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- Detailed – Comprehensive Summary for this reading.
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Detailed – Comprehensive Summary for this reading. Your Detailed – Comprehensive Summary for THIS article post should be no less of 1,200 words. . Which are the three most CRITICAL ISSUES for t
» THE HIGH-PERFORMANCE ORGANIZATION 1993 BEST OF HBR It wont surprise anyone to find an article on teams by Jon Katzenbach and Douglas Smith figuring into an issue devoted to high performance. While Peter Drucker may have been the first to point out that a team-based organiza- tion can be highly effective, Katzenbach and Smith’s work made it possible for companies to implement the idea. In this groundbreaking 1993 article, the authors say that if managers want tomakebetterdecisionsaboutteamsjthey must be clear about what a team is. They define a team as”a small number of people with complementary skills who are committed to a common purpose, set of performance goals, and ap- proach for which they hold themselves mutually accountable.”That definition lays down the discipline that teams must share to be effective. Katzenbach and Smith discuss the four elements – common commitment and purpose, performance goals, complementary skills, and mutual account- ability – that make teams function. They also classify teams into three vari- eties – teams that recommend things, teams that make or do things, and teams that run things – and describe how each type faces different challenges. The Discipline of Teams by Jon R. Katzenbach and Douglas K. Smith What makes the difference between a team that performs and one that doesn’t? I arly in the 1980s, Bill Greenwood (d a small band of rebel railroaders )n most of the top management of Burlington Northern and created a multibillion-dollar business in “piggy- backing” rail services despite widespread resistance, even resentment, within the company. The Medical Products Group at Hewlett-Packard owes most of its leading performance to the remarkable efforts of Dean Morton, Lew Platt, Ben Holmes, Dick Alberding, and a handful of their colleagues who revitalized a health care business that most others had written off. At Knight Ridder, Jim Batten’s “customer obsession” vision took root at the Tallahassee Democrat when 14 frontline enthusiasts turned a charter to eliminate errors into a mission of major change and took the entire paper along with them. Such are the stories and the work of teams – real teams that perform, not amorphous groups that we call teams because we think that the label is moti- vating and energizing. The difference between teams that perform and other groups that don’t is a subject to which most of us pay far too little attention. Part of the problem is that “team” is a word and concept so familiar to every- one. (See the exhibit “Not All Groups Are Teams: How to Tell the Difference.”) Or at least that’s what we thought when we set out to do research for our book The Wisdom ofTeams (Harper- Business, 1993)- We wanted to discover what differentiates various levels of 162 HARVARD BUSINESS REVIEW » THE HIGH-PERFORMANCE ORGANIZATION team performance, where and how teams work best, and what top management can do to enhance their effectiveness. We talked with hundreds of people on more than 50 different teams in 30 com- panies and beyond, from Motorola and Hewlett-Packard to Operation Desert Storm and the Girl Scouts. We found that there is a basic disci- pline that makes teams work. We also found that teams and good perfor- mance are inseparable: You cannot have one without the other. But people use the word “team” so loosely that it gets in the way of learning and applying the discipline that leads to good perfor- mance. For managers to make better decisions about whether, when, or how to encourage and use teams, it is impor- tant to be more precise about what a team is and what it isn’t. Most executives advocate teamwork. And they should. Teamwork represents a set of values that encourage listening and responding constructively to views expressed by others, giving others the benefit of the doubt, providing sup- port, and recognizing the interests and achievements of others. Such values help teams perform, and they also pro- mote individual performance as well as the performance of an entire organi- zation. But teamwork values by them- selves are not exclusive to teams, nor are they enough to ensure team perfor- mance. (See the sidebar “Building Team Performance.”) Nor is a team just any group working together. Committees, councils, and task forces are not necessarily teams. Groups do not become teams simply because that is what someone calls them. The entire workforce of any large and com- plex organization is never a team, but think about how often that platitude is offered up. To understand how teams deliver extra performance, we must distinguish between teams and other forms of work- ing groups. That distinction turns on per- Not All Groups Are Teams: How to Tell the Difference Working Group > Strong, clearly focused