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The Advantage

Why Organizational Health Trumps Everything Else in Business

By: Patrick Lencioni

Reviewed By: Bob Ruffolo

Organizational health trumps everything in business.

At least, that’s the argument that Patrick Lencioni makes in his book The Advantage.

Despite all of the underlying benefits of having a healthy organization, so many leaders struggle to embrace the process of creating one because they quietly believe they are too sophisticated, too busy or too technical to mess with it. In other words, they think it’s beneath them.

According to Lencioni, there are three biases that prevent leaders from embracing the power of organizational health:

  • The Sophistication Bias: Many leaders view organizational health as too simple or accessible to have a great impact in their company. They might acknowledge that it is nice, but don’t see it as a real opportunity.
  • The Adrenaline Bias: Too many leaders have become so accustomed to the daily rush of solving problems and managing crises that they are addicted to the adrenaline associated with a dysfunctional organization. Becoming a healthy organization takes time and patience, requiring leaders to slow down -- which goes against everything they’ve taught themselves to believe is good for their organization.
  • The Quantification Bias: Although becoming a healthy organization does have powerful benefits that spread across every area of an organization, you can’t accurately predict the financial benefits nor can you predict a timetable for those financial benefits to occur. Most business leaders don’t like that and prefer to make changes based on how it affects the bottom line.

Smart organizations are great at figuring out the classic fundamentals of business, such as strategy, marketing, finance, and technology. The problem is that being smart is only half the equation.

The Four Disciplines Model for Organizational Health

An organization doesn’t become healthy by following a simple, linear path. Similar to building a strong marriage or family, it’s a messy process that involves doing several things at once, and it requires ongoing maintenance. However, that messy process can be broken down into four simple disciplines. 

Discipline 1: Build a Cohesive Leadership Team

An organization can’t be healthy without a behaviourally unified leadership team, there’s just no way around it. One of the most common problems that Lencioni cities is the size of leadership teams being too large. Lencioni suggests that leadership teams stay between three and 12 people, however, he states that even eight or nine is too much for most organizations.

Behavior 1: Building Trust

The members of your leadership team have to trust each other to be cohesive.

This goes beyond just trusting each other to do their job well. This has to reach what Lencioni calls “vulnerability-based trust” where everyone is completely comfortable with being transparent and honest with each other. With this level of trust, members can comfortably admit their own faults and genuinely ask for help or admit when a colleague’s idea is better than their own.

At the heart of vulnerability-based trust, everyone in the group is willing to sacrifice their individual egos for the greater good of the team.

Behavior 2: Mastering Conflict

Conflict itself is not a bad thing -- it’s how organizations handle conflict that determines whether the resulting effects are good or bad.

Because our culture has conditioned us to avoid conflict, Lencioni suggests that leaders will often have to intentionally create healthy conflict in meetings. Although it will be uncomfortable at first, he suggests that leaders “mine for conflict” by asking others to express their disagreements.

By giving permission and welcoming disagreement, it sets an example to others that the end-goal is the best solutions. Even if that means disagreement on certain things along the way.

Behavior 3: Achieving Commitment

Conflict is important for achievement because it gives everyone an opportunity to share their input, ask questions, and understand all sides.

People don’t actively commit to something that they don’t feel involved in. They will simply smile and not -- passively committing, even if they don’t agree. 

Whenever the goal is agreement, instead of commitment, people have no reason to express concerns or ask questions. By demanding conflict within the team, each leader has a chance to plead their case and influence the outcome. However, they also know they will be held accountable to commit to the final decision of the group.

Behavior 4: Embracing Accountability

Intentions are nice, but action is what moves the organization forward.

According to Lencioni, “peer-to-peer accountability is the primary and most effective source of accountability on a leadership team.” Once everyone trusts each other and knows that everyone is committed to the desired outcome, they can confront each other without worrying about a negative backlash or defensiveness.

The goal of accountability is to offer clarity in what the other person is doing, not harsh criticism.

Behavior 5: Focusing on Results

The results of the organization as a whole (not just individual departments) are the most important thing for the leadership team to focus on. The entire purpose of the first four behaviors is to keep everyone focused on results.

The only way that good decisions can be made and that the organization can continue to succeed is when the leadership team prioritizes the results of the group over the results of the branch of the organization that they lead.

Discipline 2: Create Clarity

For as much as leaders and organizations like to focus on the theory of alignment, very few organizations actually put this into practice. The reason for this is that few organizations are clear on the principles that they want to align themselves around. 

