What Is Organizational Health, and Why It’s the Ultimate Advantage
Patrick Lencioni, in his book The Advantage, makes a bold claim: organizational health is the single greatest competitive advantage a company can achieve. Not strategy. Not technology. Not marketing. Health.
What exactly does that mean?
Defining Organizational Health
Organizational health is about how well the “human system” of your business works together. Healthy organizations are marked by:
Trust among leaders and staff
Clarity around vision, values, and priorities
Alignment between strategy and daily execution
Consistency in communication, decision-making, and execution
Unhealthy organizations, on the other hand, may look strong on paper but are riddled with politics, silos, confusion, and low morale.
Why It Matters
You can have the best strategy in the world, but if your team can’t execute together, then you’re not as efficient; and a lack of efficiency equals less profit. Lencioni’s The Five Dysfunctions of a Team shows how mistrust, avoidance of healthy conflict, lack of commitment, avoidance of accountability, and inattention to results can quietly sabotage growth.
Systems theory reinforces this: a system is only as strong as the quality of its relationships and communication. Paul Watzlawick, one of the great communication theorists of the 20th century, argued that “one cannot not communicate.” Every word, silence, email, or look either builds clarity and trust… or confusion and mistrust.
A business is not just a machine made up of inanimate objects. It’s a living system, and when the communication inside it breaks down, the system breaks down too.
A Sports Analogy
I played soccer competitively for 35 years, and a soccer team is an accurate barometer of organizational health. A team with slightly less individual ability but total alignment will outperform a more skilled team that operates individualistically.
Clear roles: Everyone knows their role on the team, whether it be on the field, on the bench, in the coaches room, the athletic trainer, the athletic director, even up to the university president. The goalkeeper knows they’re not the striker. Midfielders know their job is to connect defense and attack.
Shared vision: Everyone is working toward one goal and understands the team strategy to get there.
Trust and communication: Defenders have to trust the keeper. Strikers have to trust the midfield. And constant communication keeps everyone aligned, in the appropriate shape, and covering for one another.
Adaptability: A healthy team can adjust to the flow of the game without falling apart. Periodically teammates have to cover for each other for the good of the team. With injuries, fatigue, and discipline, sometimes players have to step into roles that are not their primary position for a short time.
When a soccer team is dysfunctional, you can see it instantly — players out of position and shape, yelling at each other, not tracking back on defense, selfish plays, finger-pointing. The same dynamics happen in business.
How to Build It
Organizational health isn’t built in a day, but it is achievable:
Diagnose it. Get a baseline and identify problem areas.
Build a cohesive leadership team. No silos. No hidden agendas.
Create clarity. Define vision, mission, values, and priorities. Repeat them until they’re second nature.
Overcommunicate clarity. Healthy organizations communicate constantly, in multiple ways.
Reinforce systems. Hiring, onboarding, goal setting, and performance management should align with your values and strategy.
How to Keep It
Like in sports, health is maintained with practice and discipline:
Regular “team huddles” to check alignment
Honest conflict resolution (no festering issues)
Coaching and development to keep players sharp
Celebrating wins to build momentum and morale
The Takeaway
Organizational health is not soft. It’s not optional. It’s the foundation on which everything else rests. A business without health is like a soccer team with 11 talented players who don’t trust each other. A business with health, even if less talented, will almost always outperform the competition.
***Question for small business owners: Is your organization championship-ready? And if not, are you coaching hard and making the right moves to beat the competition?
