Organizational health best competitive advantage

Christopher West

What’s the single greatest advantage any company can achieve? Organizational health. Yes, it’s ignored by most leaders even though it’s simple, free and available to anyone who wants it.

I’m a big fan of Patrick Lencioni and try to gobble up every book he writes. “The Advantage” is one of those books every leader should have on their must read list. Lencioni does a masterful job in making the case organizational health is the most powerful advantage to be achieved by any organization.

What is organizational health?  Organizational health is about integrity, but not in the ethical or moral ways in which integrity is defined so often today.  An organization has integrity — is healthy — when it’s whole, consistent and complete. It’s management, operations, strategy and culture fit together and make sense.

That might seem like a vague description. It feels vague to me. Let’s think about organizational health a little differently. Any organization wanting to maximize success must embody two basic qualities: smart and healthy.

Smart organizations are good at the fundamentals of business like strategy, marketing, finance and technology. These fundamentals can be thought of as decision sciences.  Business leaders make decisions every day about new marketing campaigns; creative financing arrangements to bolster the balance sheet; and strategies involving new product lines, services and markets. Being smart constitutes only half the equation, yet usually occupies almost all the time, energy and attention of most business leaders.

How do you recognize a healthy organization?  Look for signs that include minimal confusion and politics, low turnover among good employees and high degrees of morale and productivity. Business leaders might consider those signs and, with a nervous smile, ask themselves, “Wouldn’t it be nice?” Those who did shouldn’t feel alone. I’ve asked those same questions numerous times and wear a nervous smile as I sit here writing this column.

I believe even the most cynical leaders wouldn’t deny their companies would be transformed if they could achieve the characteristics of a healthy organization. Why, then, don’t leaders spend more time and energy on making their organizations healthier? Because most leaders prefer to look for answers where the light is better and they’re more comfortable. The light is certainly better in the measurable, objective and data-driven world of organizational intelligence — the smart side of the equation — than it is in the messier, more unpredictable world of organizational health. 

In this day and age of real-time data and nanosecond technology change, it’s harder than ever to maintain a competitive advantage based on intelligence alone. Don’t get me wrong. It’s still important for organizations to be smart and work the dials of marketing, finance and strategy. However, the smart part of the equation has become something of a commodity, a permission to play standard required for even a possibility of success.

An organization that is both smart and healthy will achieve a greater level of performance and success. An organization that’s healthy gets smarter over time. That’s because people in a healthy organization, beginning with the leaders, learn from one another, identify critical issues and recover quickly from mistakes. Without politics and confusion getting in their way, they rally around solutions faster than their political and dysfunctional rivals. A good way to look at organizational health is to see it as the multiplier of intelligence. The healthier an organization, the more of its intelligence it taps and puts to use.

What can a leadership team do to build a healthier organization? The answer would require a series of columns. For simplicity, I’ll summarize what Lencioni wrote in “The Advantage.” First and foremost, any leadership team of any organization must commit to making itself cohesive through building trust, engaging in healthy conflict, committing to decisions, holding people accountable and focusing on results. A cohesive leadership team must then create, reinforce and overcommunicate clarity around core values and purpose as well as vision and strategy. 

As a newly minted CEO, I can tell you it takes persistence, patience and hard work and there will be many days of making mistakes and dealing with failure and uncertainty. However, the prize of working with great people in a healthy organization is worth the effort and the pain.