leader > Individual accountability > The group’s purpose is the same as the broader organizational mission > Individual work products > Runs efficient meetings > Measures its effectiveness indirectly by its influence on others (such as financial performance of the business) > Discusses, decides, and delegates Team > Shared leadership roles > Individual and mutual accountability > Specific team purpose that the team itself delivers > Collective work products > Encourages open-ended discussion and active problem-solving meetings > Measures performance directly by assessing collective work products > Discusses, decides, and does real work together formance results. A working group’s performance is a function of what its members do as individuals. A team’s per- formance includes both individual re- sults and what we call “collective work products.” A collective work product is what two or more members must work on together, such as interviews, sur- veys, or experiments. Whatever it is, a collective work product reflects the joint, real contribution of team members. Working groups are both prevalent and effective in large organizations where individual accountability is most important. The best working groups come together to share information, perspectives, and insights; to make de- cisions that help each person do his or her job better; and to reinforce indi- vidual performance standards. But the focus is always on individual goals and accountabilities. Working-group mem- bers don’t take responsibility for results other than their own. Nor do they try to develop incremental performance con- tributions requiring the combined work of two or more members. Teams differ fundamentally from working groups because they require both individual and mutual account- ability. Teams rely on more than group discussion, debate, and decision, on more than sharing infonnation and best-practice performance standards. Teams produce discrete work products through the joint contributions of their members. This is what makes possible perfonnance levels greater than the sum of all the individual bests of team mem- bers. Simply stated, a team is more than the sum of its parts. The first step in developing a disci- plined approach to team management is to think about teams as discrete units of performance and not just as pos- itive sets of values. Having observed and worked with scores of teams in action, both successes and failures, we offer the following. Think of it as a working defi- Jon R. Katzenbach is a founder and senior partner of Katzenbach Partners, a strategic and organizational consulting firm, and a former director of McKinsey & Company. His most recent book is Why Pride Matters More Than Money: The Power ofthe World’s Greatest Motivational Force (Crown Business, 2003). Douglas K. Smith is an organizational consultant and a former partner at McKinsey & Company. His most recent book is On Value and Values: Thinking Differently About We in an Age of Me (Financial Times Prentice Hall, 2004)- 164 HARVARD BUSINESS REVIEW The Discipline of Teams* BEST OF HBR nition or, better still, an essential disci- pline that real teams share: A team is a small number of people with complemen- tary skills who are committed to a common purpose, set of performance goats, and approach for which they hold themselves mutually accountable. The essence of a team is common commitment. Without it, groups per- form as individuals; with it, they be- come a powerful unit of collective per- formance. This kind of commitment requires a purpose in which team mem- bers can believe. Whether the purpose is to “transform the contributions of suppliers into the satisfaction of cus- tomers,” to “make our company one we can be proud of again,” or to”prove that all children can leam,” credible team purposes have an element related to winning, being first, revolutionizing, or being on the cutting edge. Teams develop direction, momen- tum, and commitment by working to shape a meaningful purpose. Building ownership and commitment to team purpose, however, is not incompatible with taking initial direction from out- side the team. The often-asserted as- sumption that a team cannot “own” its purpose unless management leaves It alone actually confuses more potential teams than it helps. In fact, it is the ex- ceptional case -for example, entrepre- neurial situations-when a team creates a purpose entirely on its own. Most successful teams shape their pur- poses in response to a demand or op- portunity put in their path, usually by higher management. This helps teams get started by broadly framing the com- pany’s performance expectation. Man- agement is responsible for clarifying the charter, rationale, and performance challenge for the team, but manage- ment must also leave enough flexibility for the team to develop commitment around its own spin on that purpose, set of specific goals, timing, and approach. The best teams invest a tremendous amount of time and effort exploring, shaping, and agreeing on a purpose that belongs to them both collectively and individually. This “purposing” activity continues throughout the life of the People use the word “team” so loosely that it gets in the way of learning and applying the discipline that leads to good performance. team. By contrast, failed teams rarely develop a common purpose. For what- ever reason – an insufficient focus on performance, lack of effort, poor lead- ership-they do not coalesce around a challenging aspiration. The best teams also translate their common purpose into specific perfor- mance goals, such as reducing the reject rate from suppliers by 50% or increas- ing the math scores of graduates from 40% to 95%- Indeed, if a team fails to es- tablish specific performance goals or if those goals do not relate directly to the team’s overall purpose, team members become confused, pull apart, and revert to mediocre performance. By contrast, when purposes and goals build on one another and are combined with team commitment, they become a powerful engine of performance. Transforming broad directives into specific and measurable performance goals is the surest first step for a team trying to shape a purpose meaningful to its members. Specific goals, such as getting a new product to market in less than half the normal time, responding to all customers within 24 hours, or achieving a zero-defect rate while simul- taneously cutting costs by 40%, all pro- vide firm footholds for teams. There are several reasons: • Specific team-performance goals help define a set of work products that are dif- ferent both from an otganization-wide JULY-AUGUST 2005 165 » THE HIGH-PERFORMANCE ORGANIZATION Building Team Performance A lthough there is no guaranteed how-to recipe for building team performance, we observed a number of approaches shared by many successful teams. Establish urgency, demanding performance stan- dards, and direction. All team members need to believe the team has urgent and worthwhile purposes, and they want to know what the expectations are. Indeed, the more urgent and meaningful the rationale, the more likely it is that the team will live up to its performance potential, as was the case for a customer-service team that was told that further growth forthe entire company would be impossi- ble without major improvements in that area. Teams work best in a compelling context. That is why companies with strong performance ethics usually form teams readily. Select members for skill and skill potential, not per- sonality. No team succeeds without all the skills needed to meet its purpose and performance goals. Yet most teams figure out the skills they will need after they are formed. The wise manager will choose people for their existing skills and their potential to improve existing skills and learn new ones. Pay particular attention to first meetings and actions. Initial impressions always mean a great deal. When potential teams first gather, everyone monitors the signals given by others to confirm, suspend, or dispel assumptions and concerns. They pay particular atten- tion to those in authority: the team leader and any execu- tives who set up, oversee, or oth- erwise influence the team. And, as always, what such leaders do is more important than what they say. If a senior executive leaves the team kickofftotake a phone call ten minutes after the session has begun and he never returns, people get the message. Set some clear rules of behavior. All effective teams develop rules of conduct at the outset to help them achieve their purpose and performance goals. The most critical initial rules pertain to attendance (for example, “no interruptions to take phone calls”), discussion (“no sacred cows”), confidentiality (“the oniy things to leave this room are what we agree on”), analytic approach (“facts are friendly”), end-product orientation (“everyone gets assignments and does them”), constructive confrontation (“nofingerpointing”), and, often the most important, contributions (“everyone does real work”). A Set and seize upon a few immediate performance- oriented tasks and goals. Most effective teams trace their advancement to key performance-oriented events. Such events can be set in motion by immediately estab- lishing a few challenging goals that can be reached early on. There is no such thing as a real team without perfor- mance results, so the sooner such results occur, the sooner the team congeals. Challenge the group regularly with fresh facts and information. New information causes a team to redefine and enrich its understanding ofthe performance chal- lenge, thereby helping the team shape a common pur- pose, set clearer goals, and improve its common approach. A plant quality improvement team knew the cost of poor quality was high, but it wasn’t until they researched the different types of defects and put a price tag on each one that they knew where to go next. Conversely, teams err when they assume that all the information needed exists in the collective experience and knowledge of their members. Spend lots of time together. Common sense tells us that team members must spend a lot of time together, scheduled and unscheduled, especially