The Advantage: Why Organizational Health Trumps Everything Else In Business

by Patrick Lencioni

The single greatest advantage any company can achieve is organizational health. Yet it is ignored by most leaders even though it is simple, free, and available to anyone who wants it.

An organization has integrity—is healthy—when it is whole, consistent, and complete, that is, when its management, operations, strategy, and culture fit together and make sense.

any organization that really wants to maximize its success must come to embody two basic qualities: it must be smart, and it must be healthy.

A good way to recognize health is to look for the signs that indicate an organization has it. These include minimal politics and confusion, high degrees of morale and productivity, and very low turnover among good employees.

The vast majority of organizations today have more than enough intelligence, expertise, and knowledge to be successful. What they lack is organizational health.

After two decades of working with CEOs and their teams of senior executives, I’ve become absolutely convinced that the seminal difference between successful companies and mediocre or unsuccessful ones has little, if anything, to do with what they know or how smart they are; it has everything to do with how healthy they are.

they miss the point by attributing the bad decisions to intellectual deficiencies. They fail to see that the real deficiency, the one that makes it possible for smart people to make dumb decisions, is a lack of organizational health.

Turning an unhealthy company into a healthy one will not only create a massive competitive advantage and improved bottom line, it will also make a real difference in the lives of the people who work there.

If an organization is led by a team that is not behaviorally unified, there is no chance that it will become healthy.

A leadership team is a small group of people who are collectively responsible for achieving a common objective for their organization.

A leadership team should be made up of somewhere between three and twelve people, though anything over eight or nine is usually problematic.

When it comes to discussions and decision making, there are two critical ways that members of effective teams must communicate: advocacy and inquiry. A professor at Harvard, Chris Argyris, introduced this idea.3 Advocacy is the kind of communication that most people are accustomed to, and it is all about stating your case or making your point. I think we should change our advertising approach. Or, I recommend that we cut costs. Inquiry is rarer and more important than advocacy. It happens when people ask questions to seek clarity about another person’s statement of advocacy. Why do you think the advertising approach is wrong? And which aspects of it are you referring to? Or, What evidence do you have that our expenses are too high? And how certain are you of this?

The only reason that a person should be on a team is that she represents a key part of the organization or brings truly critical talent or insight to the table.

At the heart of the fundamental attribution error is the tendency of human beings to attribute the negative or frustrating behaviors of their colleagues to their intentions and personalities, while attributing their own negative or frustrating behaviors to environmental factors.

Trust is just one of five behaviors that cohesive teams must establish to build a healthy organization. However, it is by far the most important of the five because it is the foundation for the others. Simply stated, it makes teamwork possible.

The Conflict Continuum

Nowhere does this tendency toward artificial harmony show itself more than in mission-driven nonprofit organizations, most notably churches. People who work in those organizations tend to have a misguided idea that they cannot be frustrated or disagreeable with one another. What they’re doing is confusing being nice with being kind.

One of the best ways for leaders to raise the level of healthy conflict on a team is by mining for conflict during meetings. This happens when they suspect that unearthed disagreement is lurking in the room and gently demand that people come clean. At first, mining for conflict might seem like stirring the pot and looking for trouble. But it is quite the opposite. By looking for and exposing potential and even subtle disagreements that have not come to the surface, team leaders—and, heck, team members can do it too—avoid the destructive hallway conversations that inevitably result when people are reluctant to engage in direct, productive debate.

When a leader knows that everyone on the team has weighed in and provided every possible perspective needed for a fully informed decision, he can then bring a discussion to a clear and unambiguous close and expect team members to rally around the final decision even if they initially disagreed with it.

Most leaders have learned the art of passive agreement: going to a meeting, smiling and nodding their heads when a decision is made that they don’t agree with. They then go back to their offices and do as little as possible to support that idea. They don’t promote it on their own team, and they certainly aren’t willing to run out onto the tracks waving their arms to prevent a train wreck. Instead, they sit back and watch problems develop, quietly looking forward to the day when things go badly and they can say, “Well, I never really liked that idea in the first place.” The impact of this is often embarrassing and costly for the organization.

The only way to prevent passive sabotage is for leaders to demand conflict from their team members and to let them know that they are going to be held accountable for doing whatever the team ultimately decides.

Notice that I’m focused here on peers. That’s because peer-to-peer accountability is the primary and most effective source of accountability on the leadership team of a healthy organization. Most people assume that the leader of an executive team should be the primary source of accountability—and that’s the norm in most unhealthy organizations—but it isn’t efficient or practical, and it makes little sense.

The irony of all this is that the only way for a team to develop a true culture of peer-to-peer accountability is for the leader to demonstrate that she is willing to confront difficult situations and hold people accountable herself. That’s right. The leader of the team, though not the primary source of accountability, will always be the ultimate arbiter of it.

So—and here is the irony—the more comfortable a leader is holding people on a team accountable, the less likely she is to be asked to do so.

