On the inside looking out

Why teams need to complement their internal focus with external networking

No matter how talented and dedicated the members of a team may be; no matter how smooth and efficient their teamwork, sometimes as a unit they will stutter and fail, as the external life-support systems they need for their work to succeed are suddenly or gradually shut down. In such cases, while honing and polishing their internal structures, these teams have frequently overlooked the need to invest time and effort in fostering relations with their working environment and have slowly lost touch with the outside world. According to research by Deborah Ancona and Henrik Bresman, in today’s competitive context this can be a fatal error. What is needed, they contend, is a new genre of collaborative body: the X-team.

by Deborah Ancona and Henrik Bresman

Ask any group of executives whether teamwork is critical to the success of their organizations and all hands typically go up. Ask whether their organizations are characterized by successful teamwork, however, and you’ll see far fewer hands. As striking as this discrepancy is, it’s also understandable, because creating and leveraging effective teams across an enterprise is a complex and difficult challenge.

Our research clearly shows that high-performing organizations have met this challenge. Such organizations are characterized by an ability to orchestrate a multitude of high-performing teams, and perhaps more importantly, these organizations push their teams to take on strategically important leadership tasks throughout the enterprise.

Our research also indicates that the best vehicle for this kind of “distributed leadership” is a particular kind of externally oriented team that we call “X-team”. Before we describe the characteristics of these high-performing teams, and what managers can do to build them, first let’s take a closer look at why effective teamwork is so difficult to achieve.

The team challenge

In the wake of breathtaking advances in technology, entry barriers have come down and competition has intensified. While in days past, a firm might hold its own and even grow by coasting along in expanding markets, this is not a winning strategy in today’s environment, where increasingly, innovation is the only viable engine of growth. But innovation doesn’t come from the executive suite. It comes from the teams actually working on the frontlines.

Unfortunately, most CEOs preside over organizations full of teams whose talents and capacity for greatness are never fully harnessed. Tragic in itself, in the context of ever increasing innovation-driven competition, this can literally mean the death of a company. The difficulty stems from the fundamental fact that as organizations grow, they become increasingly influenced by the logic of coordination and control. They introduce more detailed procedures, more rigid hierarchy, and more “silos” around functions and tasks. The result is greater compartmentalization, even as critical knowledge simultaneously becomes more advanced and more spread out, so that no single person or group can possibly possess all that is needed to integrate the required array of capabilities and pull off successful, consistent innovation.

But the increasingly fierce, fast and innovation-based competition forces organizational life to change in a number of fundamental ways. First, rather than multilevel centralized hierarchies, modern organizational structures have to become loose, spread-out systems with numerous alliances. Second, organizations are dependent on information that is complex, externally dispersed, and rapidly changing. Third, teams’ tasks in such an environment are increasingly interwoven with other tasks both inside and outside the organization.

Many teams still depend on a view of team effectiveness and a model of teamwork that don’t work very well under such circumstances – namely, that all a team needs in order to succeed is to focus within – on its own process, on the problem at hand and on each other as team members.

When organizations are faced with complex problems and resources are dispersed, leadership needs to be distributed across many players, both within and across organizations, up and down the hierarchy – wherever information, expertise, vision, new ways of working together, and commitment reside.

Within this world of distributed leadership teams cannot look solely inward. What is needed is an internal focus combined with an external approach. Evidence now exists suggesting that team success at leading, innovating, and getting things done means managing both inside and outside the team. It means balancing great teamwork with great work across multiple teams.

The X-team Principles

That’s where X-teams come in. The X in X-team underlines the point that an X-team is externally oriented, with members working outside their boundaries as well as inside them. X-teams manage to be both externally and internally focused, pulling in and leveraging ideas, support, and resources from all across the organization – and from outside as well.

Traditionally, managers have been drilled in team-building sessions and training guides that effective performance depends on what goes on inside the team. As a result, many teams spend a great deal of time and energy looking inward, asking questions like: can we get the job done with these people? Will we get along? How will we coordinate our efforts? Can we finish the work on time? To deal with this anxiety, team leaders and members try to find areas of agreement, ways to coordinate, goals to achieve, and a sense of camaraderie, accomplishment and hope early in the process.

Good internal team functioning is certainly important for success. The problem is that it isn’t enough. The crucial other dimension involves external work. In other words, to be effective in today’s environment, team members need to monitor, market, and manage across the team boundary, as well as build strong ties and processes within the team. This is what X-teams do so well.

