Summary of The Advantage by Patrick Lencioni
Organisational health is the single greatest factor determining any company’s success.
People sometimes say “We have smart people and access to information, so we’ll succeed”. That’s no longer true. These have become a commodity. Patrick never met the leaders of a company who aren’t knowledgeable about their domain, or where the key people aren’t smart. But he met plenty of companies that will fail given their rotten culture.
What do unhealthy companies look like?
In a healthy company, if someone is making a wrong decision or is misbehaving, others point it out and have an open conversation, so that the team as a whole achieves what they’re supposed to. By contrast, in an unhealthy company, people don’t share their views in meetings1. The team doesn’t recognise mistakes. Politics comes in the way. Instead of speaking their mind, people will say “yes, yes” but not follow what they agreed to. If someone proposes a good idea, instead of being flexible, everyone else digs in their heels and rejects the good idea.
By contrast, a healthy organisation, once they’ve identified a problem, brainstorms solutions in a spirit of trust, and co-operate to achieve the goal. Healthy organisations are better at recognising a problem, identifying a solution, and putting their weight behind the solution. Unhealthy organisations fail at all three stages.
People who work in unhealthy organisations feel confused and powerless. They eventually conclude that work is drudgery and unlikely to lead to success. This cynical attitude eventually permeates their home life, causing deep personal problems that linger for years. This tragedy is completely preventable.
To determine organisational health, ask: Is productivity high? Is morale high? Is confusion among team members low? Is turnover among good employees low?
Why leaders neglect organisational health
Despite its importance, leaders often don’t focus enough on organisational health. Why? Because of 3 biases:
Sophistication bias: if the suggestions being given are simple, they must be useless.
Adrenaline bias: we’re too busy running, and we don’t have time to stop and fix important but not urgent issues. As racecar drivers say, you have to slow down to go fast.
Quantification bias: if you can’t measure the impact of organisational health and say, “This resulted in 32% more revenue”, it’s useless. Overly analytical people dismiss intuition.
Execs would rather work on intellectual work like spreadsheets or strategies, where they’re comfortable, than on subjective conversations that can easily become emotional and awkward. So they do the former even if their company needs the latter. It’s like the drunk searching for what he lost under the streetlight rather than where he lost it, because it’s easier to search under the light.
To make an organisation healthy, four disciplines are needed:
Discipline 1: The leadership team behaves in healthy ways every day. It’s not enough for each leader individually to do what he thinks is right, but misaligned with each other. The leadership team as a whole should be behaviorally cohesive.
Discipline 2: The leaders should create clarity. This happens only by being intellectually aligned. There are six questions you can ask to determine this. If all leaders answer similarly, you have alignment.
Discipline 3: Over-communicate the above clearly, enthusiastically and repeatedly. Repeat the message in 1:1 meetings. In team meetings. In Slack. When there’s a disagreement. And so on. Leaders should be patient. They should not just be decision-makers, but also evangelists.
Discipline 4: Reinforce clarity over time, by setting up systems. If transparency is a virtue, you might set up a system where an update is expected on every project every month in #general. With the system in place, success will take care of itself.
Small Teams Enquire, Big Teams Advocate
When a team member speaks up, there are two different scenarios: enquiry and advocacy. Enquiry is asking questions to learn more: why was this decision made? What alternatives were considered? When will we achieve the goals? What is my role in this plan? etc. Advocacy is when you’re strongly convinced about something and go around preaching it: “We should use Spring!”
In a small team (7 or fewer people), people enquire.
In a big team (8 or more people), people advocate without even understanding the context. Why do they do this? In a big team, each member gets only limited time with the decision-maker. So they have to make the most of every minute, which they do by skipping the enquiry and jumping to advocacy. In a small team, people know that the decision-maker is available to them, so they’re not in a rush.
This is why the UN is full of countries trumpeting their point of view, without listening to other countries' point of view.
For a team to work as one, they need to slow vulnerability. They need to have reached such a point of comfort that they're willing to be emotionally naked with one another, by saying "I made a mistake", "Your idea is better than me", "I wish I could learn to do it as well as you do" and "I'm sorry". When nobody in a team hides his mistakes, and everyone else can count on this, deep trust develops: they speak freely and fearlessly. They don't waste time and energy putting on airs. They abandon their pride and fear.