The Advantage lists six critical questions that leaders must answer to find clarity and create a healthy organization.

Question 1: Why do we exist?

Every organization needs to have a purpose -- something grand and aspirational that employees can get behind. Lencioni stresses the point that this purpose has to be idealistic to inspire support from employees, even though they know that the organization’s success ultimately comes down to tangible and tactical activities.

Question 2: How do we behave?

The organization that is tolerant of everything stands for nothing.

A healthy organization must identify a small set of core values that already exist within the organization and that will not be changed. These core values are the heart of the organization’s identity and will determine the type of people that will and won’t fit into the organization. 

Question 3: What do we do?

This is the opposite of the organization's purpose, which is idealistic. The answer to this question is what Lencioni calls a “business definition,” but he makes it very clear that this is not a mission statement.

This is just a simple, one-sentence description of what your organization actually does. The description should be clear and not written in a way that it would be used for marketing purposes -- just boring and easy to understand.

Question 4: How will we succeed?

To answer this question, the team must determine their strategy for success.

These are the decisions that an organization makes to differentiate themselves from their competitors and give themselves the greatest chance of success. However, all business decisions play a role in the overall strategy and it’s difficult to summarize each and every decision into one sentence or neat little paragraph.

Lencioni suggests that organizations find three strategic anchors that guide their overall strategy. These anchors become the lens from which all future decisions are based and provide consistency in the decision-making process.

Question 5: What is most important, right now?

Every organization needs to have one top priority during any given period of time if it wants to create alignment and focus among its leadership and employees.

Despite the fact that there can only be one top priority, technically, most companies have too many top priorities. Lencioni says that these companies need a “thematic goal” aka a rallying cry. 

A thematic goal is the answer to the question of what is most important today. A thematic goal must be:

  • Singular: There has to be one thing that is the clear priority over everything else, even if there are other goals.
  • Qualitative: Very rarely should a thematic goal have specific numbers attached to it.
  • Temporary: A thematic goal needs a clear timetable for execution, usually between three and 12 months.
  • Shared across the leadership team: A thematic goal might only affect one or two areas of an organization, but the entire leadership team needs to be on board in support of the goal.

The execution of a thematic goal must be broken down into categories, or what Lencioni calls “defining objectives.” These defining objectives map out a clear game plan for achieving the thematic goal.

In addition to the defining objectives, organizations need standard operating objectives -- the ongoing and relatively straightforward metrics and areas of responsibility that any leadership team must maintain in order to keep the organization afloat.

Question 6: Who must do what?

Organizations should never skip this question by assuming that everyone knows who is doing what, based on their position. Lencioni suggests that you take the little bit of time required to provide clarity for everyone on the leadership team regarding what each person is doing and ensuring that everything is covered.

Discipline 3: Over-Communicate Clarity

Once the leadership team has become one cohesive unit and they’ve established clarity by answering the six critical questions, they can start sharing those answers with the rest of the organization.

The problem is that leaders often confuse the mere transfer of information to an audience with the audience’s ability to understand, internalize, and embrace the message that is being communicated. The only way that people will embrace a message is by hearing it over a period of time, in a variety of different situations, and preferably from different people

According to Lencioni, great leaders see themselves as Chief Reminding Officers, because they are constantly relaying their message over and over.

The best way to spread the message across an organization is by a process Lencioni calls “cascading communication” where the message flows down the organization immediately following a meeting.

At the end of the meeting, executives must decide what they will and won’t pass along to their teams, which results in “commitment clarification.”

Once the leadership team has agreed on what information will be passed along, each executive begins spreading the information among their teams like rumors -- except they are true rumors. This is how they get the message to spread far and wide in a short amount of time.

Discipline 4: Reinforce Clarity

Although over-communication is important, leaders of a healthy organization don’t always have the time and availability to remind employees about the company’s reason for existing, its values, and so on.

To make sure 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. This is accomplished by ensuring that every human system, from hiring and people management to training and compensation, is designed to reinforce the answers to those questions.

The best human systems are the simplest and least sophisticated ones. Human systems shouldn’t be designed to avoid lawsuits or to copy what other companies are doing -- they exist as tools for reinforcement of clarity. This creates a structure that’s tied around the operations, culture and management of the organization without relying on the leadership team every step of the way.

The last frontier of competitive advantage is the transformation of unhealthy organizations into healthy organizations -- and the single biggest determining factor in the health of an organization is the genuine commitment and active involvement of the person in charge.