in the beginning. Indeed, creative insights as well as personal bonding require impromptu and casual interactions just as much as analyzing spreadsheets and interviewing customers. Busy executives and man- agers too often intentionally minimize the time they spend together. The successful teams we’ve observed ali gave themselves the time to learn to be a team. This time need not always be spent together physically; electronic, fax, and phone time can also count as time spent together. Exploit the power of positive feedback, recognition, and reward. Positive reinforcement works as well in a team context as elsewhere. Civing out”go!d stars” helps shape new behaviors critical to team performance. If people in thegroup, for example, are alert to a shy per- son’s initial efforts to speak up and contribute, they can give the honest positive reinforcement that encourages continued contributions. There are many ways to recog- nize and reward team performance beyond direct com- pensation, from having a senior executive speak directly to the team about the urgency of its mission to using awards to recognize contributions. Ultimately, however, the satisfaction shared by a team in its own perfor- mance becomes the most cherished reward. 166 HARVARD BUSINESS REVIEW The Discipline of Teams • BEST OF HBR mission and from individual job objec- tives. As a result, such work products re- quire the collective effort of team mem- bers to make something specific happen that, in and of itself, adds real value to results. By contrast, simply gathering from time to time to make decisions will not sustain team performance. • The specificity of performance ob- jectives facilitates clear communication and constructive conflict within the team. When a plant-level team, for ex- ample, sets a goal of reducing average machine changeover time to two hours, the clarity ofthe goal forces the team to concentrate on what it would take ei- ther to achieve or to reconsider the goal. When such goals are clear, discussions can focus on how to pursue them or whether to change them; when goals are ambiguous or nonexistent, such dis- cussions are much less productive. and other stripes fade into the back- ground. The teams that succeed evalu- ate what and how each individual can best contribute to the team’s goal and, more important, do so in terms of the perfonnance objective itself rather than a person’s status or personality. • Specific goals allow a team to achieve small wins as it pursues its broader pur- pose. These small wins are invaluable to building commitment and overcom- ing the inevitable obstacles that get in the way of a long-term purpose. For ex- ample, the Knight Ridder team men- tioned at the outset turned a narrow goal to eliminate errors into a compelling customer service purpose. • Performance goals are compelling. They are symbols of accomplishment that motivate and energize. They challenge the people on a team to commit them- selves, as a team, to make a difference. for success. A large number of people, say 50 or more, can theoretically be- come a team. But groups of such size are more likely to break into subteams rather than function as a single unit. Why? Large numbers of people have trouble interacting constructively as a group, much less doing real work to- gether. Ten people are far more likely than 50 to work through their individ- ual, functional, and hierarchical differ- ences toward a common plan and to hold themselves jointly accountable for the results. Large groups also face logistical is- sues, such as finding enough physical space and time to meet. And they con- front more complex constraints, like crowd or herd behaviors, which pre- vent the intense sharing of viewpoints needed to build a team. As a result, when they try to develop a common purpose, For managers to make better decisions about whether, when, or how to encourage and use teams, it is important to be more precise about what a team is and what it isn’t. • The attainability of specific goals helps teams maintain their focus on get- ting results. A product-development team at Eli Lilly’s Peripheral Systems Division set definite yardsticks for the market introduction of an ultrasonic probe to help doctors locate deep veins and arter- ies. The probe had to have an audible signal through a specified depth of tis- sue, be capable of being manufactured at a rate of lOO per day, and have a unit cost less than a preestablished amount. Because the team could measure its progress against each of these specific objectives, the team knew throughout the development process where it stood. Either it had achieved its goals or not. – As Outward Bound and other team- building programs illustrate, specific objectives have a leveling effect con- ducive to team behavior. When a small group of people challenge themselves to get over a wall or to reduce cycle time by 50%, their respective titles, perks. Drama, urgency, and a healthy fear of failure combine to drive teams that have their collective eye on an attainable, but challenging, goal. Nobody but the team can make it