part one
The Dream of Teams

chapter 1

The Team Ideal

A generation ago people didn’t talk about teams. Oh, they existed, but they were conventional, function- bound things. There were accounting teams, finance teams, production teams, and advertising teams—all made of specialists in parallel functions or “silos.” Everyone on a team did pretty much the same thing.

Functional teams spent a lot of time together, and spoke the same functional language. Not having to deal with one another’s “differentness,” functional teams had something of a free ride.

Wow, has a lot changed since then. The conventional silo team is still out there. But it has been crowded out by scores of other kinds of teams.

There are work teams in which everyone has the same skills, but each person is assigned a specific task. There are project teams, where people with different expertise each tackle a different part of the task. There are functional teams, and there are cross-functional teams.

There are interorganizational teams and intraorganizational teams. Some teams, like Army platoons, live and breathe together. Others join together across time zones, language differences, and boundaries. There are teams that work together for twenty years and those that team up for only a minute or two, then fade away.

There are leader-led teams and leader-less teams. There are teams in which everyone takes turns leading. And teams on which everyone is leading all the time.

There are teams of a hundred, teams of a dozen, teams of two—even teams of one (we’ll explain that).

A Short History of Teams

Though teams may seem new, they aren’t. We hunted and gathered in teams a hundred thousand years ago. Someone led, everyone did what he or she was best at, and shared in the outcome. By the time of Hammurabi, teams were already old hat. What we do today is only a modest variation on that. The team is the natural unit for small-scale human activity.

The catch is that word “small-scale.” With the Industrial Revolution, which began in the 1700s and has taken the planet by storm, the common model for many businesses drastically changed. Mass assembly machinery and techniques developed in the early 1900s meant that a single man, woman, or even child in a factory could be ten times as productive as his or her cottage equivalent, working the old way.

The Industrial Age peaked with the development of scientific management. This theory, propounded by Frederick Taylor, an American, attempted to optimize the productivity of organizations by assigning specialized tasks to individuals. Bosses were bosses. Below them were ranks of managers. Below them were countless supervisors. And below them, at the bottom of the organizational pyramid, were the multitudes of rank-and-filers, each one assigned a single task, like tightening a screw or attaching a hose or stamping a document.

Scientific management yielded the phrase “a cog in the works.” It was, in many ways, the wonder of the world. Henry Ford’s River Rouge plant in Detroit was an impressive four-mile-long monument to scientific management. The United States government was also a form of scientific management. It broke a large organization down into a nearly infinite assortment of tasks or bureau drawers. The bureaucracy this created was very steep and very deep, from the clerk sorting applications in the U.S. Patent Office all the way up to the ultimate boss, the President of the United States.

Technology ratcheted the machine age even tighter with the development of commercial mainframe computers in the 1950s. Large companies were suddenly able to perform accounting chores, such as billing, buying, cataloging, and payroll, that were unthinkable even in the big-company boom of the 1920s.

Bolstered by mainframe computers, big companies became megacompanies. The emphasis began a subtle shift away from uneducated manufacturing crews toward well-educated professional functional groups—people skilled in engineering, finance, distribution, and even technology itself.

By the 1960s the idea of teams made of flexible, multifunctional members, especially in big companies, had become nearly extinct. Functional teams such as accounting teams, design teams, and information services teams existed, but specialization and separation was the typical pattern.

Then the American postwar prosperity bubble popped. Corporations had become so immense that they were out of touch with their customers, and charging too much for value delivered. Workers were not asked to contribute their knowledge to the task of increasing an organization’s ability to compete or make a profit. A deep trench separated management from workers; management was the brains of an operation, and workers were the muscle, and that was all.

Labor relations became one of two things, each as bad as the other: adversarial to the point of intracompany war, or complacent to the point of indifference. The driving mission of adversarial industries like mining and oil seemed to be to keep workers down. The sloppy mission of complacent industries like autos and steel was to cut sweetheart deals with labor to mop up the gravy between them, and the hell with the customer. It was the age of bloat.

The rest of the world, ruined by World War II, was rapidly rebuilt. Fiercely competitive Japan, Germany, and other countries, seeking an edge against the U.S., were experimenting with new models for large organizations. Their successes at our expense were our wake-up call. The American engine of prosperity—huge factories, reductionist use of labor, vertical integration, and mainframe information control—began to stall.

Japan came at America in large part because of its team ethic. In the wake of the war they had no enviable natural resources, no state-of-the-art infrastructure, no money, no computers. What they had was motivated people with a tremendous amount of social capital—the cultural disposition to work together—and the vision and patience to chart a strategy and see it through.

Working largely in teams, the Japanese proceeded to clean our clock. Through the 1970s word wafted across the Pacific Ocean of the new approach the Japanese were using. Instead of asking the least from workers—such as tightening a 9⁄16-inch bolt 23⁄4 turns clockwise, over and over and over—the Japanese were asking the most. Every worker, in every function, at every level, was made a part of the company team. And that team’s mission was continuous improvement of processes. No idea was too small, and no worker was too small. Everyone participated.

