Patrick Lencioni. The Advantage: Why Organization Health Trumps Everything in Business. Jossey-Bass, 2012. (216 pages)
Jim Collins once told me, qualitative field research is just as reliable as the quantitative kind, as long as clients and readers attest to its validity. (xvii)
The Case for Organizational Health
The single greatest advantage any company can achieve is organization health. Yet it is ignored by most leaders even though it is simple, free, and available to anyone who wants it. (1)
The Three Biases. More than a side dish or a flavor enhancer for the real meat and potatoes of business, it is the very plate on which the meat and potatoes sit. …before leaders can tap into the power of organizational health, they must humble themselves enough to overcome the three biases that prevent them from embracing it.
- The Sophistication Bias: …it’s hard for well-educated executives to embrace something so simple and straightforward.
- The Adrenaline Bias: …afraid to slow down and deal with issues that are critical but don’t seem particularly urgent.
- The Quantification Bias: …measuring its financial impact is almost impossible to do in a precise way.
I am convinced that once organizational health is properly understood and placed into the right context, it will surpass all other disciplines in business as the greatest opportunity for improvement and competitive advantage. Really. (4)
Understanding Organizational Health. At its core, organizational health is about integrity, but not in the ethical or moral way that integrity is defined so often today. 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. (5)
Smart Versus 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. (5)
Two Requirements for Success
I’ve come to learn that even well-intentioned leaders usually return to work and gravitate right back to the “smart” side of the equation… Why would they do something so absurd? (6)
- Better Light. Lucy: “I’m looking for my earrings.” Ricky: “You lost your earrings in the living room?” Lucy: “No, I lost them in the bedroom. But the light out here is much better.”
- Permission to Play. …a minimum standard required for having even a possibility of success. 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.
Health Begets — and Trumps — Intelligence. An organization that is healthy will inevitably get smarter over time. … In contrast, smart organizations don’t seem to have any greater chance of getting healthier by virtue of their intelligence. In fact, the reverse may actually be true because leaders who pride themselves on expertise and intelligence often struggle to acknowledge their flaws and learn from peers. (9)
Most organizations exploit only a fraction of the knowledge, experience, and intellectual capital that is available to them. But the healthy ones tap into almost all of it. (11)
The Four Disciplines Model
Is this model foolproof? Pretty much. (16)
Discipline 1: Build a Cohesive Leadership Team
The first step a leadership team has to take if it wants the organization it leads to be healthy — and to achieve the advantages that go with it — is to make itself cohesive. There’s just no way around it. If an organization is led by a team that is not behaviorally unified, there is no chance that it will become healthy. (19)
Defining a Leadership “Team” …one that plays together simultaneously, in an interactive, mutually dependent, and often interchangeable way. (21)
I like to say that teamwork is not a virtue. it is a choice — and a strategic one. (21)
A leadership team is a small group of people who are collectively responsible for achieving a common objective for their organization.
A Small Group of People. Between three and twelve. | Having too many people on a team can cause a variety of logistical challenges, but the primary problem has to do with communication. When it comes to discussions and decision making, there are two critical ways that members of effective teams must communicate: advocacy and inquiry. (22)
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? (22)
When more than eight or nine people are on a team, members tend to advocate a heck of a lot more than they inquire. This makes sense because they aren’t confident that they’re going to get the opportunity to speak again soon, so they use their scarce floor time to announce their position or make a point. (22)
Inclusivity, or the basic idea behind it, should be achieved by ensuring that the members of a leadership team are adequately representing and tapping into the opinions of the people who work for them, not by maximizing the size of the team. (23)
When executives put people on their leadership teams for the wrong reasons, they muddy the criteria for why the team exists at all. (24)
Collectively Responsible. …implies, more than anything else, selflessness and shared sacrifices from team members. (25)
…while there will always be a need for division of labor and departmental expertise, leadership team members must see their goals as collective and shared when it comes to managing the top priorities of the greater organization. (26)
BEHAVIOR 1: BUILDING TRUST
At the heart of vulnerability lies the willingness of people to abandon their pride and their fear, to sacrifice their egos for the collective good of the team. (27)
When members of a leadership team willingly acknowledge their weaknesses to one another, they give their peers tacit permission to call them on those weaknesses. (31)
The Fundamental Attribution Error. 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. (32)