happen. It’s their challenge. The combination of purpose and spe- cific goals is essential to performance. Each depends on the other to remain rel- evant and vital. Clear performance goals help a team keep track of progress and hold itself accountable; the broader, even nobler, aspirations in a team’s pur- pose supply both meaning and emo- tional energy. Virtually all effective teams we have met, read or heard about, or been mem- bers of have ranged between two and 25 people. For example, the Burlington Northern piggybacking team had seven members, and the Knight Ridder news- paper team had 14. The majority of them have numbered less than ten. Small size is admittedly more of a prag- matic guide than an absolute necessity they usually produce only superficial “missions” and well-meaning intentions that cannot be translated into concrete objectives. They tend fairly quickly to reach a point when meetings become a chore, a clear sign that most ofthe peo- ple in the group are uncertain why they have gathered, beyond some notion of getting along better. Anyone who has been through one of these exercises un- derstands how frustrating it can be. This kind of failure tends to foster cyni- cism, which gets in the way of future team efforts. In addition to finding the right size, teams must develop the right mix of skills; that is, each of the complementary skills necessary to do the team’s job. As obvious as it sounds, it is a common fail- ing in potential teams. Skill require- ments fall into three fairly self-evident categories. Technical or Functional Expertise. It would make little sense for a group of JULY-AUGUST 2005 167 » THE HIGH-PERFORMANCE ORGANIZATION doctors to litigate an employment dis- crimination case in a court of law. Yet teams of doctors and lawyers often try medical malpractice or personal injury cases. Similarly, product development groups that include only marketers or engineers are less likely to succeed than those with the complementary skills of both. Problem-Solving and Decision-Mak- ing Skills. Teams must be able to iden- tify the problems and opportunities they face, evaluate the options they have for moving forward, and then make neces- sary trade-offs and decisions about how to proceed. Most teams need some members with these skills to begin with, although many will develop them best on the job. Interpersonal Skills. Common un- derstanding and purpose cannot arise without effective communication and constructive conflict, which in turn de- pend on interpersonal skills. These skills include risk taking, helpful criticism, fact that their performance challenge was a marketing one. In fact, we discov- ered that teams are powerful vehicles for developing the skills needed to meet the team’s performance challenge. Ac- cordingly, team member selection ought to ride as much on skill potential as on skills already proven. Effective teams develop strong com- mitment to a common approach; that is, to how they will work together to ac- complish their purpose. Team members must agree on who will do particular jobs, how schedules will be set and ad- hered to, what skills need to be devel- oped, how continuing membership in the team is to be earned, and how the group will make and modify decisions. This el- ement of commitment is as important to team performance as the team’s com- mitment to its purpose and goals. Agreeing on the specifics of work and how they fit together to integrate indi- vidual skills and advance team perfor- mance lies at the heart of shaping a A team opportunity exists anywhere hierarchy or organizational boundaries inhibit the skills and perspectives needed for optimal results. objectivity, active listening, giving the benefit of the doubt, and recogniz- ing the interests and achievements of others. Obviously, a team cannot get started without some minimum complement of skills, especially technical and func- tional ones. Still,think about how often you’ve been part of a team whose mem- bers were chosen primarily on the basis of personal compatibility or formal po- sition in the organization, and in which the skill mix of its members wasn’t given much thought. It is equally common to overempha- size skills in team selection. Yet in all the successful teams we’ve encountered, not one had all the needed skills at the outset. The Burlington Northern team, for example, initially had no members who were skilled marketers despite the common approach. It is perhaps self- evident that an approach that delegates all the real work to a few members (or staff outsiders) and thus relies on reviews and meetings for its only”work together” aspects, cannot sustain a real team. Every member of a successful team does equivalent amounts of real work; all members, including the team leader, contribute In concrete ways to the team’s work product. This is a very im- portant element ofthe emotional logic that drives team performance. When individuals approach a team situation, especially in a business set- ting, each has preexisting job assign- ments as well as strengths and weak- nesses reflecting a variety