Wm. Edwards Deming, the American statistician who helped get industrial Japan back on its feet in the 1950s, contributed some of the key concepts to the Japanese idea of kaizen, or continuous improvement. Foremost among these was the prime directive of teams, the notion that all are human beings. (Years after he returned to the U.S., having received Japan’s highest honors, an acquaintance of ours asked him what the Japanese had taught him. Deming did not even look up from his dinner to reply. “People are important,” he said.)

By the 1990s the new team model overtook the old model of hierarchy, even in the U.S. By the millennium, organizations everywhere, of every size, saw teams as part of the answer to nagging issues of strategic focus, cost containment, restructuring, productivity, training, and connectivity, completing one of the great blood-less revolutions in history, and helping cause the longest period of economic expansion ever.

In the 2000s, the idea of teaming has continued to evolve. Not rapidly, as technology evolves, but incrementally, as people discover new ways to put their heads together, and new reasons to do it. Technology is altering the way teams are expected to work, and occasionally making it easier and more fluid.

The renewed trend toward mergers means that teams will be operating across cultural grains, facing all the accompanying challenges. Already we are seeing virtual organizations that are wholly team-based—ad-hoc organizations thrown together for a single purpose, that do their work, make their money, and then disband.

Likewise, the new generation coming to power, the so-called “N” (for network) Generation, appears to have an intense teaming style all its own, as if they are determined to replace the ego-driven teams of their predecessors. It will be fascinating to see how that plays out.

So teams are here to stay, and even to dominate the way work is performed.

But as we shall see, they are also problematic.

Why Teams?

A team is easily defined: people doing something together. It could be a hockey team making a power play, or a research team unraveling an intellectual riddle, or a rescue team pulling a child from a burning building, or a family making a life for itself.

The something that a team does isn’t what makes it a team; the together part is.

Why did the world turn to teams? How could it not? On paper, at least, teams were a no-brainer:

Teams save money. In come teams and out goes middle management. Organizations turning to teams solely to save bucks have not been disappointed.

Teams increase productivity. Teams are closer to the action and closer to the customer than the old bureaucracy could be. Teams see opportunities for improving efficiencies bosses can’t hope to see.

Teams improve communication. In a proper team, members are stakeholders in their own success. Teams intensify focus on the task at hand. The very heart of a team, its business if you will, is the sharing of information and the delegation of work.

Teams do work that ordinary workgroups can’t do. When a task is multifunctional in nature, no single person or crew of functionaries can compete with a team of versatile specialists. There is just too much to know for one person or one discipline to know it all and do it well.

Teams make better use of resources. Teams are a way for an organization to focus its most important resource, its brainpower, directly on problems. The team is the Just-In-Time idea applied to organizational structure—the principle that nothing may be wasted.

Teams mean higher-quality decisions. Good leadership comes from good knowledge. The essence of the team idea is shared knowledge, and its immediate conversion to shared leadership.

Teams mean better quality goods and services. The quality circle (long ago abandoned) was an early expression of the idea that quality improvement requires everyone’s best ideas and energies. Teams increase knowledge, and knowledge applied at the right moment is the key to continuous improvement in the quality of goods and services.

Teams mean improved processes. Processes occur across functions. Teams, straddling all the functions contributing to a process, have better “process vision.” That’s why reengineering in the 1990s and the use of teams went hand in hand.

Teams “differentiate while they integrate.” Most organizations are eager to cut costs and work more effectively, but they worry about the fragmentation that may occur after scaling back. Teams allow organizations to blend people with different kinds of knowledge together; the blend inoculates the organization against the shock of downsizing.

All these things sound really good, and they are all true enough in the aggregate. But teams can also result in a new wave of problems that are causing all kinds of organizations all kinds of grief. For over a decade, we have been discovering that while teams achieve some good outcomes, they often fail for one reason or another.

Yes, companies save dollars by eliminating or combining jobs deemed unnecessary—productivity by attrition. But communication, quality, and true productivity gains—all the promises teams make, and managers get so excited about—remain elusive.

So you can’t blame these companies if they are having second thoughts about the team idea. Are teams just another frantic business fashion? Is it time to hitch up the harnesses and rebuild the pyramid of bureaucracy?

No, and no. First, teams are not a fad. They have always been around, and they will always be around. Second, there can be no turning back. The old hierarchy was too expensive. Turning back means taking on the waste and excess costs in industrial bureaucracies that led to the competitiveness calamity in the first place.

We have no choice, except to plunge deeper into the team experience.

But before we do that, it would be wise to stop and ask why teams fail, and how we can change our organizations, or our expectations, so our teams can achieve their promised potential.

The Fork in the Road

Let’s finish our history lesson. By the early 1990s, teams were being hailed as the greatest thing since beltless pants. At this point a fork appeared in the road. Companies came to it and, depending on their corporate cultures, veered to the right or to the left.

