The one advantage many businesses miss out on
Which business would you rather own?
Read the following true story (business names changed) of two Sydney companies based in the same industry. Both companies were ambitious and wanted to become the best in their industry. Both planned to grow their revenue and become highly profitable.
Left Field Creative
Left Field Creative prided itself on its intelligence and creativity. Founded by brilliant designers and marketers, the company quickly gained a reputation for innovative approaches. Their strategic plans were meticulously crafted, marketing campaigns were top-notch, and financial management was strong.
As the company grew, however, cracks began to show. Departments operated independently of each other. Power struggles and office politics simmered beneath the surface. Employee turnover was high, and maintaining positive morale was an ongoing struggle. Despite their smart, creative strategies, internal pressure hindered progress.
Five Green Hats
Two suburbs away Five Green Hats took a different approach. While they were also smart and creative, they were not as well-known and popular as Left Field Creative. The Five Green Hats founders valued intelligence as well but their true focus was on building a healthy organisation. The leadership team worked hard to create a cohesive culture, fostered trust, encouraged open communication, and aligned everyone around a shared vision.
Employees at Five Green Hats felt valued and understood their roles within the broader mission of the company. Collaboration was seamless, and conflicts were resolved constructively. As a result, they not only retained great staff but also attracted the best in the industry. Innovation flourished because people weren’t afraid to take risks, knowing they had the support of their teammates.
The Turning Point
Up to this point, Left Field Creative was making more money with bigger budgets and higher-paying clients. But then both companies faced a significant challenge when the pandemic broke out.
The market shifted dramatically and required businesses to pivot and adapt fast. Left Field Creative despite its intelligence, struggled. The stress of the pandemic plus the lack of communication and teamwork led to missed opportunities and divided the company. Their creative brilliance was overshadowed by their internal dysfunction.
In contrast, Five Green Hats thrived. The cohesive team quickly aligned on a new strategy, leveraging their trust and collaboration to pivot effectively. Employees rallied together, driven by a shared purpose and mutual support. Even though they felt the same pressure as Left Field Creative, their healthy culture acted as a multiplier, amplifying their creativity, which enabled them to not only survive but thrive.
The Outcome
Five Green Hats had not only adapted to the new way of working as the market shifted, but they also emerged stronger, capturing a significant share of the market. Left Field Creative despite its earlier promise, fell behind and was bogged down by its internal struggle. They survived, but only just!
The One Advantage
This story of two businesses illustrates a fundamental truth: being smart is not enough.
As Patrick Lencioni outlines in his book The Advantage, the true differentiator is organisational health. A healthy company, like Five Green Hats, can leverage its intelligence effectively, creating a resilient and innovative environment that drives ongoing success, regardless of environmental and market changes.
Smart & Healthy Businesses Have a Competitive Edge
In his book, The Advantage, Patrick Lencioni states that businesses must be smart and healthy to achieve sustainable success. This dual focus creates a distinct competitive advantage that many organisations ignore. While being smart involves traditional metrics like strategy, marketing, finance, and technology, being healthy encompasses the less tangible but critical aspects such as culture, teamwork, and clarity.
The Dual Focus: Smart and Healthy
Smart Organisations:
Strategy: Clear plans and policies that align with the business's goals.
Marketing: Effective promotion and branding to reach and engage customers.
Finance: Robust financial management to ensure stability and growth.
Technology: Uses technological advancements to enhance efficiency and innovation.
You get the idea …
Healthy Organisations:
Culture: A positive, inclusive environment that fosters employee engagement and satisfaction.
Teamwork: Collaboration and mutual support among team members.
Clarity: Clear communication of goals, roles, and expectations.
Minimising Politics: Reducing internal strife and fostering a spirit of cooperation.
And so on …
Lencioni argues that while many businesses excel at being smart, they often neglect the importance of being healthy.
The Multiplier Effect
A healthy business will inevitably become smarter over time. That’s because in a healthy business people learn from each other, identify issues and recover quickly from mistakes. Healthy businesses enjoy the multiplier effect.
In comparison, smart businesses rarely become healthier due to their intelligence. The opposite is often the case as they do not easily listen and learn from each other.
Benefits of the Multiplier Effect:
Enhanced Productivity: Healthy businesses experience higher levels of productivity because employees are more engaged and motivated.
Reduced Turnover: A positive culture and clear communication lead to higher employee retention.
Improved Innovation: Healthy environments encourage creativity and risk-taking.
Better Customer Satisfaction: Engaged and motivated employees deliver better customer service, leading to higher customer loyalty.
Practical Steps to Building a Healthy Business
Build a Cohesive Leadership Team
Ensure the leadership team is aligned and works well together.
Encourage open communication and mutual support.
Create Clarity
Clearly define and communicate the business’s mission, vision, and values.
Ensure all employees understand their roles and how they contribute to the organization's goals.
Over-Communicate Clarity
Reinforce the business’s mission and values through regular communication.
Use multiple channels to ensure the message is consistently delivered and understood.
Reinforce Clarity
Embed the business’s mission and values into every aspect of operations, from hiring to performance evaluations.
Celebrate and reward behaviours that align with the business’s values.
If you’d like to go deeper
Read Patrick Lencioni's book The Advantage
Book a complimentary strategy session with us here to work through what you’d like to achieve in your business