of talents, backgrounds, personalities, and preju- dices. Only through the mutual discov- ery and understanding of how to apply all its human resources to a common purpose can a team develop and agree on the best approach to achieve its goals. At the heart of such long and, at times, difficult interactions lies a commitment-building process in which the team candidly explores who is best suited to each task as well as how indi- vidual roles will come together. In ef- fect, the team establishes a social con- tract among members that relates to their purpose and guides and obligates how they must work together. No group ever becomes a team until it can hold itself accountable as a team. Like common purpose and approach, mutual accountability is a stiff test. Think, for example, about the subtle but critical difference between “the boss holds me accountable” and “we hold ourselves accountable.” The first case can lead to the second, but without the second, there can be no team. Companies like Hewlett-Packard and Motorola have an ingrained perfor- mance ethic that enables teams to form organically whenever there is a clear performance challenge requiring col- lective rather than individual effort. In these companies, the factor of mu- tual accountability is commonplace. “Being in the boat together” is how their performance game is played. At its core, team accountability Is about the sincere promises we make to ourselves and others, promises that un- derpin two critical aspects of effective teams: commitment and trust. Most of us enter a potential team situation cau- tiously because ingrained individual- ism and experience discourage us from putting our fates in the hands of others or accepting responsibility for others. Teams do not succeed by ignoring or wishing away such behavior. Mutual accountability cannot be co- erced any more than people can be made to trust one another. But when a team shares a common purpose, goals, and approach, mutual accountability grows as a natural counterpart. Accountabil- ity arises from and reinforces the time, energy, and action invested in figuring out what the team is trying to accom- plish and how best to get it done. 168 HARVARD BUSINESS REVIEW The Discipline of Teams • BEST OF HBR When people work together toward a common objective, trust and commit- ment follow. Consequently, teams en- joying a strong common purpose and approach inevitably hold themselves responsible, both as individuals and as a team, for the team’s performance. This sense of mutual accountability also produces the rich rewards of mutual achievement in which all members share. What we heard over and over from members of effective teams is that they found the experience energizing and motivating in ways that their “nor- mal” jobs never could match. On the other hand, groups established primarily for the sake of becoming a team or for job enhancement, commu- nication, organizational effectiveness, or excellence rarely become effective teams, as demonstrated by the bad feel- ings left in many companies after ex- perimenting with quality circles that never translated “quality” into specific goals. Only when appropriate perfor- mance goals are set does the process of discussing the goals and the approaches to them give team members a clearer and clearer choice: They can disagree with a goal and the path that the team selects and, in effect, opt out, or they can pitch in and become accountable with and to their teammates. The discipline of teams we’ve out- lined is critical to the success of ail teams. Yet it is also useful to go one step fur- ther. Most teams can be classified in one of three ways: teams that recommend things, teams that make or do things, and teams that run things. In our expe- rience, each type faces a characteristic set of challenges. Teams That Recommend Things. These teams include task forces; proj- ect groups; and audit, quaiity, or safety groups asked to study and solve partic- ular problems. Teams that recommend things almost always have predeter- mined completion dates. Two critical issues are unique to such teams: getting off to a fast and constructive start and dealing with the ultimate handoff that’s required to get recommendations implemented. The key to the first issue lies in the clarity of the team’s charter and the composition of its membership. In ad- dition to wanting to know why and how their efforts are important, task forces need a clear definition of whom management expects to participate and the time commitment required. Man- agement can help by ensuring that the team includes people with the skills and influence necessary for crafting practical recommendations that will carry weight throughout the organization. Moreover, management can help the team get the necessary cooperation by opening doors and dealing with political obstacles. Missing the handoff is almost always the problem that stymies teams that rec- ommend things. To avoid this, the trans- fer of responsibility for recommenda- tions to those who must implement them demands top management’s time and attention. The