Why CEOs Need to Think Less About Strategies
If you have your health, you've got just about everything. So says Patrick Lencioni, the consultant, speaker, and best-selling author, in his new book, The Advantage: Why Organizational Health Trumps Everything Else in Business. Lencioni is best known for popular business fables like The Five Dysfunctions of a Team. But The Advantage draws on real-life case studies to convince business executives that fielding smart strategies is less important than building a healthy and effective organization. Lencioni spoke with Inc. editor-at-large Leigh Buchanan about the CEO's role in promoting a well-adjusted company.
Ask an entrepreneur what she wants for her business, and she'll talk about financial success, a fabulous culture, irresistible products. Ask a new parent what she wants for her child, and she'll say, "I want her to be healthy." Should founders think more like parents?
Let me make the analogy a little tighter. The real job of parents is to give their children an environment in which they can thrive. Ultimately, parents can neither predict nor control how their kids turn out, but they can give them a life free of unnecessary dysfunction and stress—and clarity about boundaries. Similarly, the head of an organization has to make it healthy. The key is to create an environment where people can thrive, without unnecessary dysfunction, confusion, and politics. This requires a cohesive team at the top, clarity, communication, and reinforcement through human systems. By doing this, founders can provide their people with the opportunity to succeed in ways that even they couldn't have anticipated.
The Advantage talks a lot about leadership teams. So let's discuss the CEO's role. For starters, given the weight his opinions carry, should the CEO hold his peace until the team has hashed over a subject?
You do have to solicit others' feedback before you announce your own opinion. Because even if you're a humble CEO who thinks of himself as just one member of the team, you still have undue influence. And if your people don't weigh in on a decision, they're not going to buy into it, either. That doesn't mean you're seeking consensus. The leader's job is to listen to everybody and then say, "OK, based on what I just heard, here is how we are going to go." If you have a really cohesive team where people know they can push back and have conflict with the leader, then guarding your thoughts becomes less important. If you're not sure you have established that yet, it's better to be reticent.
If you already know what you plan to do in a given situation, should you simply forgo discussion?
What you can't do is tell people their opinions matter when they really don't. We see this all the time in organizations. I've seen it in churches: "We're going to select a new pastor. Let's give all the parishioners a chance to vote." But they already know whom they are going to pick. You have to come clean and say, "I think I know what I'm going to decide. I would love to solicit input, but it would be disingenuous."
The earliest members of an entrepreneur's leadership team are usually the friends, relatives, or former colleagues he or she started the business with. As you start hiring more experienced executives, how do you manage relationships between old friends and new kids on the block?
When you bring on new people, you have to rebuild the team, to rebuild trust. If you adopted two children into your family, you wouldn't just say, "Oh, they'll catch on." You'd have to integrate them. The new people and the old people have to figure each other out. Once they understand each other's personal histories, someone may find she can relate better to a new person than to people she's worked with forever.
I can see why you would want people with different backgrounds and personalities on leadership teams. Is it also a good idea to include people with different tolerances for risk?
I think that's huge. When we work with teams, we profile their members' approaches to work, and risk is part of that. At my company, The Table Group, I can go around the table and tell you who will promote a conservative, keep-it-the-same-way approach and who will say "throw it out the window." I love that. I balance listening to the risk takers with "let's make sure we're not doing something stupid here, folks." There are a lot of ways to think about diversity on a team. You have to remember that people can look very different but have similar approaches to things like decision making and risk.
Is it OK for a CEO to behave differently in meetings than in one-on-one interactions?
The chief thing is that people should say the same things one on one that they say in the group. When leaders say different things in meetings and personal conversations, that's a sign of trouble. But I'm a great believer in fewer one-on-one conversations and more team conversations. Ninety-five percent of difficult conversations should take place in a group, so everybody around the table benefits from what is said, and the CEO doesn't have to repeat it eight times. If you're going to call someone on his or her behavior, do it with the whole team, assuming you've built that level of trust and are willing to let people call you on things as well. They say parents shouldn't let their kids see them fight. Well, my wife and I argue in front of the kids—I'm Italian and Irish, so I can't help it. But we make up in front of our kids, too. That's how it should be at work.
If you're encouraging conflict, do you need a "no-asshole rule" to weed out people who get mean when they argue?
At my company, we have three core values. We look for people who are humble. That means we instead of I. Hungry—we like people we have to tell to back off, not to work harder. And smart—not intellectually smart but interpersonally smart. If a person is humble, hungry, and smart, that's our no-asshole rule.
A key challenge for all companies is getting employees to think about the business as a whole, rather than their own specific jobs or departments. What can CEOs do to make that happen?
It starts at the top. The CEO has to make it very clear that when we're together, you take off your marketing hat, and you take off your finance hat, and we all put on the hat that says XYZ Company. One tangible way to do that is the rallying cry. You ask the team, "What is the one thing we have to do as a company in the next three to nine months? The thing that if we don't do it, we will fail?" People will toss that around, and then someone will say, "If we don't solve the capacity problem, we're in trouble." Then someone else will agree: "Yeah, if we don't do that, then my department is screwed, too." And everybody says, "Yep." Now that becomes everybody's priority. And suddenly people are saying, "I have three open hiring slots that you need more than I do. You should take those."
When we were looking at this, we asked ourselves, "What kinds of organizations don't have silos?" Well, emergency rooms. Fire departments. Soldiers in the field. Because those organizations have a common rallying cry. "Save this person's life!" "Keep this building from burning down!" "Protect the platoon!" Companies experience the same thing when they go into a crisis. The challenge is keeping employees from going back to their silos once the crisis is over.
You're no fan of terms such as alignment, empowerment, and world class. How can leaders restore potency to their written and verbal communication?
Repetition is more important than novelty. Tell your people, "You may think that 'the customer is always right' is a cliché. But you are going to hear it in orientation. You are going to hear it in training. You are going to hear it in your performance review. We are going to build it into every system we have. And after a while, you are going to say, 'You know, I think they're serious.' " So even though the words might be degraded, in context, they actually mean something.
We worked with Southwest Airlines when they were codifying their values. They talk about having a warrior spirit and a servant's heart. Are they serious? Well, their stock symbol is LUV. At another company, that would get only snickers. At Southwest, nobody thinks what the leaders say is just a bunch of words.
You write that "Every organization must contribute, in some way, to a better world for some group of people..." But let's be real. Can a company that makes, say, self-adhesive return-address labels talk about mission the same way as one that makes cancer drugs?
You can't inspire someone by saying something that isn't true. But there are multiple core purposes a company can have that can inspire people. We asked the leaders of a paving company we work with about their core purpose. They were saying things like, "We're making the world a better place." And the founder finally said, "Guys, you know why we do this? We do this so we can give these great people jobs. If the paving industry wasn't good, we'd do roofing."
Maybe frame the question like the movie It's a Wonderful Life. If my company didn't exist, how would things be different?
That's a great way to look at it. If we weren't here, then the town wouldn't have the pride it has. These people wouldn't have jobs. Some CEOs might say the only difference is I wouldn't have as much money. If that's true, then be up front about it. Don't pretend to care about something you don't.
As a founder and president yourself, what has been the most difficult challenge for making and keeping your company healthy?
Not letting myself get distracted by the things I find interesting about my job: the writing and speaking and strategizing. My job as a leader is to take responsibility for keeping my company healthy.
This is your first book to draw on real—if unnamed—examples instead of fictional companies. Did you ever feel like a novelist working on his first biography: frustrated that you couldn't manipulate the details and personalities for maximum effect?
It turns out that truth is much stranger than fiction.