There is a difference between ‘smart’ companies and ‘healthy’ companies. A successful company can be either ‘smart’ or ‘healthy’, but great companies are both.
Smart companies are good at the classic fundamentals of business- strategy, marketing, operations, finance and technology. There is no doubt about the importance of these areas. Part of the appeal in these domains is that they are subject to logic and quantification. These are the areas where most executives believe they need to spend their time and energy.
Healthy companies focus on culture. They have minimal politics, minimal confusion, high morale, high productivity and low turnover. They tend to be managed by soft-hearted, but tough minded executives with a high-EQ. These executives are not “caught up in the self”, they recognize they serve a large audience of stakeholders.
Smart and healthy organizations both aim at generating targeted results. They take different but reinforcing approaches to obtain this common objective.
Purpose/Mission => Vision => Objectives/Goals => Strategy => Execution => Results
Character/Values => Leadership => Team => Culture => Behaviors => Results
At BIP, we have learned that culture is more important than strategy in building enduring early-stage companies. A company that has a great culture can adjust quickly. It can deal with conflict and ambiguity, make quick decisions, and move on. In contrast, companies with great strategies and weak cultures can often times find themselves in a bind with little ability to adjust when market conditions change.
While executives make the practical connection between performance and health, they gravitate toward the smart side. This is in part because they have been trained to place priority on smart. It is also the case because most executives don’t have a handle on how to make healthy happen. They don’t know the territory.
We have all worked in unhealthy organizations and know the misery of dealing with politics, dysfunction, confusion, and anchored thinking. In early-stage companies, an executive needs to show courageous leadership and vision, but that leader must avoid creating a ‘cult of personality’ centered around themself. Good organizations can be built that way, but great organizations are never built in that fashion.