Organisational Health - the silent enabler of success

For a long time I’ve believed that organisational health is a hugely undervalued ingredient for success – especially for startups that are scaling fast. It’s the silent enabler of so much else. Before I give you my take on it, here’s a succinct definition of Organisational Health…

An organization’s ability to function effectively, to cope adequately, to change appropriately, and to grow from within.

For me it’s about intentionally creating a resilient, cohesive organisation that can operate with a sustained sense of calm.

Really healthy organisations tend to feel calm even when they’re ploughing through unknown waters at a thousand miles per hour. They’re able to operate on the edge of chaos without becoming chaotic.

Despite the obvious benefits of a healthy organisation, it’s often neglected – I think for a few reasons…

  1. It seems kinda boring – we’re conditioned to believe the best solutions come from fancy, innovative approaches. Being healthy isn’t complex or innovative… but it does takes sustained effort. And there’s none of the adrenaline which usually comes with startup leadership.
  2. It’s very hard to quantify results. The best measurements of organisational health are whatever we use to measure general success (growth, revenue etc) but this makes it very hard to measure the effect of work. As always, useful proxy metrics are hard to find.
  3. It needs a holistic approach - it cuts across leadership, operations and people functions, as well as every other function in a business. Which makes it hard.
  4. Founders are often unskilled in this domain – the skills needed to grow a healthy organisation often feel quite at odds with the other skills required to be a good founder. (Some only realise this when the wheels fall off but I’ve met a lot who realised from the start, felt horribly inadequate as leaders and stuck their heads in the sand.)

Remote and distributed companies need to be much healthier than office-based firms because co-location allows us to paper over an awful lot of cracks. And systemic health problems have a disproportionately large effect on remote teams, which quickly compounds with scale.

So what does a healthy organisation look like to me?

These kinds of things…

None of these things happen by accident

While it helps and is amazing to be part of, I don’t think shared passion for the mission is necessary – there are thousands of very healthy companies whose people don’t really give a damn about the mission. (Potential exception: your senior leadership team.) 💡

So when should you start thinking about organisational health?

Short answer: as soon as you reasonably can.

Small, young companies get disproportionally large gains from the effort, which compound over time. Without the right foundations this all gets exponentially harder as you scale (and as your collective habits and ways of working become entrenched). I’ve seen way too many companies ignore this stuff until they’ve raised a Series B and the wheels start falling off.

Having the foundations for a super healthy organisation allow you to scale quickly without as much pain, and help things stay calm as the organisation rapidly becomes more complex.

If you’re a tiny seed-stage startup scrambling to find product-market fit, you should probably focus 💯 on that (solid foundations are useless if they’re the wrong shape for the house, or you never build it). But as soon as you reasonably can, step back and think about how to build a healthy organisation.

So how do we start getting healthier? 🌱

Firstly, we need to believe it’s at least as important as our other business aims. Being healthy is unlikely to be the number one goal but, as with human health, unless we make a strong commitment to it, it’ll always loose out to other more pressing stuff.

Secondly, we need at least one person who’s wholly focussed on keeping our organisation healthy. I’ve seen some amazing small startups where this is the fundamental job of the COO. More recently, I’ve seen this owned by a Head of Remote.

In larger firms I’ve seen teams called Workplace Design, Office of the COO, Remote Operations, People Operations, (plain old) Operations, and the like. The one thing these have in common is that they are 100% focussed on making the company itself as healthy as possible.

Ultimately, keeping an organisation healthy will always be a joint effort led by people like…

None of this happens by accident.

I nicked the term Organisational Health from The Advantage by Patrick Lencioni. The first chapter makes a much fuller argument for it’s importance than I have here.

Guiding Principles 📜

Here are a few loose principles I’ve found useful for helping folks approach organisational health. (I could – and probably will – write a whole article on each of them.)

1️⃣ Have an internal focus

Most functions in a startup are led by external needs & drivers: Product, Engineering, Sales, Marketing, Strategy, etc… all should have their eyes set mostly on the outside world.

We need at least one function which has an internal focus, treats the company like a product, itself as a product team and its employees as users. And this function needs a good product manager.

Done well, this function is a huge force multiplier for all the others.

“We design how our company works as thoughtfully as our products.”

2️⃣ Beware organisational debt

Just like a software product accrues technical debt, a company accrues organisational debt. The effects are similar - it gets increasingly harder to get stuff done over time.

Used strategically, this kind of debt is useful because it lets us move faster, but the tweet below explains why we must be intentional about how we incur it. And how we pay it down.