Too Much Vulnerability?…it’s worth pointing out that vulnerability is not about a team member using the team as his own private therapy group. (35)
The Leader Goes First. If the team leader is reluctant to acknowledge his or her mistakes or fails to admit to a weakness that is evident to everyone else, there is little hope that other members of the team are going to take that step themselves. In fact, it probably wouldn’t be advisable for them to do so because there is a good chance that their vulnerability would be neither encouraged nor rewarded. (36)
BEHAVIOR 2: MASTERING CONFLICT
“productive ideological conflict,” (38)
When there is trust, conflict becomes nothing but the pursuit of truth, an attempt to find the best possible answer. (38)
Conflict Avoidance. When leadership team members avoid discomfort among themselves, they only transfer it in far greater quantities to larger groups of people throughout the organization they’re supposed to be serving. In essence, they leave it to others below them to try to resolve issues that really must be addressed at the top. This contributes to employee angst and job misery as much as anything else in organizational life. (40)
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. (44)
Conflict Tools. One of the best ways for leaders to raise the level of healthy conflict on a team is by mining for conflict during meetings. …By looking for an 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. (45)
BEHAVIOR 3: ACHIEVING COMMITMENT
People will not actively commit to a decision if they have not had the opportunity to provide input, ask questions, and understand the rationale behind it. Another way to say this is, “If people don’t weigh in, they can’t buy in.” | This is a critical point and needs to be clarified because it should not be misinterpreted as an argument for consensus. (48)
The truth is, very few people in the world are incapable of supporting a decision merely because they had a different idea. Most people are generally reasonable and can rally around an idea that wasn’t their own as long as they know they’ve had a chance to weigh in. (49)
Most leaders have learned the art of passive agreement: going to a meeting, smiling, 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. (49)
Specific Agreements. …functional teams maintain the discipline to review their commitments and stick around long enough to clarify anything that isn’t crystal clear. (51)
BEHAVIOR 4: EMBRACING ACCOUNTABILITY
Peer Pressure. …peer-to-peer accountability is the primary and most effective source of accountability on the leadership team of a healthy organization. (54)
Overcoming the “Wuss” Factor. 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. (56)
Firing someone is not necessarily a sign of accountability, but is often the last act of cowardice for a leader who doesn’t know how or isn’t willing to hold people accountability. | 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. (57)
…there is nothing noble about withholding information that can help an employee improve. (59)
Behavior Versus Measurables. The reason that behavioral accountability is more important than the quantitative, results-related kind has nothing to do with the fact that it is harder. It is due to the fact that behavioral problems almost always precede — and cause — a downturn in performance and results.
BEHAVIOR 5: FOCUSING ON RESULTS
…no matter how good a leadership team feels about itself, and how noble its mission might be, if the organization it leads rarely achieves its goals, then, by definition, it’s simply not a good team. (65)
Collective Goals. When it comes to how a cohesive team measures its performance, one criterion sets it apart from noncohesive ones: its goals are shared across the entire team. (66)
Team Number One. When members of a leadership team feel a stronger sense of commitment and loyalty to the team they lead than the one they’re a member of, then the team they’re a member of becomes like the U.S. Congress of the United Nations: it’s just a place where people come together to lobby for their constituents. (68)
Discipline 2: Create Clarity
…creating clarity is all about achieving alignment. (73)
Within the context of making an organization healthy, alignment is about creating so much clarity that there is as little room as possible for confusion, disorder, and infighting to set in. (73-74)
But all too often — and this is critical — leaders underestimate the impact of even subtle misalignment at the top, and the damage caused to the rest of the organization by small gaps among members of the executive team. (74)
There is probably no greater frustration for employees than having to constantly navigate the politics and confusion caused by leaders who are misaligned. (75)
BLATHER. …it can’t be denied that most mission statements have neither inspired people to change the world nor provided them with an accurate description of what an organization actually does for a living. (75)
Just in case you’re not convinced of this, take look at the following mission statement I’ve lifted from the T-shirt of a company that most people know fairly well. I’ve redacted the name of the organization and just one word that might give away its industry. See if you can guess which company it is. (76)
_____ Incorporated provides its customers with quality _____ products and the expertise required for making informed buying decisions. We provide our products and services with a dedication to the highest degree of integrity and quality of customer satisfaction, developing long-term professional relationships with employees that develop pride, creating a stable working environment and company spirit.
