What Really Matters: A Conversation With Patrick Lencioni

When you go in to work with a company, how do you know when the organizational health is good and how do you know when it’s bad? What are the tells of both?

If I could have one piece of data about a company to understand if it’s healthy and successful, I’d want to go watch the leaders in a meeting. If the meeting is boring and there’s no tension, and there’s not emotional engagement with one another, I know that there are really bad things going on. I don’t mean emotional tension like people going after each other’s throats. What I mean is if people are engaged and feel like there’s something at stake, and that they have to push each other.

What do people who run companies need to do right now to really make culture better? What do they need to understand about culture?

I’ve had my consulting firm for 20 years and I worked with CEOs for five years before that. I have never seen a charismatic famous CEO whose people really wanted to follow [him or her]. They were hitching their wagon to something hoping it would work, but when those companies turn down, it’s ugly.

I remember going to Walmart years ago. I was in their cafeteria and I thought I was in a junior high school. And all their executives and all their employees were going to this really crappy cafeteria, and I thought, where’s the really nice part? No, this is it. The stores are actually nicer than their headquarters were—which may have changed since then. But I’m always suspect of places that are self-referential and treat the leaders like they’re important. I just love to go places where you’re surprised by the level of humility and reality that exists.

I can’t even begin to imagine how much has been spent on foosball tables in the last 25 years to create a culture.

The great thing about Millennials is they sniff out the bullshit. If you have a foosball table and your managers treat people like crap, and they bring in dinner just because they’re trying to manipulate you to live your life there, eventually, they sniff that out.

Younger people today are like, “Listen, if you’re going to treat me terribly, don’t try to win me over by letting me bring my dog to work or play foosball or build a slide from the second floor to the first floor.” If you want to do that, fine, but make it a company that runs well, a company that’s truly collaborative where you ask people their opinions and consider them, and you get people involved and respect them. That doesn’t mean everybody gets to vote on everything, this is not a touchy-feely soft thing.

There are these CEOs who I would say are cynical and power hungry, but they know how to dress things up to look like it’s collaborative. But underneath it the culture is just poison. You’ve got to focus on the fundamentals of making an organization healthy, and if you don’t do that, don’t insult people by trying to buy their affection with toys.

What are those fundamentals?

There are really four things. Most leaders in the Valley think that to make a company big you have to be the smartest kid on the block. Well, the funny thing is with the ubiquity of computing and information today, everyone’s smart. I honestly believe in 20 years of being a consultant, I’ve never worked with a company and walked away from the first meeting and said, “These people are just too dumb.” Everybody knows enough in the world today to run a business. It’s not about what you know, it’s can you tap into the intelligence, the experience and the talent of the people there?

To do that there are four things you have to do. First of all, if the leaders at the top are political, dysfunctional and not a cohesive team, you’re through. If the leaders are fighting against each other, you’ll never come close to maximizing your potential. It’s the worst thing.

Second, they have to be intellectually aligned. There are six fundamental questions that if those leaders are not completely aligned around, I mean no daylight between them, then you’re going have problems.

Third, you have to constantly, persistently, and repetitively communicate the answers to those questions. Alan Mulally was incredible at this when he turned Ford around. Gary Kelly at Southwest is great at this. At all the best companies we know, the leaders constantly reinforce the key messages, they don’t get bored and move on to something else. They’re like, “This is what we’re about and I’m going to tell it to you again and again and again.”

Nobody ever leaves an organization because they think, “Well, the CEO just communicated to me way too much.” The best leaders know that you can’t over communicate what matters.

The last thing is they have to put just enough structure in place around those answers to reinforce the culture without bureaucratizing it. Most companies over bureaucratize.

Do we overcomplicate business?

Oh gosh, absolutely.

Why?

There are three reasons people reject simple solutions. One, I call sophistication bias. I want something that’s really sophisticated and sexy. It’s like, “I lost weight, how did I do it? I ate less and I exercised more.” Nobody’s finding that interesting.

The next bias is what we call the adrenaline bias. That’s, “I want something to work right now.” It’s like, “Freeze off my fat.” No solution that flips a switch and changes right away works. Organizational health does not take that long, but it’s a discipline that you have to do for a while to see it work.

The third one is quantification bias. When I worked at Bain [Consulting] people would say, “Isolate all the variables and tell me exactly what the ROI of doing this one thing is.” It doesn’t work that way.

When we work with companies they ask, “What will organizational health do for us?” Our answer is: Everything. It will permeate everything you do and you’ll never be able to isolate the variable. It’s going to permeate how you have meetings, how you make decisions, where you put your capital, how you talk to one another, how you deal with failures. And they’re like, “Well, if it’s not sexy, and I can’t do it right away, and I don’t know exactly what the ROI is, it must not work.”

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Dan Bigman is Editor and Chief Content Officer of Chief Executive Group, publishers of Chief Executive, Corporate Board Member, ChiefExecutive.net, Boardmember.com and StrategicCFO360. Previously he was Managing Editor at Forbes and the founding business editor of NYTimes.com.