At its core, accountability is about having the courage to confront someone about their deficiencies and then to stand in the moment and deal with their reaction, which may not be pleasant. It is a selfless act, one rooted in a word that I don’t use lightly in a business book: love. To hold someone accountable is to care about them enough to risk having them blame you for pointing out their deficiencies.

But there is an enormous difference between the two. Conflict is about issues and ideas, while accountability is about performance and behavior.

Although every case is a little different, generally I believe that on cohesive teams, accountability is best handled with the entire team. I say this because when leaders and team members call one another on issues in front of team members, they get benefits that don’t occur when it takes place individually. First, when accountability is handled during a meeting, every member of the team receives the message simultaneously and doesn’t have to make the same mistakes in order to learn the lesson of the person being held accountable. Second, they know that the leader is holding their colleague accountable, which avoids their wondering whether the boss is doing his job. Finally, it serves to reinforce the culture of accountability, which increases the likelihood that team members will do the same for one another. When leaders—and peers—limit their accountability discussions to private conversations, they leave people wondering whether those discussions are happening. This often leads to unproductive hallway conversations and conjecture about who knows what about whom.

Too many leaders seem to have a greater affinity for and loyalty to the department they lead rather than the team they’re a member of and the organization they are supposed to be collectively serving.

Some leaders of teams that don’t regularly succeed will still insist that they have a great team because team members care about one other and no one ever leaves the team. A more accurate description of their situation would be to say that they have a mediocre team that enjoys being together and isn’t terribly bothered by failure.

alignment is about creating so much clarity that there is as little room as possible for confusion, disorder, and infighting to set in. Of course, the responsibility for creating that clarity lies squarely with the leadership team.

No matter how many times executives preach about the “e” word in their speeches, there is no way that their employees can be empowered to fully execute their responsibilities if they don’t receive clear and consistent messages about what is important from their leaders across the organization.

There is probably no greater frustration for employees than having to constantly navigate the politics and confusion caused by leaders who are misaligned.

1. Why do we exist? 2. How do we behave? 3. What do we do? 4. How will we succeed? 5. What is most important, right now? 6. Who must do what?

More than getting the right answer, it is important to simply have an answer—one that is directionally correct and around which all team members can commit.

a plan is better than no plan. And it was General Patton who once said, “A good plan violently executed today is better than a perfect plan executed next week.”

An organization’s core purpose—why it exists—has to be completely idealistic. I can’t reiterate this point enough. Many leadership teams struggle with this, afraid that what they come up with will seem too grand or aspirational. Of course, that’s the whole point.

In order to successfully identify their organization’s purpose, leaders must accept the notion that all organizations exist to make people’s lives better. Again, that sounds idealistic, but every enterprise—every last one—ultimately should exist to do just that. To aspire to anything less would be foolish. After all, no one doubts that every company must have some sort of value proposition—a compelling reason that customers or constituents want to interact with it. And at the heart of that interaction is the expectation of a better life.

the process of determining an organization’s purpose cannot be confused with marketing, external or internal. It must be all about clarity and alignment.

if an organization is tolerant of everything, it will stand for nothing.

The importance of values in creating clarity and enabling a company to become healthy cannot be overstated. More than anything else, values are critical because they define a company’s personality.

an organization that has properly identified its values and adheres to them will naturally attract the right employees and repel the wrong ones.

When leaders who adopt too many values finally realize what they’ve done and that there is no hope for actually putting their many values to practical use, they often end up ignoring them altogether.

Core Values These are the few—just two or three—behavioral traits that are inherent in an organization. Core values lie at the heart of the organization’s identity, do not change over time, and must already exist. In other words, they cannot be contrived.

Aspirational Values These are the characteristics that an organization wants to have, wishes it already had, and believes it must develop in order to maximize its success in its current market environment. Aspirational values are the qualities that an organization is aspiring to adopt and will do its best to manage intentionally into the organization. However, they are neither natural nor inherent, which is why they must be purposefully inserted into the culture.

Permission-to-Play Values These values are the minimum behavioral standards that are required in an organization. Although they are extremely important, permission-to-play values don’t serve to clearly define or differentiate an organization from others. Values that commonly fit into this category include honesty, integrity, and respect for others.

Accidental Values These values are the traits that are evident in an organization but have come about unintentionally and don’t necessarily serve the good of the organization. In many companies, behavioral tendencies develop over time because of history, or because people start to hire employees who come from similar backgrounds. One day everyone looks around and realizes that just about every employee who works in the organization shares some quality: socioeconomic status, introversion, or good looks.

One of the best ways to go about identifying an organization’s core values is to undertake a three-step process as an executive team. The first step is to identify the employees in the organization who already embody what is best about the company and to dissect them, answering what is true about those people that makes them so admired by the leadership team. Those qualities form the initial pool of potential core values.

Next, leaders must identify employees who, though talented, were or are no longer a good fit for the organization. These are people who, in spite of their technical abilities, drive others around them crazy and would add value to the organization by being absent. Once those people are identified—sadly, this is usually a little easier than the first step—they need to be dissected in the same way.

Finally, leaders need to be honest about themselves and whether or not they embody the values in that pool.