The point here is that alignment and clarity cannot be achieved in one fell swoop with a series of generic buzzwords and aspirational phrases crammed together. Leaders simply cannot inspire, inform, motivate, market, and position their companies in the context of a T-shirt or lucite tschotske. Clarity requires a much more rigorous and unpretentious approach. (77)
SIX CRITICAL QUESTIONS
- Why do we exist?
- How do we behave?
- What do we do?
- How will we succeed?
- What is most important, right now?
- 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. (78)
A good plan violently executed today is better than a perfect plan executed next week. – General Patton
QUESTION 1: WHY DO WE EXIST?
An organization’s core purpose — why it exists — has to be completely idealistic. I can’t reiterate this point enough. … In order to successfully identify their organization’s purpose, leaders must accept the notion that all organizations exist to make people’s lives better. (82)
Now that doesn’t mean that all organizations make people’s lives better in major, transformational ways. Most do so in relatively small, subtle ways. And it doesn’t mean that they make all people’s lives better; usually it’s a relatively small subset of the population. Nonetheless, every organization must contribute in some way to a better world for some group of people, because if it doesn’t, it will, and should, go out of business. (83)
Finding Your Reason for Existing. First, they must be clear that answering this question is not he end of the clarity process. …Second, an organization’s reason for existence, its purpose, has to be true. …Third, the process of determining an organization’s purpose cannot be confused with marketing, external or internal. (84-85)
So how does an organization go about figuring out why it exists? It starts by asking this question: “How do we contribute to a better world?” (85)
Not a Differentiator. The point here is that an organization’s reason for existing is not meant to be a differentiator and that the purpose for identifying it is only to clarify what is true in order to guide the business. (90)
QUESTION 2: HOW DO WE BEHAVE?
…if an organization is tolerant of everything, it will stand for nothing. (91)
Core Values. 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. … They cannot be extracted from an organization any more than a human being’s conscience can be extracted from his or her person. As a result, they should be used to guide every aspect of an organization, from hiring and firing to strategy and performance management. (93-94)
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. (95)
Permission-to-Play Values. These values are the minimum behavioral standards that are required in an organization. (97)
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. (98)
When leaders choose elaborate and unique phrases for their values but don’t adhere to them, they generate more cynicism and distrust than if they said nothing at all. (101)
Identifying Core Values. …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. ….identify employees who, though talented, were or are no longer a good fit for the organization. …be honest about [oneself] and whether or not [you] embody the values in that pool. (102)
QUESTION 3: WHAT DO WE DO?
The answer to this question is something we call an organization’s business definition. (105)
QUESTION 4: HOW WILL WE SUCCEED?
Strategic Anchors. …an organization’s strategy is simply its plan for success. It’s nothing more than the collection of intentional decisions a company makes to give itself the best chance to thrive and differentiate from competitors. That means every single decision, if it is made intentionally and consistently, will be part of the overall strategy. (108)
Identifying Anchors. …take a reverse-engineering approach… …consider everything imaginable related to their business. (109) …search for patterns that would indicate the organization’s strategic direction and anchors. Put another way, they need to identify the items, or collections of items, that fit together to form a theme or category. (111)
QUESTION 5: WHAT IS MOST IMPORTANT, RIGHT NOW?
If everything is important, nothing is.
And there is an additional consequence beyond the distraction, diffusion, and dilution that this causes: the emergence of departmental silos. (119)
Then I realized that there was a certain category of organization that seemed to rise above the silo problem: emergency responders. (12)
What a crisis provides for an organization, whether that organization is an emergency responder accustomed to dealing with crises or a more traditional organization that finds itself temporarily in the midst of one, is a rallying cry, a single area of focus around which there is no confusion or disagreement. (121)
The Thematic Goal (a.k.a. The Rallying Cry)
A thematic goal is…
- Shared across the leadership team.