more top managers assume that recommendations wiir’just DUEL) RELIABLE Phone Paris 773-555-0100 ^”^ Creating and Managing Strategic Alliances noyember 6-9 gram where the business world’s rr geous minds tackle its most challengL issues, execed.kellogg.northwestem.edu 847-491-3100 Kellogg » THE HIGH-PERFORMANCE ORGANIZATION happen,” the less likely it is that they will. The more involvement task force members have in implementing their recommendations, the more likely they are to get implemented. To the extent that people outside the task force will have to carry the ball, it is critical to involve them in the process early and often, certainly well before recommendations are finalized. Such involvement may take many forms, including participating in interviews, helping with analyses, contributing and critiquing ideas, and conducting experiments and trials. At a minimum, anyone responsible for implementation should receive a briefing on the task force’s purpose, approach, and objec- tives at the beginning of the effort as well as regular reviews of progress. Teams That Make or Do Things. These teams include people at or near the front lines who are responsible for doing the basic manufacturing, devel- opment, operations, marketing, sales, service, and other value-adding activi- ties of a business. With some exceptions, such as new-product development or pro- cess design teams, teams that make or do things tend to have no set comple- tion dates because their activities are ongoing. In deciding where team perfonnance might have the greatest impact, top management should concentrate on what we call the company’s “critical de- livery points”-that is, places in the or- ganization where the cost and value of the company’s products and services are most directly determined. Such crit- ical delivery points might include where accounts get managed, customer service performed, products designed, and pro- ductivity determined. If performance at critical delivery points depends on com- bining multiple skills, perspectives, and Judgments in real time, then the team option is the smartest one. When an organization does require a significant number of teams at these points, the sheer challenge of maximiz- ing the performance of so many groups will demand a carefully constructed and performance-focused set of manage- ment processes. The issue here for top management is how to build the neces- sary systems and process supports with- out falling into the trap of appearing to promote teams for their own sake. The imperative here, returning to our earlier discussion ofthe basic discipline of teams, is a relentless focus on perfor- mance. If management fails to pay per- sistent attention to the link between teams and performance, the organiza- tion becomes convinced that “this year, we are doing ‘teams’.”Top management can help by instituting processes like pay schemes and training for teams re- sponsive to their real time needs, but more than anything else, top manage- ment must make clear and compelling demands on the teams themselves and then pay constant attention to their mance challenge at hand or whether the group must deliver substantial in- cremental performance requiring real joint work products. Although the team option promises greater performance, it also brings more risk, and managers must be brutally honest in assessing the trade-offs. Members may have to overcome a natural reluctance to trust their fate to others. The price of faking the team ap- proach is high: At best, members get diverted from their individual goals, costs outweigh benefits, and people re- sent the imposition on their time and priorities. At worst, serious animosities develop that undercut even the poten- tial personal bests ofthe working-group approach. Every company faces specific performance challenges for which teams are the most practical and powerful vehicle at top management’s disposal. progress with respect to both team ba- sics and performance results. This means focusing on specific teams and specific performance challenges. Other- wise “performance,” like “team,” will become a cliche. Teams That Run Things. Despite the fact that many leaders refer to the group reporting to them as a team,few groups really are. And groups that become real teams seldom think of themselves as a team because they are so focused on per- formance results. Yet the opportunity for such teams includes groups from the top ofthe enterprise down through the divisional or functional level. Whether it is in charge of thousands of people or just a handful, as long as the group over- sees some business, ongoing program, or significant functional activity, it is a team that runs things. The main issue these teams face is determining whether a real team ap- proach is the right one. Many groups that run things can be more effective as working groups than as teams. The key judgment is whether the sum of indi- vidual bests will suffice for the perfor- Working groups present fewer risks. Effective working groups need little time to shape their purpose, since the leader usually