There's no such thing as too much vulnerability. Except maybe when a person is new to a company or a team, or a team is trying to transition from an environment of distrust to one of trust. Then you could decide to show some vulnerability and over time increase it. But those cases aside, there's no such as too much vulnerability.
If you find yourself in an environment where nobody is showing vulnerability, and you want it to change, go first. If everyone is waiting for someone to change, change won't happen. All the more so if you're a leader. It should feel awkward. It should feel like your stature in their eyes is a little diminished. It's okay to feel a little ashamed. Nobody is perfect, and that's what vulnerability is all about.
Conflict
There are four types of conflict:
Ideological conflict, where people argue for a certain point of view, even passionately. This is the good kind of conflict.
Conflict without trust, which is just politics — trying to manipulate someone into doing something regardless of whether that course of action is beneficial. When there's trust, people are able to agree when someone else's idea is better than theirs. Or admit when they don't know. Then the fear of conflict diminishes. Conflict then becomes the pursuit of truth. It can be a little uncomfortable. A healthy discomfort. A productive tension where different people come with different perspectives, like a UX designer saying that we should build an app with a great UX, and someone else saying we should launch faster.
Personal conflict, centered on individuals rather than ideas.
Artificial harmony: Some teams have a fear of conflict. Conflict is perceived to be uncomfortable, so people try to suppress it. So people withhold their opinions in meetings. They say yes but not follow what they agreed upon. They merely tolerate rather than trust their colleagues. They laugh at them after the meeting.
Only the first kind of conflict in the above list is good. If there's overt ideological conflict during a meeting, a leader shouldn't show discomfort or try to suppress the conflict. He should listen to both perspectives with an open mind, focusing on the logic rather than the emotion. Let every possible perspective about a decision be put on the table. Think about what has been said. Show by example what to do. Leaders can't run from discomfort. They have to accept it. This also applies in your personal life. If you want to exercise, you'll feel uncomfortable, but you have to push past it. No pain, no gain. In fact, no pain in the short term leads to more pain in the long term.
After everyone’s point of view is put on the table, if there’s still no agreement, the person in charge will make the call, and others should disagree and commit.
People don't insist on their plan being accepted. They care whether they're heard, that their perspective has been factored into the decision.
Accountability
At the end of a meeting, ask each person to summarise what the action items are. You'll be surprised to see that each person has a different view, significantly different from the actual action items. To solve this, make action items specific. For example, instead of "let's track our work in a structured manner", say "Don't message engineers on Slack to assign them a new task. Instead, create a task in Github." Write down these action items in a shared document that everyone can see while in the meeting. At the end of the meeting, ask everyone if the action items in the document are clear and whether anything was missed. People should have access to the document to refer to it a week or two later when they (naturally) forget what was discussed.
In a healthy team, people hold each other accountable. In an unhealthy team, people complain to the boss that Ramesh is doing something bad. People start to wonder who ratted them out, and they become resentful of each other. They causes the boss to waste her time on personal gripes, distracting her from the mission of the team.
When we say that a good team holds itself accountable, it doesn’t abdicate the leader of her responsibility to backstop the team. If she sees bad behavior and doesn't hold the appropriate person accountable, people will notice and stop enforcing accountability. Some managers are reluctant to confront people about their problems. Other managers are fine confronting people about objective problems like "Your sales target was $500K and you sold only $200K" but not about behavioral problems. The latter conversation can be awkward and get emotional at any point of time. Regardless, it’s cowardly of a manager to run away from awkward conversations. Problems with performance can always be traced backward in time to behavioral problems.
Accountability is parallel to conflict. Both involve discomfort and emotion. Conflict is about ideas: should we take more time to improve the app and then launch? On the other hand, accountability is about making judgments of personal behavior.
Some companies have a problem of alignment between various teams. Sometimes leaders think underlings don't have a good attitude and don’t work together. But usually the problem is that leaders themselves aren't aligned.
Mission
Every company has a reason to exist. They should identify and communicate this. A mission statement is the tool for this.
To write one, introspect about why you started this company. When the owners of a company in the US that makes driveways did so, they remembered that they started the company to give first-generation Americans a way to eventually buy their own home. If the market for driveways deteriorates, they wouldn't mind doing roofing or painting, because taking care of their people is more important to them than driveways. This is the kind of clarity a mission statement brings. It’s meant to drive decision-making. If you treat writing a million statement as a BS exercise to get out of the way, then you’ll have more misalignments in the company, and people joining who never committed to the mission, because you didn’t distil and communicate it in the first place. This will cause people to become cynical.
