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SOUTHWEST AIRLINES (LUV)
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Q&A: Leadership author Patrick Lencioni on what Silicon Valley CEOs should strive to achieve

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07/12/2018 | 07:21pm CEST

July 12--Patrick Lencioni is not enamored with the Steve Jobs and Elon Musk types of Silicon Valley CEOs.

Rather than getting hung up on the superstar visionary CEO, which the tech industry has in spades, Lencioni prefers a more humble, off-camera personality for a successful CEO. Most importantly, Lencioni hopes that the CEO and other top executives of a company pay relentless attention to the firm's organizational health.

Lencioni is the founder of The Table Group, a Lafayette-based company that provides leadership consultation to CEOs and executives at companies with widely recognized brands, such as Intuit, Southwest Airlines and Chick-fil-A.

He has authored 11 books about leadership and organizational health, selling a total of more than 5 million copies.

Lencioni delivered a speech in May at Santa Clara University, as The Table Group partnered with the Silicon Valley Executive Center in the university's Leavey School of Business to teach students about the importance of organizational health. This interview has been edited for length and clarity.

Q: What brings you out to Santa Clara University?

A: We have this concept called organizational health, which we think is the biggest thing that is lacking in most companies. We've been looking for an academic home for this idea. We are going to partner with Santa Clara so that if Kellogg School at Northwestern is all about marketing, and Wharton at Penn is about finance and Harvard is about strategy, we want Santa Clara to be the home of organizational health.

Q: And for those unfamiliar, what is your definition of organizational health?

A: Organizational health is about how to create the most effective organization possible through teamwork among leadership team, clarity around where they are taking the company, constant communication about that clarity and constant reinforcement of every process it puts in place. The healthiest organizations will generally win. Southwest Airlines is not smarter than their competition, but healthier. And I'm sure United has more Ph.D.s and industry experts, but they are so dysfunctional. Whereas Southwest puts nice, down-to-earth people in a room and makes great decisions. So I'm trying to figure out, how do you create a company that is not too political and not confused?

Q: I understand that you also believe Silicon Valley is more lacking in organizational health than other industries. Can you expand?

A: Silicon Valley is uniquely challenged because people here have such emphasis on the smart and technical side of business. People often think it's the smartest people who will rise to be successful. It's actually the people who actually learned to work as a team and create a healthy culture who see most success.

There is a skepticism about these things, and Silicon Valley and Wall Street have it most. People attribute success to decision sciences, stuff like technology and strategy. Those are important, no doubt, but they are not enough. It's hard to convince some Silicon Valley CEOs because they think it's about the next piece of tech which is going to make them a billionaire.

Q: But in a way, some of the Silicon Valley companies who eschewed organizational health became the most successful. Apple, for example. Steve Jobs used to encourage his executives to get confrontational with each other and butt heads.

A: There are some companies which succeed because of the force of will of the founder or the leader. But it's so much work and so much less loyalty, and when things go bad there is a greater likelihood of people jumping ship. What Apple has done is remarkable. I don't know what their culture exactly is because I have not worked with them. I don't know what Tim Cook is like. But there are a lot of dead bodies and injuries (from the confrontations). The question is: What could they have achieved had they been even more united and more cohesive as a team?

Q: Silicon Valley has other companies with arguably poor organizational health which have seen public scandals lately. Let's take Facebook and its Cambridge Analytica scandal recently. Can you gauge what went wrong for Facebook?

A: I can say that there is a certain amount of hubris and disregard of the social impact with what they are doing. To be a great team player, you need to be humble and you have to create humility. Humility is subservience to your customers and to the market you serve. Companies are sometimes more self-impressed and more interested that they are kings of the world than how does this work. Facebook is interesting because studies find Facebook is not good for people. The question is: Does it bother them, or is it like, "Hey, we are making a crap load of money"? Are you concerned about the impact you are having on your customers? It's things like that that humble organizations would ask.

Q: And Uber under former CEO Travis Kalanick? They were a lightning rod for controversy not so long ago.

A: They acted like they were surprised when they were caught. And they were pursuing profit above all else. But you have to know why you exist and have a reason why you exist beyond making money to be successful.

Q: What would you diagnose in general for most tech companies? Is Silicon Valley unique in its disregard for organizational health?

A: Outside of technology, people recognize and accept this concept more. I think the potential of getting rich, like IPO-ing, makes people here put up with a lot of crap that other people wouldn't. It's a shame, because most people aren't going to get filthy rich at the end of the day. And frankly, the day-to-day experience of working at companies like that is going to be awful. In many ways, they have artificially golden handcuffs. Misery at your job can be very costly.

Q: This organizational health concept seems to fit well for startups who start with a small headcount. What should startup founders recognize as they scale up their business?

A: It's definitely easier in a startup to do this. But larger companies said they want this, too. It's harder to turn around a big company, but even larger companies are realizing the competitive advantage of turning their organization into a healthier one is great because turnover will go down, they are going to attract better people, and reduce internal infighting and politics.

When you start a company, you should express, "This is why we are starting this, and this is how our people will behave." And then your strategy, market and products are probably going to change, but the core values won't. If you change those things, you are essentially doing a restart. And that's what the exec team's job is: How do we preserve the core of what we are?

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Patrick Lencioni

Age: 52

Position: Chief Executive Officer, The Table Group, Inc.

Hometown: Bakersfield

Education: Claremont McKenna College

Family: Wife and 4 boys

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Five facts about Patrick Lencioni

1. After having my twin boys, I learned that I could sleep standing up.

2. I'm an amateur screenwriter.

3. My childhood ambition was to be a point guard in the NBA.

4. I get my best ideas in the shower.

5. My greatest inspiration is Jesus Christ.

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___

(c)2018 the San Jose Mercury News (San Jose, Calif.)

Visit the San Jose Mercury News (San Jose, Calif.) at www.mercurynews.com

Distributed by Tribune Content Agency, LLC.

© Tribune Content Agency, source Regional News

Stocks mentioned in the article
ChangeLast1st jan.
APPLE -0.23% 191.44 Delayed Quote.13.12%
SOUTHWEST AIRLINES -0.65% 53.43 Delayed Quote.-18.37%
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Financials ($)
Sales 2018 22 061 M
EBIT 2018 3 283 M
Net income 2018 2 523 M
Debt 2018 1 079 M
Yield 2018 1,01%
P/E ratio 2018 12,60
P/E ratio 2019 10,45
EV / Sales 2018 1,47x
EV / Sales 2019 1,36x
Capitalization 31 251 M
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Mean consensus OUTPERFORM
Number of Analysts 19
Average target price 62,9 $
Spread / Average Target 17%
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Managers
NameTitle
Gary C. Kelly Chairman & Chief Executive Officer
Thomas M. Nealon President
Michael G. Van de Ven Chief Operating Officer
Tammy Romo CFO, Principal Accounting Officer & Executive VP
Kathleen Wayton Chief Information Officer & Senior Vice President
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