One of the more important lessons I learned from Business School is there are usually multiple paths to competitive advantage. My classmates and I all entered thinking we knew how the world worked, but quickly realized that we’d solved similar problems in many different ways. New books just out by Pat Lencioni and John Montgomery found me recalling this lesson.
The Advantage: Why Organizational Trumps Everything Else in Business by Pat Lencioni and Great from the Start by John Montgomery navigate new paths to competitive advantage that make worthwhile contributions to the existing sea of business books. They each depart from conventional wisdom, but in different ways.
Competitive Advantage via Healthier Organizations
Lencioni asserts that healthier organizations gain The Advantage by not letting politics and confusion bleed them of morale and productivity. Organizational health attracts and retains the best people, leaving these organizations able to tap the intelligence of the organization and find ways to make it smarter. Lencioni charts a new approach not in his diagnosis, but in his prescription.
According to Lencioni, organizations suffer poor health when leaders focus on quantitative, objective and impersonal topics like strategy, marketing, finance and technology–the stuff leaders are taught matters–rather than integrative, holistic and relatively subjective ones like minimizing politics and confusion. To be fair, he doesn’t say strategy, marketing, finance and technology are unimportant, merely that ubiquitous information leaves them commodities available to even small firms. The Advantage offers a four-pronged approach to making organizations healthier: Build a cohesive leadership team; create clarity; over communicate clarity; and reinforce clarity. You may detect a theme.
Seeds of Competitive Advantage Form Early
Coming from a very different perspective is Silicon Valley attorney and entrepreneur John Montgomery’s Great from the Start. Based on 25 years of work with startups. Montgomery argues that baking in good organizational structure is the best way to build an organization able to scale rapidly while operating as a responsible corporate citizen. The genesis of Montgomery’s book was a quest to reverse engineer Gordie Campbell’s success as an entrepreneur (SEEQ Technology; CHIPS and Technologies) and mentor to startups (Cobalt Networks, 3Dfx Interactive and NetMind). Montgomery’s conclusion is that prosaic decisions enshrined in the Articles of Incorporation–and even earlier, such a skills balance among the founders–can significantly accelerate growth and generate an exit event (acquisition or IPO) years sooner.
Book marketing aside, Lencioni’s proposition transcends the purported commoditization of strategy, marketing, finance and technology, just as Montgomery’s premise doesn’t suggest that creating the right structure for a corporation will fix a bad business model or prevent stupid decisions. Each approach creates greater alignment within the firm, and like a wise guide, encourages the consistent and positive habits that increase the energy and intelligence available within the organization for pursuing its objectives.
While Lencioni concentrates on organizational health and Montgomery focuses on organizational structure, they both focus on the way a firm’s culture shapes the values that drive decision making and execution. In this way the books are excellent complements. If one follows the path Montgomery lays out in Great from the Start, adopting Lencioni’s four-pronged approach to making organizations healthier will come naturally. Personally, I prefer to frame organizational health and structure as lenses that magnify a company’s execution in the areas of strategy, marketing, finance and technology rather than vice versa.
If I were to add a book to the mix, it’d represent the third leg of a triad, that a brand strategically engaged with customers provides another source of disproportionate advantage. While culture drives organizational health and healthy organizations are more competitive, I believe strategy, marketing, finance and technology are still very relevant. The upshot being, firms have a variety of ways to gain competitive advantage, although getting a staying ahead takes better and better execution.
Full disclosure: I read and commented on several drafts of Great from the Start at the request of John Montgomery, contributing enough to warrant a sentence in the Acknowledgements. Pat Lencioni was a classmate of mine at Claremont McKenna College, although I haven’t spoken with him in some years.