Go Out before In

Our doubts about the internal model of teams started decades ago, in a quality-of-work-life project in a prominent New York hospital.¹ One part of the project focused on improving the satisfaction and performance of nursing teams. Turnover and conflict were high. Enter a consulting firm. The consultant trained team members in skills such as problem-solving, communication, group decision-making, and conflict resolution.

A lot of time and energy went into the training. The consultant emphasized the importance of understanding teammates’ viewpoints and reaching consensus. During the project, the unit did improve communication and increase problem-solving capabilities. People learned interpersonal skills, and the number of work conflicts decreased. Unfortunately, after thousands of dollars and many hours spent, these changes were short-lived. Furthermore, it became clear from nursing audit data that there was little proof that these interventions improved the performance of the nursing teams.

More proof that internal process was not enough came in a study of 100 sales teams in the telecommunications industry. The study focused on whether sales teams performed better when they had clear roles and goals, practiced open communication, and supported one another. The results showed that though such teams’ members were more satisfied and considered themselves high performers, these internal processes did not predict performance. Instead, team performance, as measured by revenue attained by the team, could not be predicted in any way by looking solely at how members interacted with one another. The old model we all believe in simply did not tell the whole story.²

And then a series of studies led us to a major “aha” moment about what did affect performance. First, a study of forty-five product development teams in the tech industry showed that those that scouted new ideas from outside sources, received feedback from and coordinated with outsiders, and got support from top managers were able to build innovative products faster than those that dedicated themselves solely to efficiency and working well together.³

Still more evidence came from studies of consulting and pharma. The consulting teams that were more externally focused performed better in terms of client satisfaction and ratings of senior leaders than did teams that focused only on their internal interactions. Similarly, the pharma teams that were externally focused were better able to identify usable molecules and evaluate those molecules’ potential for the company than were teams that focused exclusively on their own knowledge base.⁴

By now, other team studies have replicated these results.⁵ They show that, when adapting to rapidly shifting external conditions or implementing a new strategy, an exclusively internal focus can be lethal. When success depends on keeping up with technology, markets, competitors, and other external stakeholders, an external focus combined with an internal focus is essential.

The new research is quite compelling. One study of pharmaceutical drug development teams showed that vicarious learning (the process of learning from prior related experiences of other teams) shows productivity gains only if it is paired with a robust internal process. Similarly, a lab experiment shows that both process work and learning are needed for teams to perform well. The inpatient medical teams at a US children’s hospital rely on the interdependence of both internal process work and external connectivity for success. Another study shows the importance of external connectivity that can be carried out through storytelling.⁶

Further, technology developed since the first edition of our book is offering us highly detailed information about teams. For example, large studies across multiple industries that actually track team member interactions using wearable devices show that teams’ ability to connect across and outside of the organization are critical for productivity and innovation.⁷ This is because teams in a rapidly changing world need to rely on both familiar practices known to team members and fresh ideas from outside the team and the organization. In a business plan competition at MIT for $100K, teams that spend more time with venture capitalists and other experts on their first day are more likely to be chosen for awards months later, as shown by these wearable devices that track team member interactions. Finally, new AI is currently being developed with algorithms that connect people in organizations with similar responsibilities and high interdependencies.⁸

And yet, despite the wealth of research against it, the internal model remains lodged in our brains and our actions. Executives continue to believe that performance depends mainly on internal team dynamics. The data that supports combining external activities with internal ones is there in black and white, and has been for some time, but much to our chagrin, it has been largely ignored.

The current world demands that teams take a more active role outside their boundaries. Indeed, we know from our work with many teams over the years that, in almost every organization, some teams do take an internal approach while others integrate internal and external work—and the latter have outperformed the others. These are the teams that have provided us with the lessons in this book. Now we’re going to delve more deeply into what teams with an exclusively internal focus miss out on by overlooking the external.

A Tale of Two Teams

Let’s compare two consulting teams from their formation through to the ultimate dissolution of one team. Both teams were created by a young, dynamic state education commissioner who wanted to reorganize how the state’s Department of Education supported schools. In his view, the department reacted too much to the needs of the state’s school districts rather than proactively finding out how they could support districts with new and more effective academic programs and curricula. To achieve this, he asked that teams be organized to consult to school districts in a particular geographic area. This approach was more streamlined than the previous one, in which department employees worked within academic silos (e.g., writing curriculum specialists, science curriculum specialists, etc.) and across functional silos (e.g., elementary education, vocational schools, etc.). These new geographic-based teams were headed by team leaders who were free to organize and motivate their teams as they saw fit. From the very beginning, two particular teams had very different orientations, which set them on different paths that would never converge.

The Southeast team, headed by Sanjay, had an internal focus. Its members saw themselves as a team set up to satisfy their own goals and to complete a task. The Northwest team, headed by Neema, melded the internal and external in a much more integrated way. Its members saw themselves as change agents working with senior management to create innovative solutions for district problems.

Why Sanjay chose to focus primarily inwardly and Neema chose to move externally as well as internally is not entirely clear. What is clear, however, is that the Southeast and Northwest teams show how small decisions made at the beginning of a project can set the stage for how teams will evolve over their life spans.

Two Teams, Two Strategies

As seen in table 1-1, the internal (Southeast) and integrated (Northwest) approaches differed along a number of dimensions: (1) primary goal (get to know how to work as a team versus get to know the external environment); (2) secondary goal (inform the region of the team’s intentions and decisions versus create team cohesion and organization); (3) initial amount of interaction with the environment (low versus high); (4) source of information used to map the environment/task (i.e., use existing member knowledge versus seek new information from outsiders); (5) direction of communication with the environment (one-way, or sustain the status quo, versus two-way, or see the regions from a new perspective, diagnose needs, get feedback, and invent new ways to provide services); and (6) overall focus (build a team versus help the organization build a new strategy).