Don't try to come up with something that looks good on a T-shirt. It's not a PR exercise. Treating it as one will cause you to come up with something that's not true, which will cause employees to lose trust and become cynical.
Core values
Core values define how your company operates. In other words, if the mission statement describes the goal, core values describe how you plan to get to the goal, such as by being transparent. Or by being a kind employer. Or by being an employer that demands high performance.
When people have a decision to make, they should consult the company values and ask if the proposal aligns with the values. Values should be used for hiring, performance management, firing and setting company strategy.
Don't worry if your mission statement is same as another company's. Two companies might have the same reason to exist. For example, both a hospital and a masseuse might exist to alleviate pain and suffering.
If your company exists only to make money for its owner, that's fine. Just be honest about it with your team members. If you contrive a mission statement, they'll lose trust in you.
A terrible way to identify company values is to ask everyone to vote on what's important. You’ll end up with a litany of platitudes like customer service, innovation, quality, environmental responsibility, financial responsibility, respect for the individual, excellence, customer satisfaction, integrity, work-life balance. When you make a decision, and refer to the values to see if it’s aligned, no option can align with all 9 values. So you’ll ignore some. This will cause cynicism among everyone. If someone complains that a value is being ignored, you should be able to determine whether that's the case. If you can't confidently do so, that value is bullshit. Guiding decisions is the whole reason for the mission statement. Don't try to be all things to all people. When you write your company values, they should have an element of intolerance. If you're tolerant towards everything, you stand for nothing.
You should be willing to be punished, both personally and as a company, for your values. If transparency is a value, you should be transparent, even if it means losing a client. Otherwise, values mean nothing.
An airline had humor as a value. A passenger complained to the CEO that a flight attendant was making jokes during the safety briefing. A typical spineless PR-obsessed CEO would thank the passenger and promise to tell the attendant to be serious, which would jeopardise the core value. Instead, this CEO responded to the passenger with "We'll miss you." If you're not willing to take a hit for the value, you don't believe in the value, in which case you should remove it from your list of values.
Core values can't change from time to time. You can't believe in being honest with customers, do so this year, and next year, when there's a tough situation, try to get out of it by being dishonest just in this case. If you do, your behavior shows that honesty is not a core value for you. If that’s the case, recognise it and don’t claim otherwise.
Don't confuse core and aspirational values. The former captures what is true today, and the latter, what you want to be true. For example, one CEO told Patrick that a sense of urgency is a core value. But everyone in the company was complacent. When challenged, the CEO said that that's why he wants it to be a core value. This won't work — Merely saying it's a core value won't change people's behavior. Then the gap between what’s on the website and what people are doing every day will cause cynicism. To change behavior, the CEO needs to enforce it every day in his work. Then, when the organisation is in sync with the behavior, make it a core value. Core values should merely formalise what people in the organisation already believe. The execs should be the first ones to live the core values every day. One company Patrick worked with listed "friendliness" as a core value. Patrick asked them if they think they're friendly. When they responded hemmed and hawed, Patrick continued, "Compared to other teams I worked with, you don't seem particularly friendly." They laughed and took out "friendliness" as a core value.
Set a high bar. A company said that integrity is a core value. When asked how, they said that they don't hire people who lie during an interview. But every company does the same thing, so doesn't make integrity a core value for the company.
When you identify a core value, avoid calling it something which already has a lot of connotations, like "humility". Everyone comes with their preconceived notion of what that means, which might be different from what management intended. One company had a value "sweep the floor". People asked what that meant, and the answer was, "Don't have an ego; don't say that ‘This work is beneath me.’" That's better than "humility". See if you can come up with some non-traditional phrase like this.
Again, values should exclude. In the previous example, when asked to sweep the floor, one person resigned admitting that he has an ego, and he wants to build up his CV by doing impressive work. Values that don't exclude are mere platitudes.
Strategic anchors
How we do business is different from core values and reason for existing. For example, for a retail chain, how we do business may be things like "We'll set up huge stores in areas where rent is low, so that we can offer a huge variety of products to customers under one roof. We'll have ample parking. We'll sell only long-lasting products. If any product is even slightly defective, we'll sell it through a different channel without our brand. We'll have employee discounts. Our pay and benefits will be slightly higher than average." These are strategic anchors — a few key business decisions that will affect everything else. Strategic anchors are important, but they're completely different from core values and mission.
