CSCMP's Supply Chain Quarterly
October 21, 2018

When being smart is not enough

Lots of companies concentrate on being smart. What they really should be focusing on, says Patrick Lencioni, is being healthy.

Smart leaders in the supply chain profession are not hard to find. Yet being smart, in and of itself, does not guarantee success. According to author Patrick Lencioni, companies must go beyond "smart" to truly reach their full market potential.

Speaking at Dematic's annual Material Handling and Logistics Conference a few months ago, Lencioni identified two characteristics that he considers to be hallmarks of a successful business. "There are two requirements for success today," he said. "Companies must be smart, but they must also be healthy." In fact, in his new book, **ital{The Advantage,} Lencioni writes that organizational health "will surpass all other disciplines in business as the greatest opportunity for improvement and competitive advantage."

Some definitions are in order here. As for what characterizes a "smart" company, an organization obviously needs a good strategy, sound marketing that links to its strategy, a solid understanding of enabling technologies and how to put them to the best use, and, of course, a solid financial plan and management.

Really nothing new here, but what of the issue of an organization's health? "Healthy companies have some common attributes," Lencioni said. "They have minimal politics, minimal confusion, high morals, high productivity, and low turnover."

To get (and stay) healthy, companies must do four things, he said. First, they must build and maintain a cohesive management team.

Second, those leaders must create clarity. "The goals must be clear and properly aligned," he noted. "There can be no ambiguity in the answers they give their employees."

The third requirement on Lencioni's list is communication—or what he likes to call "over-communication." "Research tells us that people need to hear things a minimum of seven times in order to believe it," Lencioni said. "Employees want and need to know you are sticking to the company's message."

The fourth thing is essentially an extension of the third. "You need to not only over-communicate, but also reinforce it in all things you do. There can be no ambiguity at all, at any time," he said.

Making all this happen requires leaders to master some important behaviors and then see that they're ingrained in the corporate culture, Lencioni maintains. First, there must be an extremely high level of trust among the management team members. Second, they need to embrace conflict. "Conflict can be great," said Lencioni, who contends that if there is no conflict in an organization, then someone is holding back. Think of a boardroom filled with "yes men" who agree with everything the CEO says. "When you have trust, conflict is really just the pursuit of truth."

And if employees and managers don't buy in? Then implementing the tactics that support your company's strategy will be like pushing a string up a flagpole.

Mitch Mac Donald is Group Editorial Director of AGiLE Business Media.

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