Second, the primary purpose of the thematic goal is not necessarily to rally all the troops within the organization, as helpful as that may seem. More than anything else, it is to provide the leadership team itself with clarity around how to spend its time, energy, and resources. (122)
Leaders Without Hats. …it’s worth repeating that every thematic goal must become the collective responsibility of the leadership team. (123)
…it is the lack of a defined, compelling rallying cray or thematic goal that allows most bad staff meetings to happen, which enables poor decision making. (124)
Standard Operating Objectives. …ongoing and relatively straightforward metrics and areas of responsibility that any leadership team must maintain in order to keep the organization afloat. (126)
QUESTION 6:WHO MUST DO WHAT?
…every organization of any size needs some division of labor, and that begins at the very top. Without clarity around that division of labor, the potential for politics and infighting, even among well-intentioned people, is great. (132)
Discipline 3: Overcommunicate Clarity
Whether the number is five, seven, or seventy-seven, the point is that people are skeptical about what they’re being told unless they hear it consistently over time. (141)
The problem is that leaders confuse the mere transfer of information to an audience’s ability to understand, internalize, and embrace the message that is being communicated. The only way for people to embrace a message is to hear it over a period of time, in a variety of different situations, and preferably from different people. (142)
…messaging is not so much an intellectual process as an emotional one. Employees are not analyzing what leaders are saying based solely on whether it is intellectually novel or compelling, but more than anything else on whether they believe the leaders are serious, authentic, and committed to what they are saying. (143)
Intelligent people want to be challenged with new messages and new problems to solve, and they get tired of revisiting the same topics. But that doesn’t matter. The point of leadership is not to keep the leader entertained, but to mobilize people around what is most important. (143)
CASCADING COMMUNICATION. There are three keys to cascading communication: message consistency from one leader to another, timeliness of delivery, and live, real-time communication. (146)
UPWARD AND LATERAL COMMUNICATION.What is key to making these effective is that leaders not give the impression that they are abdicating responsibility for decision making by giving employees a vote. Great organizations, unlike countries, are never run like a democracy. (150)
Discipline 4: Reinforce Clarity
In order to ensure that the answers to the six critical questions become embedded in the fabric of the organization, leaders must do everything they can to reinforce them structurally as well. The way to do that is to make sure that every human system — every process that involves people — from hiring and people management to training and compensation, is designed to reinforce the answers to those questions. | The challenge is to do this without adding too much structure. Or as someone once said to me, “An organization has to institutionalize its culture without bureaucratizing it.” (153-154)
NON-GENERICS. That’s why a one-page, customized performance review form that mangers embrace and take seriously is always better than a seven-page, sophisticated one designed by an organizational psychologist from the National Institute for Human Transformation and Bureaucracy (there is no such thing). | This point cannot be overstated. Human systems are tools for reinforcement of clarity. They give an organization a structure for tying its operations, culture, and management together, even when leaders aren’t around to remind people. And because each company is different, there are no generic systems that can be downloaded form the Internet. (155)
Interviewing. …the purpose of an interview should be to best simulate a situation that will give evaluators the most accurate view of how a candidate really behaves, it seems to me that getting them out of the office and doing something slightly more natural and unconventional would be a better idea. (159)
ORIENTATION. The most memorable time of an employee’s career, and the time with the biggest impact, are his or her first days and weeks on a new job. (161)
PERFORMANCE MANAGEMENT. …the series of activities that ensures that managers provide employees with clarity about what is expected of them, as well as regular feedback about whether or not they are adequately meeting those expectations. (162)
COMPENSATION AND REWARDS. The point that needs to be made here is that the single most important reason to reward people is to provide them with an incentive for doing what is best for the organization. (164)
To fail to make the connection between compensation and rewards and one or more of the six big questions is to waste one of the best opportunities for motivation and management. (165)
RECOGNITION. I like to explain to clients that when leaders fail to tell employees that they’re doing a great job, they might as well be taking money out of their pockets and throwing it into a fire, because they are wasting opportunities to give people the recognition they crave more than anything else. Direct, personal feedback really is the simplest and most effective form of motivation. (167)
