One of the world’s most respected, best-known thinkers on corporate culture works out of an unassuming open-plan office over a hair salon in tony Lafayette, California, two traffic jams east of San Francisco.
The location suits him, and his mission. Just close enough to keep the pulse of disruption in Silicon Valley, just far enough away to grow skeptical that “change the world” mantras are actually creating great companies—and may actually be doing the opposite. Ask Patrick Lencioni to name a great company, he’ll bring up Southwest. Great leadership? Ford under Alan Mulally.
“Google has heated toilet seats, an infinity pool, organic gardens, free bicycles and a spa, and that’s great, but as soon as things go bad there it is going to be a bloodbath,” he says. “Companies, especially in technology, that love the accoutrements of culture, that’s not really culture. That’s to me excess. And I have to say I think it’s rooted in narcissism.”
His aversion to business BS runs deep. The son of a salesman, he joined Bain Consulting in the 1980s on a quest to discover why his father—and so many millions like him— suffered under unending crisis and chaos at work. Finding few answers in the actual practice of Big Consulting, he set off on his own.
Meeting with hundreds of clients over the next few years, he realized that it isn’t strategic miscues, or failures of technology or risk management that cause disasters. Those are symptoms. The causes are rooted the usual grab bag of fundamental human flaws—fear, greed, mistrust, etc.—and how they play out among top leaders.
To help businesses cope, he wrote a series of deceptively simple bestsellers, all of which you’re likely familiar with, including The Five Temptations of a CEO; Death by Meeting; The Advantage and, most famously, The Five Dysfunctions of a Team. By design, each can be read in a sitting and do not require an advanced degree to comprehend.
With corporate culture dominating the headlines, Chief Executive decided it was the right time to sit down with Lencioni and get his take on business, from leadership meltdowns and tech titans to Millennials and the MeToo movement. Here’s an edited version of the conversation.
We talked a bit about that new book Bad Blood [by Wall Street Journal reporter John Carreyrou] and what happened at Theranos. What’s your take on the idea of the hero CEO and what it’s done to American business?
People always ask me “Who’s the best CEO in the world?” And I say, “Well, do you want a famous one, or do you want a great one?” Most of the great CEOs, nobody knows who they are, primarily because they don’t want to be known, that wasn’t their goal. Their goal was to create a great organization to serve their customers and their employees well and change people’s lives. So I think that the problem is that the media creates this.
Greed is no longer cool. But fame…. Like this young woman [CEO Elizabeth Holmes] at Theranos, she’s still determined to turn this into something, she’s still trolling the Valley, looking for deals and the next thing. I don’t know if it’s sunk in with her exactly what happened.
I worked in the database industry back in the 1990s, and there were two companies, one of which was Oracle, and Larry Ellison, who was early on in that world, and it was a miserable place to work, it just was. I went to work for a guy named Mark Hoffman who most people never heard of at a company called Sybase, and it was just a completely different place.
Sybase continued to grow and do well, and one day they started to say, “We should be like Oracle.” They got a new CEO who was much more of a personality and they lost the very thing that distinguished them. I think that’s very natural for people to seek that out because they think that’s what makes for great leadership, but it’s quite the opposite.
What’s your take on the rash of high profile CEO disasters that we’ve seen recently from places like Texas Instruments to Uber?
These are downstream symptoms. The core problem is a lack of what we call organizational health. They’re not sound organizations.
Sometimes you can have a sound organization and a person just goes off the rails. But usually, if you look back, they were nurturing this kind of culture. And then they finally get caught and people say, “Whoa, gee, what happened?” And it’s like oh no, this is just a matter of time.
At the heart of a great organization is a humble leader, somebody who’s doing it because they feel a great weight and responsibility in being the leader.
There are two schools of thought about becoming a CEO. One is that it’s the reward for a lifetime of hard work, you’ve arrived. The other is that it’s a huge responsibility and you are now more on the hook for your performance than you’ve ever been. I look at it like athletes who get drafted. Is it, finally, I’ve arrived and now I get to enjoy a great life, or, oh no, now if I don’t play well, I’m gonna blow it? The best athletes are the ones who have that second attitude. The best CEOs are the ones who go, “Now I feel more not negative pressure, but the pressure to do the right thing, to work really hard and to steward this opportunity.”
When you see it as a reward, you just cannot embrace the things you’re supposed to do. That’s kind of where it all starts. Whether it’s treating women wrong, abusing your power or abdicating responsibility for what you’re doing, it’s usually rooted in the idea that, “I’m entitled to this job, so I should get to do what I want,” versus, “I’m responsible for this job so I have to do what’s necessary.”
When you go in to work with a company, how do you know when the organizational health is good and how do you know when it’s bad? What are the tells of both?
If I could have one piece of data about a company to understand if it’s healthy and successful, I’d want to go watch the leaders in a meeting. If the meeting is boring and there’s no tension, and there’s not emotional engagement with one another, I know that there are really bad things going on. I don’t mean emotional tension like people going after each other’s throats. What I mean is if people are engaged and feel like there’s something at stake, and that they have to push each other.
What do people who run companies need to do right now to really make culture better? What do they need to understand about culture?
I’ve had my consulting firm for 20 years and I worked with CEOs for five years before that. I have never seen a charismatic famous CEO whose people really wanted to follow [him or her]. They were hitching their wagon to something hoping it would work, but when those companies turn down, it’s ugly.
I remember going to Walmart years ago. I was in their cafeteria and I thought I was in a junior high school. And all their executives and all their employees were going to this really crappy cafeteria, and I thought, where’s the really nice part? No, this is it. The stores are actually nicer than their headquarters were—which may have changed since then. But I’m always suspect of places that are self-referential and treat the leaders like they’re important. I just love to go places where you’re surprised by the level of humility and reality that exists.
I can’t even begin to imagine how much has been spent on foosball tables in the last 25 years to create a culture.
The great thing about Millennials is they sniff out the bullshit. If you have a foosball table and your managers treat people like crap, and they bring in dinner just because they’re trying to manipulate you to live your life there, eventually, they sniff that out.
Younger people today are like, “Listen, if you’re going to treat me terribly, don’t try to win me over by letting me bring my dog to work or play foosball or build a slide from the second floor to the first floor.” If you want to do that, fine, but make it a company that runs well, a company that’s… Read More>>