The two directions have been summed up by global strategist Gary Hamel, who says there are two basic corporate “orientations.” These orientations correspond to the numbers above and below the line in any fraction:

The top number is the numerator and the bottom number is the denominator. Consider the numerator to be a company’s potential for growth, expansion, core competencies, new products, new markets, generativity—profit by doing. The denominator is, by definition, the bottom line—cost containment, downsizing, flattening, delayering, dehiring—profit on paper.

Numerator companies have a vision of creating something terrific and new that didn’t exist before. Denominator companies subscribe to a more limited view, a zero-sum picture of mature markets that can never be expanded.

Numerator companies come to the fork in the road and say, “Aha—we can use teams to leverage growth!” Denominator companies come to the same crossing and say, “Aha—we can use the idea of teams to trim the workforce!” (Gary Hamel and C.K. Pra-halad, Competing for the Future, Cambridge: Harvard Business School Press, 1994.)

This fork in the road explains a lot about team dysfunction. Basically, teams in numerator-type environments experience less dysfunction than teams in denominator-type environments. Teams do well when they are vision-led, and given lots of latitude to let their own genius come to flower. When the creative juices are flowing, you can put up with a lot of baloney. Teams that are a mechanism solely for saving money tend to wear out sooner, their juices flow intermittently at best, and in their frustration, members tear into one another.

The most dysfunctional teams, however, are the in-between teams. They are told they are denominator teams, but in actuality they are numerator teams. Management sells them on the wisdom of teams, pumps up the happy talk, and inspires grand visions of camaraderie and collaboration, and everybody getting along.

In such organizations, teams are a Trojan horse—a fine and wonderful gift wheeled into the gates. But there are Greeks with spears in the belly. So be afraid.

The numerator/denominator split is a false dichotomy in one sense. One is not all good and one all bad. Both numerator and denominator approaches are legitimate. Indeed, most companies pursue both at the same time, tilting back and forth from one to the other. Cost-squeezing initiatives are not innately evil or mean-spirited. They are perfectly defensible in terms of the competition one is up against, in terms of the expectations of shareholders, and in terms of the personalities and experiences of top management—and because wasting is bad.

Nevertheless, when companies whose primary thrust is cost containment come to the fork in the road and choose to use teams primarily as a cost-cutting tactic, they set their teams up for a fall. No team can thrive when it has to forage for its supper. A team is not a money-saving “device.” A team isn’t any kind of device.

A team is a surprising, perplexing, up-and-down, tragicomic, value-creating human thing.

And it is a human thing that needs attention. It has to be pampered, fed, stroked, and have its pen hosed out from time to time. It needs understanding. It needs, at times, something akin to affection. Something old-line bureaucracies, which haven’t exactly disappeared, have never been very good at dispensing.

Teams have the potential to do so much more than wring maximum value from a tightly held dollar. When they fail, it is often because the organization employing them has turned to teams in order to trim middle management, without giving the new teams the attention, tools, vision, rewards, or simple clarity that they need to succeed.

This book is about retracing a company’s steps to that crucial crossroads, and rethinking the path their teams will take. Numerator, denominator, or (shudder) a hybrid of the two.

Companies approaching teaming with a numerator or growth orientation do not write off the idea of bottom-line profitability. Far from it. There are incredible stories of growth at companies whose top managers have averted their gaze from the mechanical, baseline trance of achieving 9 percent return on investment (“Don’t ask how we bring in the 9 percent, just do it!”) and focused instead on team processes that are the seedbed for true market expansion.

This is not an item of faith. Look at the stories in the press about which companies are breaking new ground and reaping dividends, and which companies are not. The good companies are noteworthy for their flexibility, focus, speed, and resilience—all team qualities. The second-raters leave a trail of ambiguity wherever they go, because they lack these team qualities. Or worse, they brutalize the teams that could have put them over the top.

A Rosetta Stone

In Egypt during the Napoleonic Wars, a French soldier with a shovel uncovered a clay tablet that explained, in one place, how cuneiform, hieroglyphics, and Greek translated into one another. The find was a windfall for archeologists, who didn’t have a clue what all the picture writing of ancient times was trying to say.

We are now going to hand you our Rosetta stone—a book-on-a-stone that explains, in cryptic phrases, everything this book is about. We label this runic wisdom “team intelligence”—everything a team needs to know about itself to survive and succeed.

This chart lists all the reasons teams fail, and the ways in which they can turn failure around.

TEAM INTELLIGENCE

The only problem with our Rosetta stone is that solutions are not as simple as the single-sentence descriptions make them seem. To utilize team intelligence, you have to have team intelligence. And that is a human learning process involving trial, error, intuition, commitment, honesty, and emotion.

So, sorry—you still have to read the book.

It is useful to remember that all teams—even the most successful—stumble over every one of these problems. Some problems they may never solve.

Nightmare teams, on the other hand, can suffer from every single dilemma and never get one of them right. We have seen teams that have been together three years and longer without making even a dent in improving cohesion.

Chances are your teams occupy the middle ground, doing some things well, but coming up short in a few others. For the moment, use the chart to assess your current teams. You must correctly diagnose your situation, and admit what the problems are, before you can take steps to put them right.