and consequences that extend far beyond the immediate transaction.

Effective systems thinkers operate with what we call a "triple focus," an inner awareness of their organization's culture and emotional climate, an inter awareness of how they relate to stakeholders and partners, and an outer awareness of the larger systems in which they operate. Chouinard exemplified this when he created Patagonia Provisions, recognizing that "regenerative organic agriculture can actually make things better—improving biodiversity, soil health, farmer lives, and drawing carbon from the atmosphere." He saw how food systems connected to textile systems, how both connected to climate systems, and how his business could be a catalyst for even greater regeneration.

This kind of thinking translates into practical leadership skills. Developing this capacity starts with paying attention to unintended consequences. When making decisions, leaders would be wise to ask: What ripple effects might this create that we haven't considered? How might our choices right here, right now, affect stakeholders in the future and beyond our immediate sphere? The systems thinker learns to look for unintended consequences before they become problems.

Systems thinkers also map their networks of influence: Who are the actual decision-makers in the ecosystem, even if they don't look like it when referencing the formal hierarchy? What external relationships determine whether an initiative succeeds or fails? Understanding patterns and systemic truths positions a leader to build the coalitions necessary for getting ideas off the ground and creating sustainable change.

Systems thinkers also look for decisions that serve multiple purposes simultaneously. Every operational choice—hiring practices, supply chain partnerships, even meeting structures—can either reinforce or undermine their strategic objectives. The most effective systems thinkers recognize that there are no neutral decisions; each choice either moves you toward or away from the future you're trying to create.

Leaders with strong organizational awareness do well because they see opportunities and risks that others skip over. Chouinard discovered that "every time I do the right thing, I make money"—not because virtue is automatically rewarded, but because systems thinking reveals innovations and efficiencies that linear thinking misses.

This thinking also extends to how leaders see today's business challenges. The leaders who master organizational awareness become versed in seeing patterns. While their competitors react to market shifts, they anticipate them. While others build products, they build ecosystems– proving again and again that doing the right thing isn't just good ethics, it's good strategy. In the end, success comes not from optimizing parts, but from strengthening the whole.

Co-written by Elizabeth Solomon

Click here to learn more about Daniel Goleman's Building Blocks of Emotional Intelligence.