Patrick Lencioni describes smart organisations as follows:
“Smart organizations are good at those classic fundamentals of business—subjects like strategy, marketing, finance, and technology — which I consider to be decision sciences.” – Partick Lencioni, The Advantage
However, it’s the health of an organisation the provides the context in which decisions concerning strategy, marketing, governance and technology takes place. As such organisational health is a key determinant of success. Patrick Lencioni describes healthy organisation as follows:
“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. 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.” – Patrick Lencioni, The Advantage
In summary, the primary elements of smart and healthy organisations are summarised below.
Smart vs Healthy Organisations (Source: Patrick Lencioni, The Advantage)
It turns out that dysfunctional organisations make poor decisions no matter how smart they appear to be. This is the same effect can be seen with people who are not psychologically whole, they can be extremely smart, however they end up making poor decisions. Organisational health is thus a critical part of success.
Patrick Lencioni makes the following observations concerning organisational health:
- Organisational smarts – although important – does not provide long term competitive advantage, it only gives organisations “permission to play”.
- Sustainable competitive advantage requires organisational health, not just organisational smarts.
- Leaders spend too much time on organisational smarts and spend too little time improving organisational health.
- The biggest lack in business is organisational health, not organisational smarts.
- Organisational health should receive priority over organisational smarts.
- When organisational health is lacking smart people end up making dumb decisions.
- Organisational health acts as a multiplier of organisational smarts.
- What’s that state of your organisation’s health?
- Do you need to commit to improve your organisational health?
- Which of the elements of organisation health requires your focus?