System Reform and Leadership
June 29, 2026 |
As an adaptive leadership enthusiast, I’m always fascinated by how systems respond to major reform.
The reaction to the Australian Government’s recent tax changes has been a perfect example.
When governments attempt significant reform, the debate quickly becomes about winners and losers. The proposed capital gains tax changes are no exception.
I’m not interested here in debating the merits of the policy. What interests me is the adaptive challenge.
Every system is perfectly designed to produce the results it currently gets. Change the rules, and the system pushes back.
The leadership question in this is whether leaders can hold the tension long enough for the system to adapt?
Those who benefit from the current system will naturally mobilise. They are not irrational or selfish. They are simply protecting something they value. Others who believe the current arrangements are inequitable will push just as hard in the opposite direction.
This is what adaptive leadership looks like in practice. Whether it be competing values, legitimate losses and emerging factions. I often see leaders feeling the pressure to retreat and compromise before the change has had a chance to take hold.
The temptation for any leader is to relieve the heat in the system. They try and soften the reform simply because resistance becomes uncomfortable.
But resistance is not always evidence that the change is wrong. Sometimes it is evidence that the status quo has finally been challenged.
The challenge is distinguishing between feedback that improves the reform and pressure that simply seeks to preserve the status quo.
The real test of leadership is knowing whether resistance is telling you to change course or to stay the course.