Specifically, we have identified three distinguishing principles of X-teams compared to traditional teams: external activity, extreme execution, and flexible phases. First we will explore each individually and then offer some insights into how management can foster these characteristics.

External activity means that X-teams constantly seek out information about the customer, the technology, the market, and the competition. To create effective goals, plans and designs, members must go outside the team. They figure out the direction top management is moving and work to either change that direction or link to it. They learn from other teams and adapt to new information. They work hard to coordinate with others and get support from upper levels, and they have effective dialogue with many people outside the team.

In addition to this productive external activity, X-teams practice what we call extreme execution inside the team. This involves the development of internal processes and structures that enable members to learn from their external forays, adjust their plans accordingly, and coordinate their work and execute effectively. It involves the development of shared goals, clear roles, a transparent decision-making process, and interpersonal relationships characterized by trust and respect. Additional factors that we have found to be critical include devising and adhering to shared timelines, and taking time to reflect on external inputs as a team – no matter how severe the time pressures under which the team is operating. Extreme execution also includes a flexible membership structure that allows for shifting internal roles to reflect changing external demands.

Finally, X-teams move well from one phase to another to push a project forward. In our longitudinal studies, we have found that traditional teams often get stuck. At times they get stuck in information-gathering mode. Other times they may get stuck in design mode (“just one more bell, one more whistle”). High performing X-teams instead move swiftly and effectively from information gathering to putting their product or service together, to explaining to users why they should care. This is the principle we refer to as flexible phases.

Together, these three elements – external activity, extreme execution and flexible phases – form the principles by which X-teams are guided. But how are they able to execute those principles? What kind of structure supports such teams? The answer largely lies in what we have come to call the three “X-factors.” First is extensive ties to useful outsiders who enable teams to go beyond their boundaries, coordinate their activities, and adapt over time. Second, expandable tiers allow such teams to structure themselves. Finally exchangeable membership allows a team to include members who come in and out of the team and rotate leadership. These new, externally oriented X-teams have been able to make great things happen. They consistently outperform traditional teams across a wide variety of functions and industries. Their external focus helps them to respond more nimbly than traditional teams to the rapidly changing characteristics of work, technology, and customer demands, and to link their work more effectively to other organizational initiatives.

Management imperatives

Creating a culture in which X-teams can thrive is perhaps the greatest imperative for managers. X-teams cannot function in a traditional command and control environment. Managers need to establish a culture that values open and honest communication and acknowledges that risk taking and disagreement are necessary elements of innovation. Networking and connectedness must also be cultivated in the team. When putting together a team, understandably most managers tend to select people who are good at their jobs. But an often-overlooked factor, and one that is key in X-teams, is a potential team member’s social networks or ties within and outside the organization. Our research has shown that team members with deep ties on the technical side, along with ties to upper management, university researchers, and external professional organizations, can help their teams move through the project lifecycle efficiently and effectively.

Admittedly, X-teams are not easy to manage: Coordination is considerably more complicated than in a traditional internally focused team. So they may not always be the best choice. For example, if a team is charged with a relatively routine task and operates in a stable organizational environment, then following the X-team principles may not be worth the coordination costs.

But in the face of challenging and complex problems, in business and beyond (consider the complexity of the worldwide social, political, and environmental challenges of our age), X-teams may just be the best way to get people from diverse backgrounds and varying points of view and levels of knowledge to pool their collective energy to come up with the most innovative solutions.

RESUMÉ Deborah Ancona

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Deborah Ancona is the Seley Distinguished Professor of Management at the MIT Sloan School of Management, and Faculty Director of the MIT Leadership Center. She received her BA and MS in psychology from the University of Pennsylvania and her PhD in management from Columbia University. She has served as a consultant on leadership and innovation to companies such as BP, Vale, Merrill Lynch, Newscorp, HP, Nike, and AstraZeneca. In addition to her book x-teams: how to build teams that lead, innovate, and succeed together with Henrik Bresman, Prof. Ancona’s studies of team performance have also been published in several important academic publications such as the Sloan Management Review.

RESUMÉ Henrik Bresman

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Henrik Bresman is Assistant Professor of Organizational Behavior at INSEAD, where he teaches MBA and executive courses. His research focuses on high-performance teams, innovation and leadership. Bresman received his PhD from the MIT, where he studied as a Fulbright scholar. Born and raised in Sweden, he also holds a degree in economics from the Stockholm School of Economics. Prior to joining INSEAD, Prof. Bresman held a number of managerial, consulting, and entrepreneurial positions.