…the vast majority of employees, at all levels of an organization, see financial rewards as a satsifier, not a driver. (167-168)
The Centrality of Great Meetings
…there is no better way to have a fundamental impact on an organization than by changing the way it does meetings. (173)
Bad meetings are the birthplace of unhealthy organizations, and good meetings are the origin of cohesion, clarity, and communication. (174)
The truth is, if executives are having the right kind of meetings, if they’re driving issues to closure and holding one another accountable, then there is much less to do outside meetings, including managing their direct reports. | The thesis behind all of this is worth repeating: a great deal of the time that leaders spend every day is a result of having to address issues that come about because they aren’t being resolved during meetings in the first place. (186)
Seizing the Advantage
…there are a couple of factors that [organizations/early adopters] must embrace in order to avoid experiencing false starts and undue cynicism. (190)
THE LEADER’S SACRIFICE. …the person in charge of an organization’s leadership team is crucial to the success of any effort to build a healthy organization. (190)
There is just no escaping the fact that the single biggest factor determining whether an organization is going to get healthier — or not — is the genuine commitment and active involvement of the person in charge. For a company, that’s the CEO. For a small business, it’s the owner. For a school, it’s the principal. For a church, it’s the pastor. for a department within a company, it’s the department head. (190)
The truth is, being the leader of a healthy organization is just plain hard. But in the end, it is undeniably worth it. (192)
Checklist for Organizational Health
Members of a leadership team can gain a general sense of their organization’s health and, more important, identify specific opportunities for improvement by completing the following checklist.
Discipline 1: Build a Cohesive Leadership Team
___ The leadership team is small enough (three to ten people) to be effective.
___ Members of the team trust one another and can be genuinely vulnerable with each other.
___ Team members regularly engage in productive, unfiltered conflict around important issues.
___ The team leaves meetings with clear-cut, active, and specific agreements around decisions.
___ Team members hold one another accountable to commitments and behaviors.
___ Members of the leadership team are focused on team number one. They put the collective priorities and needs of the larger organization ahead of their own departments.
Discipline 2: Create Clarity
___ Members of the leadership team know, agree on, and are passionate about the reason that the organization exists.
___ The leadership team has clarified and embraced a small, specific set of behavioral values.
___ Leaders are clear and aligned around a strategy that helps them define success and differentiate from competitors.
___ The leadership team has a clear, current goal around which they rally. They feel a collective sense of ownership for that goal.
___ Members of the leadership team understand one another’s roles and responsibilities. They are comfortable asking questions about one another’s work.
___ The elements of the organization’s clarity are concisely summarized and regularly referenced and reviewed by the leadership team.
Discipline 3: Overcommunicate Clarity
___ The leadership team has clearly communicated the six aspects of clarity to all employees.
___ Team members regularly remind the people in their departments about those aspects of clarity.
___ The team leaves meetings with clear and specific agreements about what to communicate to their employees, and they cascade those messages quickly after meetings.
___ Employees are able to accurately articulate the organization’s reason for existence, values, strategic anchors, and goals.
Discipline 4: Reinforce Clarity
___ The organization has a simple way to ensure that new hires are carefully selected based on the company’s values.
___ New people are brought into the organization by thoroughly teaching them about the six elements of clarity.
___ Managers throughout the organization have a simple, consistent, and nonbureaucratic system for setting goals and reviewing progress with employees. That system is customized around the elements of clarity.
___ Employees who don’t fit the values are managed out of the organization. Poor performers who do fit the values are given the coaching and assistance they need to succeed.
___ Compensation and reward systems are build around the values and goals of the organization.
___ Tactical and strategic discussions are addressed in separate meetings.
___ During tactical staff meetings, agendas are set only after the team has reviewed its progress against goals. Noncritical administrative topics are easily discarded.
___ During topical meetings, enough time is allocated to major issues to allow for clarification, debate, and resolution.
___ The team meets quarterly away from the office to review what is happening in the industry, in the organization, and on the team.
But above and beneath, around, and through all of this, I thank God — Father, Son, and Holy Spirit — for blessing me in so many ways and bringing me ever closer year after year. Your mercy endures forever. (204)