establishes it. Meetings are run against well-prioritized agendas. And decisions are implemented through specific individual assignments and ac- countabilities. Most ofthe time, there- fore, if performance aspirations can be met through individuals doing their re- spective jobs well, the working-group approach is more comfortable, less risky, and less disruptive than trying for more elusive team performance levels. In- deed, if there is no performance need for the team approach, efforts spent to improve the effectiveness ofthe work- ing group make much more sense than floundering around trying to become a team. Having said that, we believe the extra level of perfonnance teams can achieve is becoming critical for a growing num- ber of companies, especially as they move through major changes during which company performance depends on broad-based behavioral change. When top management uses teams to run 170 HARVARD BUSINESS REVIEW things, it should make sure the team succeeds in identifying specific purposes and goals. This is a second major issue for teams that run things. Too often, such teams confuse the broad mission of the total organization with the specific purpose of their small group at the top. The dis- cipline of teams tells us that for a real team to form, there must be a team pur- pose that is distinctive and specific to the small group and that requires its members to roll up their sleeves and accomplish something beyond individ- ual end products. If a group of managers looks only at the economic performance of the part of the organization it runs to assess overall effectiveness, the group will not have any team performance goals of its own. While the basic discipline of teams does not differ for them, teams at the top are certainly the most difficult. The com- plexities of long-term challenges, heavy demands on executive time, and the deep-seated individualism of senior peo- pie conspire against teams at the top. At the same time, teams at the top are the most powerful. At first we thought such teams were nearly impossible. That is because we were looking at the teams as defined by the formal organi- zational structure; that is, the leader and all his or her direct reports equals the team. Then we discovered that real teams at the top were often smaller and less formalized: Whitehead and Wein- berg at Goldman Sachs; Hewlett and Packard at HP; Krasnoff, Pall, and Hardy at Pall Corporation; Kendall, Pearson, and Calloway at Pepsi; Haas and Haas at Levi Strauss; Batten and Ridder at Knight Ridder. They were mostly twos and threes, with an occasional fourth. Nonetheless, real teams at the top of large, complex organizations are still few and far between. Far too many groups at the top of large corporations needlessly constrain themselves from achieving real team levels of perfor- mance because they assume that all di- rect reports must be on the team, that team goals must be identical to corpo- rate goals, that the team members’ po- sitions rather than skills determine their respective roles, that a team must be a team all the time, and that the team leader is above doing real work. As understandable as these assump- tions may be, most of them are unwar- ranted. They do not apply to the teams at the top we have observed, and when replaced with more realistic and flexible assumptions that permit the team disci- pline to be applied, real team perfor- mance at the top can and does occur. Moreover, as more and more companies are confronted with the need to manage major change across their organizations, we will see more real teams at the top. We believe that teams will become the primary unit of performance in high-performance organizations. But that does not mean that teams will crowd out individual opportunity or formal hierarchy and process. Rather, teams will enhance existing structures without replacing them. A team oppor- tunity exists anywhere hierarchy or orga- nizational boundaries inhibit the skills and perspectives needed for optimal results. Thus, new-product innovation requires preserving functional excel- lence through structure while eradicat- ing functional bias through teams. And frontline productivity requires preserv- ing direction and guidance through hi- erarchy while drawing on energy and fiexibility through self-managing teams. We are convinced that every com- pany faces specific performance chal- lenges for which teams are the most practical and powerful vehicle at top management’s disposal. The critical role for senior managers, therefore, is to worry about company performance and the kinds of teams that can deliver it. This means top management must rec- ognize a team’s unique potential to de- liver results, deploy teams strategically when they are the best tool for the job, and foster the basic discipline of teams that will make them effective. By doing so, top management creates the kind of environment that enables team as well as individual and organizational performance. ^ Reprint R0507P; HBR OnPoint 4428 To order, see page 195. 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