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Business Tips – What is the last Competitive Advantage for a business?
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Published on Tuesday, 13 November 2018 15:22
(This is a summary of key ideas by Paul Humphreys, of the book The Advantage, by Patrick Lencioni)
After watching his father come home frustrated and complaining about how his company was managed, as well as working in management roles in large organisations himself , Patrick Lencioni found that management decisions had a very real impact on workers and customers, and ultimately the business success.
He saw in his work that an organisation’s biggest opportunity was not only about strategy, finance, marketing – but the health of the organisation – and it filtered from the top leadership – that was the new competitive ADVANTAGE.
He also finds that it is ignored by most leaders even though it is simple, because it is seen as TOO easy, and requires some humility to face the truth, is not sophisticated, nor an adrenalin rush, nor easily quantifiable.
It requires being both HEALTHY & SMART (one is not enough) -
- Health - low politics and confusion, high morale, enthusiasm and productivity, and low employee turnover (and clients!).
- Smart – the usual aim to excel at strategy, marketing, technology and occupies the greatest focus.
Many admit that the characteristics of HEALTH above, would transform their company, but without having a method to foster and encourage it, gravitate back to focus on the more tangible SMART areas which are more measurable and visible. But the opportunities by being smart/innovative are more competitive and harder to achieve.
Patrick has found that health makes the difference in successful businesses, because most organisations already have the “smarts” within the team. Rallying around a solution works, when no politics and confusion occurs. Like healthy families can exist without great wealth.
But health is not easy to define, and is not celebrated in business reporting, although everyone one knows what it is like to be in an UNHEALTHY organisation and the misery of politics, dysfunction, bureaucracy and confusion. The toll of the anguish and frustration on staff and ultimately families is another result.
In the book Patrick explains -
All the competitive advantages we’ve been pursuing during our careers are gone. That’s right. Strategy. Technology. Finance. Marketing. Gone as the key to advantage.
No, those disciplines have not disappeared. They are all alive and well in most organizations. And that’s good, because they’re important. But as meaningful competitive advantages, as real differentiators that can set one company apart from another, they are no longer anything close to what they once were.
That’s because virtually every organization, of any size, has access to the best thinking and practices around strategy, technology and those other topics. In this age of the internet, as information has become ubiquitous, it’s almost impossible to sustain a competitive advantage based on intellect and knowledge.
However, there is one remaining, untapped competitive advantage out there, and it’s more important than all the others ever were. It is simple, reliable and virtually free. What I’m talking about is organizational health.
The Healthy Organization
A healthy organization is one that has all but eliminated politics and confusion from its environment. As a result, productivity and morale soar, and good people almost never leave. For those leaders who are a bit skeptical, rest assured that none of this is touchy-feely or soft. It is as tangible and practical as anything else a business does, and even more important.
Why?
- Because even the smartest organization in the world, the one that has mastered strategy and finance and marketing and technology, will eventually fail if it is unhealthy. Trust me, I’ve seen it happen again and again.
- But a healthy organization will always find a way to succeed, because without politics and confusion, it will inevitably become smarter and tap into every bit of intelligence and talent that it has.
So if all this is true – and I am absolutely convinced that it is – then why haven’t more companies embraced and reaped the benefits of organizational health? For one, it’s hard. It requires real work and discipline, over a period of time, and it must be maintained. On top of that, it’s not sophisticated or sexy. That means it doesn’t excite a group of executives who are looking for a quick fix or a silver bullet, something that they will be reading about in the Wall Street Journal or Bloomberg Business week. Moreover, in spite of its power, organizational health is hard to measure in a precise, accurate way. It impacts so many disparate areas of an enterprise that it is virtually impossible to isolate it as a single variable and quantify its singular impact on the bottom line.
But the biggest reason that organizational health remains untapped is that it requires courage. Leaders must be willing to confront themselves, their peers, and the dysfunction within their organization with an uncommon level of honesty and persistence. They must be prepared to walk straight into uncomfortable situations and address issues that prevent them from realizing the potential that eludes them.
Organizational health is about making a company function effectively by:
- Building a cohesive leadership team;
- Establishing real clarity among those leaders;
- Communicating that clarity to everyone within the organization; and
- Putting in place just enough structure to reinforce that clarity going forward.
The advantage of organizational health is undeniable and massive. Companies get more done in less time. They avoid losing their best people. They identify problems earlier and solve them faster. They beat rivals who waste time, money and energy fighting among themselves, which ultimately drives away good employees and customers.
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