System-to-model innovation is an emerging innovation pathway in artificial intelligence that has driven progress in several prominent areas over the last decade. System-level innovations advance with the diffusion of AI and expand the base of contributors to leading-edge progress in the field. Countries that can identify and harness system-level innovations faster and more comprehensively will gain crucial economic and military advantages over competitors. This paper analyzes the benefits of system-to-model innovation and suggests a three-part framework to navigate the policy implications: protect, diffuse, and anticipate.