Repetition
When management announces a new strategy, or a change in how the company works, employees need to hear it 7 times before they follow it. Executives sometimes forget that junior employees don't have the same ability to understand what has been said as they, and that it needs to be spelt out with more specifics and in a directive manner. Or they may understand it only when their manager shows them how to implement it in their context. For example, if it has been decided that quality is a priority, and the manager is talking to an engineer:
Engineer: We're going to launch an updated version of our software tomorrow. It's going to introduce some new bugs, but we'll fix them in a week.
Manager: We decided that quality is important.
Engineer: So?
Manager: That means we're going to postpone tomorrow's launch till it works properly. We're not going to make anything worse for users.
Engineer: You want me to do that?
Manager: Absolutely. That's what a focus on quality means. How are you going to postpone the launch? Are you going to send a message to team saying we're postponing till the bugs are fixed?
Engineer: Yes, that would be how we'd do it. Do you want me to do it?
Manager: Yes, please send the message.
In this conversation, the manager has translated an abstract priority ("quality") into a specific course of action for the engineer in the context of the upcoming launch. Then, in the second part of the conversation, he has had to reiterate multiple times that a focus on quality is not just an abstract theory to be discussed, but to be implemented starting right now.
Employees have dealt with managers who keep flip-flopping or haven't thought things through before announcing so, even if they understood the message, they'll think, "Let's wait and see if this guy really means it."
Considering all this, 7 repetitions are needed. If you're a leader, you're a Chief Repetition Officer.
Rewards
Rewards come in many forms: financial like a hike, equity or bonus. Emotional like praise and gratitude for a job well done. You can also reward someone by giving them increased responsibility.
All these are important. Each has its place. Companies overweight financial rewards, but employees are not coin-operated.
Companies sometimes underweight non-financial rewards because employees say in exit interviews that they’re leaving for money. But this is usually untrue. People don't leave jobs where they're given praise and gratitude2. People leave jobs that are thankless, where they're only challenged and criticised but never praised.
If someone did an exceptional job, you should stop what you're doing and praise that person. Patrick was in a meeting with managers of a company where they mentioned the exceptional job Susan did, despite being junior, and how they’re grateful to her. Patrick interrupted the meeting and called Susan into the room and they all told her that what a marvelous job she did and thanked her. This made a huuuuge difference to her perspective towards the company and motivation to work there.
Rewards shouldn’t be given out randomly. They should be given out for only two reasons: someone performed well, or behaved well, in tune with company values.
Even if they’re not random, they shouldn’t seem that way. The link should be pointed out explicitly: “You're being promoted because you delivered project X very well. And when Ramesh had problems, you helped him out without me having to ask you. You've set an example to others on how to behave. For these two reasons — project X and your behavior — you're being promoted."
Important people processes like hiring, rewards, performance management and firing can't be done in an unthinking way by copying a template from the Internet and pasting it into a company. They're too important to be neglected.
How to have effective meetings
If you're asked to evaluate how a company is running, there’s one activity that will help you do so, more than everything else: observe their meetings. This single activity will give you more insights, more than talking to employees, talking to customers, or looking at the product, or looking at the financials.
Don’t cram multiple topics into one meeting to save time. Don’t start a topic by saying, "Let's discuss it quickly." Your goal should not be to rush through it to save time, as if meetings are an annoyance. Instead, give it the time needed to discuss all relevant issues and to hear both sides out, so that we have confidence in the decision made and that both sides buy into it. Better to spend 4 hours discussing one topic and resolving it than to spend 2 and not.
Don't mix strategic and tactical topics into one meeting. If a mismatched topic comes up, park it for a separate meeting.
You need three kinds of meetings:
Tactical meetings (e.g., what features did we launch yesterday?)
Strategic meetings (e.g., how do we plan this project?)
Quarterly review meetings (e.g., what risks and open questions does this project have?). These are similar to a strategic meeting, but while you have a strategic meeting before starting a project, you have a quarterly review meeting to make sure it's on track. Quarterly is the right cadence for this: if you have them more often, the team won't have time to fully implement what was decided in the last meeting. if you have them less often, it's too late.
Department heads shouldn't misuse meetings to advocate their favorite causes. It's not the UN. Nor to shift the focus to themselves and their work.
Perhaps because they think, “What’s the point?”
Unless they're so grossly underpaid that it affects their livelihood.