The workplace has seen unprecedented disruption from the rapid rise of AI, the growing influence of geopolitics, the return to office, and more. In this increasingly complex landscape, organizations today are grappling with the challenges of remaining competitive, maintaining growth, and staying agile while prioritizing operational efficiency and effectiveness. The good news is that the fundamental, big idea remains true: Leaders should focus on how they run the place—organizational health—to drive long-term performance.
Our research over the past two decades reinforces the importance of health for sustained value creation. Organizations in the top quartile for health deliver three times the shareholder returns compared to those in the bottom quartile. They are less likely to have safety incidents or show signs of financial distress, and their employees are more likely to endorse their employer to friends and relatives. Additionally, organizations that improved health also saw increased EBITDA one year later.
Being healthy requires that an organization demonstrates clear alignment, effective execution, and continuous renewal. To start the conversation, leaders should ask these three critical questions:
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Is there clear alignment across the organization?
Alignment refers to the extent to which an entire organization is united and moving in sync toward a shared vision, strategy, and purpose.
More than just surface-level agreement, true alignment is about achieving laser-sharp clarity. It’s about building a culture where values drive day-to-day behaviors, transparency is the norm, and diverse perspectives and dissent are encouraged, which creates an unrivalled work environment that helps employees thrive. Without this, organizations risk falling into the chaos of mixed messages and misaligned priorities.
The CEO of an industrial company brought this to life through unflinching stories about why the transformation was a matter of survival and how it could unlock untapped potential. These stories weren’t just speeches; they were rallying cries, sparking shared ambition across every level of the company. His commitment cascaded through the ranks until nearly 50 percent of the workforce was actively engaged in driving individual initiatives by the transformation’s second year. Performance skyrocketed and the share price exploded, increasing more than tenfold during the transformation.
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Do we have what it takes to execute effectively?
Execution refers to an organization’s ability to translate strategy into action by leveraging people, processes, and systems, with clear accountability and a focus on metrics that matter to drive results and enable course correction when needed.
Effective execution demands the right capabilities, accountability systems, and processes to drive results. Without these critical elements, even the best strategies will fail to deliver on their potential.
A power company demonstrated disciplined execution by embedding strategic goals into the fabric of its operations. It integrated ambitious targets into planning processes, budgeting, and executive performance evaluations, ensuring that progress was measured and accountability was clear. But this wasn’t just about setting goals—it was about delivering results. The company launched more than 700 initiatives that generated over $150 million in value within the first few months, and the company’s stock price soared by 60 percent over three years.
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Are we able to continuously adapt and renew to the rapidly changing external landscape?
Renewal refers to an organization’s ability to continuously innovate, adapt, and reinvent itself to stay relevant and thrive in a constantly evolving environment.
The ability to continuously adapt and evolve means fostering a culture of innovation that embraces fresh ideas, both from within the organization and from external best practices. It also demands staying deeply attuned to customer needs and keeping a sharp eye on how competitors are responding to the same challenges. Without this commitment to renewal, organizations risk falling behind in an ever-accelerating world.
One of the most striking examples of reinvention in recent years comes from a major sports league, where the rise of data analytics transformed how teams operated. The league looked to data from its most valuable resource—its audience. Through surveys, focus groups, and direct engagement with younger fans, the organization uncovered what truly mattered to them: faster, more dynamic gameplay. The league didn’t hesitate to experiment, introducing sweeping rule changes that fundamentally reshaped the pace and energy of the game.
Asking these three questions about how to run an organization—especially when defining strategy and goals—isn’t just a “nice-to-have”; it’s the difference between leading with clarity or operating in an echo chamber. The answers aren’t always simple, but asking these questions relentlessly is non-negotiable for building a culture that drives strategy and unlocks long-term performance.
The hard truth is this: No matter how ambitious its strategic goals are, an organization’s ability to achieve them hinges entirely on how effectively its culture fuels that ambition. Simply put, organizational health isn’t a soft concept. It’s the engine that unlocks the full potential of every employee and channels it directly into performance.
Without embedding health into the core of an organization and understanding how to strengthen it, even the best strategies will falter. But when leaders prioritize health, they unleash a force multiplier that drives alignment, accountability, and results. In upcoming blog posts, we’ll dive deep into the three axes of alignment, execution, and renewal, arming leaders with bold, actionable insights to reshape their organizations from the inside out.
The authors wish to thank Nicolette Rainone for her contributions to this blog post.
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This blog post is part of a four-part series on the Organizational Health Index, exploring the core axes of organizational health—alignment, execution, and renewal—and sharing lessons learned from organizations that achieved health and performance gains.