3️⃣ Human + System

These are the two fundamental components, and Internal Operations should focus on both:

These need to be viewed and tackled together and the highest leverage stuff addresses both human & system concerns at the same time (eg. shared behaviours & habits).

A garden needs plants (humans) that take their own path. These need thoughtful nurturing. It also needs pots, trellises, paths (systems) to support the plants. These aren’t nurtured, they’re engineered. If we want an awesome garden we need to engineer the right systems and nurture the plants right – this will only work if view both together as a whole. 🌱

4️⃣ Behaviours & habits over processes & tools

While processes and tools are important, the most effective way to improve an organisation’s health is by improving the habits and default behaviours of its people.

If you’ve ever tried to impose a new system or process without considering behavioural change, you’ve probably seen a lot of folks ignore it and revert to what they know. People always fall back on their habits and default behaviours. Especially in groups.

On the plus side, given the right habits, behaviours, principles, environment etc, people will likely create effective systems & tools on their own.

That said… used intentionally, processes and tools can be very powerful tools for affecting behaviour & habits. Especially in groups.

5️⃣ Strive for clarity

A culture of clarity reduces day-to-day uncertainty and tends plenty of efficiency savings (especially in distributed companies). But its greatest value comes from how it reduces the cognitive load on people.

At best, lack of clarity leads to increased cognitive load as folks struggle to make sense of things and make decisions themselves. At worst, it leads to a culture of uncertainty and stress because in the absence of facts people always assume the worst. In either case, it means people are spending a lot of time thinking and talking about unnecessary stuff.

Creating clarity in a complex and inherently unclear environment is one of the hardest things about leadership, so leaders often think about clarity in a very macro sense: is everyone clear on our mission? Or our Q3 goals?

Yet most of the uncertainty, inefficiency & stress I’ve seen comes from lack of clarity on tiny things:

Creating clarity & consistency on stuff like this is often much harder than it seems – especially in large, fast-growing or globally distributed companies. But done right, it can have an insanely big effect on organisational health.

Examples 💡

  • Vision & values provide clarity on why we’re all here.
  • Consistent systems and processes create clarity about how things work (and why).
  • Strong principles provide clarity on how to make decisions..
  • Org structure provides contextualised clarity on who's responsible for what.
  • Mission → strategy → plans provide clarity on where we're going and how.
  • Clear, consistent internal messaging communicates clarity re everything
    • above.
  • etc.

6️⃣ Practice simplicity

Simplicity matters because simple things are easy for people to fully understand and reason about. When designing systems we have to consider the usefulness and accuracy of the mental models folks form about them.

It’s much easier to augment folks’ existing correct mental models than to fix their incorrect ones.

A complex system that works is invariably found to have evolved from a simple system that worked. A complex system designed from scratch never works and cannot be patched up to make it work. You have to start over with a working simple system. — John Gall (1975, p.71)

Designing simple solutions for complicated problems is almost never simple itself, but wherever possible we should aggressively err on the side of simplicity.

7️⃣ Harness the power of principles

Principles are often more useful than rigid rules because when they’re fully understood they allow people to confidently make decisions without constant recourse to others. They also help people understand the why.

Even when you need rigid rules, clearly explaining the principles which underpin them increases transparency & shared understanding, and helps folks to adapt the rules intelligently.

For any principles to be useful they need to be well-thought-out, easy to understand and constantly reinforced by everyone. Otherwise, they’re just more words in a document somewhere.

8️⃣ Create frameworks (as well as tools)

Our inwards-facing function needs to build an environment & toolset that helps other functions do their best work. But also go one step further and create the environment & meta-tools that allow others to design their own.

We can’t design an entire company from the top. Nor can we design by general consensus on everything. Instead, we need to provide a framework of strong, consistent guide-rails (principles, tools, practices, structures etc) that everyone trusts.

This is the kernel of our “Operating System”. If everyone really understands this framework and buys into it, (with a little help) they’ll be able to create their own systems of work on top of it. And our kernel helps keep those systems compatible with each other.

Doing this is the only real way to create a truly agile organisation that can evolve as it scales.

Of course, keeping the kernel fit for purpose takes ongoing effort. As does guiding and nurturing the people and systems that use it.

These are just a few of my thoughts on what it takes to keep an organisation healthy, but hopefully they’ve sparked a few thoughts for you.

If you take one thing away from this, let it be the idea that creating a great company only happens when we set out to do so with intentionally, and when we get it right the sense of calm if can provide is a silent enabler of so much else.

And with many of us moving towards remote, globally distributed organisations, all this matters much more.