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Name: The Advantage
Rating: 4.6 (145 reviews)
Author: Patrick M. Lencioni

Patrick M. Lencioni

Why Organizational Health Trumps Everything Else in Business

4.6 (145 ratings)

25 mins

Topics

Leadership Success Strategy Teamwork

Table of Contents

The Advantage
Summary of 11 key ideas

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Key idea 1 of 11

What’s in it for me: find out why your company can’t afford to be unhealthy anymore.

Anyone who has ever laughed at a Dilbert comic can probably recognize some of the ridiculous consequences that working in an unhealthy organization can have for employees. Amusing though the comic strips may be, the real life organizations find themselves in deep trouble. They waste resources and waste employees because they simply do not work well as a team. Sooner or later, they lose out to healthy competitors.

To avoid this happening to your company, you need to join the winning side by building a healthy organization.

In these blinks, you’ll discover how to do this.

You’ll learn why many leaders ignore the health of their organization, even though it’s killing them.

You’ll also understand why the best leadership teams are the ones whose members can admit to each other, “I screwed up.”

You’ll also see why everyone’s favorite waste of time – meetings – are actually crucial to healthy organizations, and how you can make them more effective.

Finally, you’ll find out why quarterly executive team retreats play an essential part in tackling the company’s strategic challenges.

To be successful, organizations need to be smart and healthy.

As long as there have been companies, there have been business leaders pondering the secret of a successful organization.

For an organization to become successful, two criteria must be fulfilled: the organization must be smart and healthy.

Being smart means having the technical competence to deal with aspects of the company like strategy, marketing, finance and technology, while being healthy means having high morale and productivity as well as minimal conflicts, confusion and employee churn.

As you will discover in these blinks, it’s organizational health that most affects the company’s success.

Why?

First of all, healthy organizations can at least become smart over time, but unhealthy organizations can’t.

This is because leaders in unhealthy organizations are reluctant to admit their own flaws and therefore won’t ask others for advice – which impedes learning. In healthy organizations, leaders are open about mistakes and therefore quicker to overcome them and learn from them.

Consider the analogy of a family: In healthy families where parents raise their children through discipline, affection and time spent together, the children tend to be able to overcome the difficulties they face. Unhealthy families, on the other hand, often produce children who struggle no matter how smart they are.

Second, in unhealthy organizations even smart people often make stupid decisions. Many companies have smart leaders who have graduated from top universities, but their firms still fail because they are riddled with politics, misalignment and inconsistencies.

In fact, it turns out that having smart leaders is not that important: many healthy companies run by relatively average people still make wise decisions that make them more successful than their “smarter” competitors.

Of course, the financial costs of an unhealthy organization are undeniable: squabbling staff and inefficient work results in wasted resources and time as customers and employees leave. This means a healthy organization is in fact at a competitive advantage, the benefits of which can be seen in the bottom line as well as in the happiness of employees.

But how can you create a healthy organization and why do leaders often neglect this vital aspect of business?

Leaders neglect organizational health as they think they’re too sophisticated, busy or analytical to bother with it.

When thinking about organizational health, most leaders stumble into one of the three biases: the sophistication bias, the adrenaline bias or the quantification bias.

First, there’s the sophistication bias: Achieving organizational health is seen as too simple a task by many well-educated business executives, as all it demands are high levels of discipline, persistence, courage and a healthy dose of common sense. This can be off-putting if the leader believes that dramatic improvements can only come from sophisticated, complex endeavors.

Build a cohesive leadership team to create a healthy and cohesive organization.

At the end of the day, all companies are made up of people and the relationships between them. This means that no company can achieve its full potential when the relationships between its leaders and various departments are dysfunctional.

So how can this unfortunate state of affairs be avoided?

From trust to results-orientation, there are five behavioral principles that teams must embrace to build a cohesive team.

Anyone who has been on any kind of team knows that cohesion greatly contributes to that team’s efficacy. And for a leadership team to be cohesive, it must embrace five behavioral principles:

First, great leadership teams must have trust – more specifically vulnerability-based trust, the kind of trust that stems from openly sharing one’s vulnerabilities and mistakes. This allows team members to say things like, “I need help,”“Your idea is better than mine,” “I screwed up,” and even, “I’m sorry.” Such honesty requires a strong bond among team members, but saves a lot of time and energy for all parties.

Leadership teams need to build cohesion by asking themselves simple questions about who they are and what they’ll do.

Like phalanges in ancient Greece, a team achieves maximum efficacy when members are maximally aligned with each other in thought and action.

To eliminate even small discrepancies in their thinking, a leadership team must answer six critical questions.

Employees should be continuously reminded of the company’s reason for existence, core values, strategy and priorities.

Once the leadership has established clarity and alignment over the six critical questions presented in the previous blink, they must communicate their answers to the rest of the company. In fact, they must overcommunicate them.

Great leaders should consider themselves Chief Reminding Officers – yes, they must plot a strategic course for the company, but one of their top priorities must also be to remind people of it on a regular basis.

Human systems in the company must be simple and built on the answers to the six key questions.

No company can survive without its employees. Therefore, a key part of any company is its human systems – meaning the processes that involve managing people, from hiring and performance management to training and compensation.

To effectively design and lead human systems, leaders must ensure the systems reflect the special nature of the culture of their organization. In turn, they can only determine this special nature by answering the six critical questions.

No action, activity or process is more central to a healthy organization than the way it holds meetings.

It is a great irony that many leaders consider the meetings of the leadership team to be a waste of time. In fact they are the single best indicator of organizational health.

Leadership team meetings are where cohesion, clarity and communication originate, or, alternatively, where the seeds of an unhealthy organization are sown.

Leaders use four different kinds of meetings – daily, weekly, monthly and quarterly – for different levels of granularity.

Now that we have seen that not all issues should be discussed in one meeting, let’s look at four different kinds of meetings, each differing in its objectives and the frequency with which it is held.

First, there are the daily Check-In meetings, where teams make a habit of gathering once a day for ten minutes to exchange information. This saves a lot of time because many issues can really be resolved in less than a minute if all the necessary stakeholders are in the room, whereas chasing after the necessary inputs one-by-one would take hours.

Leaders and the teams around them are the key component of building healthy organizations.

At the end of the day, the main factor helping an organization become healthier is the genuine commitment and active involvement of the leader.

Far too often, however, leaders think that tasks related to organizational health should be handled by others. This is a mistake, as the leader must lead through example.

Final Summary

The key message in these blinks:

For a company to succeed, it is not enough for it to have smart leaders. It must also be healthy, and the responsibility for this lies with its leadership team. By defining and communicating the organization’s values and priorities clearly, they can attain the competitive advantage that a healthy organization has over squabbling unhealthy ones.

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What is The Advantage about?

These blinks outline the key principles for building a healthy organization where all the employees pull together in the same direction following the same objectives. This enables organizations to achieve their full potential, while unhealthy competitors waste resources in internal squabbles.

Who should read The Advantage?

Leadership team members in any type of organization
Anyone working in human resources
Consultants in the fields of leadership, organizational learning and team building

About the Author

Patrick Lencioni is the founder and president of The Table Group, a management consultancy specializing in organizational health and the development of executive teams. He has authored ten business books that together have sold over three million copies globally. His best-selling book is The Five Dysfunctions of a Team, the key ideas of which are also available in blinks.

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Corporate Culture Management & Leadership

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