Interestingly, (7) team building was the only area where the two approaches overlapped—both leaders wanted to create cohesive teams; they just went about it differently.

But small differences in emphasis and focus at the very start ended up making a big difference later. Sanjay’s approach pulled members together around a solution that did not meet stakeholder expectations. Neema’s approach opened the team up to other viewpoints and dialogue to find creative solutions and brought members into a process of discovery. These choices had implications in both the short term and the long term.

In the short term, the Southeast team members were more satisfied, felt more like a team, and thought they were making progress on the task. The Northwest team members, on the other hand, felt more confused, felt less like a team, and felt unsure about what they were doing together. So, the internal focus did initially help people feel safe, directed, and satisfied with their progress.

But over the long term, this early satisfaction turned on itself, as the Southeast team failed to produce. While a lot of time was spent early on trying to define goals and roles, as the project continued many team members missed meetings and enthusiasm declined. In contrast, the Northwest team had high levels of interaction with both the region and the top management team. Team meetings were a bit confused at first but improved over time. This integrated team sacrificed some internal cohesion early on for greater understanding of its external world, while the other team made the opposite choice. And it was the wrong one.

The Vicious Downward Spiral

After a year of work, a survey of the top management team, the superintendents in the regions, and team members themselves found the Southeast team (Sanjay’s internally focused group) scored the lowest. The Northwest team, on the other hand—with its more integrated focus—was one of the top performers. Why do a few different steps at the start lead you to success—or over a cliff? Why does a sole internal focus disable your ability to see, act, and gain acceptance outside? The exclusively internal focus poses numerous problems that together become a vicious downward spiral (see figure 1-1).

Let’s look at each phase of the spiral in turn.

Starting from Behind

In the short term, members of the Southeast team (Sanjay’s internally focused team) were able to get to know each other well and pull together information about the regions. They even started to brainstorm what they might do in the regions. Unfortunately, they did not do a good job on the latter. Since they did not often venture beyond their own team boundaries, they didn’t really know what superintendents wanted and so could not create highly valued interventions. They also had a hard time determining management’s expectations. Thus, the team’s members were left behind from the start—unable to move to a new way of thinking and operating.

In contrast, the Northwest team members (Neema’s integration-focused team) rated themselves as having a high ability to predict regional needs because of high levels of interaction with those regions. Meeting notes showed that this team was closest to the pulse of current issues in the region and in the organization. Team members were asked to report on important events in the districts so that everyone knew what was going on. Sharing information from the field helped team members get to know each other and feel like they were collectively tackling a tough challenge. Neema’s team was also involved with top management and helped the education commissioner design some of the organizationwide regional interventions. When the commissioner had to miss a meeting, Neema was asked to chair it.

There was, however, an initial downside to Neema’s approach. Her early decision to send members outside kept them from coming up with solutions quickly and caused stress all around. Neema dealt with that stress by providing the team with a focused task: understand the context in which you operate first. This direction helped members to be patient and gave them a better sense of what was going on with clients and executives.

Once they had a more accurate view of the situation, they could invent ways to improve what was going on in the regions. Furthermore, while they were interacting with the regions, they were building relationships with key stakeholders—people who would then be more likely to help them in the future. Essentially, they set the stage for dialogue with the outside world. The price they paid was lower team cohesion and higher levels of confusion about their team identity early on.

Bottom Line: Balance Is Key

While this chapter has focused on the failures of one internally oriented team, we have seen many teams fall into this vicious spiral. Not one of those teams was led by someone who was stupid or had bad intentions; all the leaders wanted to create a highly motivated group that would perform well. They wanted to cultivate a nurturing environment in which team members got along. Early meetings usually had high levels of energy as members got to know each other, pooled information, set goals, and began the task at hand. And sometimes they were lucky and set the right strategy. But more often they enthusiastically started a negative vicious spiral without even knowing it.

These teams did not realize that in creating tight, protective boundaries, they made it more difficult to step outside them to keep up with a changing world. They did not realize that by moving quickly to build the team, they forgot to check in with important stakeholders and create buy-in. They did not see that in sharing existing information, they developed trust but built solutions for a reality that no longer existed. While each step they took may have built internal cohesion, they ignored the outside world at their peril. The result was lower performance and ultimately a dampening of the very cohesion they tried to create. The bottom line is this: balance is key.

There are some circumstances in which the internal model works. Internally focused and self-reflective teams work well when they operate in stable environments. They work well when they have all the information they need within their borders and do not have to collaborate with other groups in the organization. They work well when the task is clear and stable and when they already have support within the organization. They work well when all the necessary resources are within the team and when changes in technology, markets, and strategy are not relevant.

Unfortunately, as we will examine more closely in the next chapter, the world of those specific conditions is almost completely gone. The good news is that with a few carefully chosen steps, a team can move from a total internal focus to a more balanced, integrated one. What’s more, a team can move from acting alone to working with others as part of a distributed leadership effort, engaging top management and multiple teams in creating new, innovative solutions and in improving organizational performance. Such a move may create challenges to the team’s internal harmony, at least initially. However, making the shift can help the team escape a vicious spiral and turn it into a virtuous one, finding satisfaction along the way.

In this chapter we have shown that our old models of teams don’t work. When teams focus solely on building a solid team (i.e., on clear roles and goals, conflict management, trust, team spirit, rational decision-making, diversity among members, accountability, and rewards for teamwork), they wall themselves off from achieving their full potential. By instead reaching outside their boundaries, teams can become agents for innovation and vehicles for organizational leadership in action. In the next chapter, we will explain the new environment that has made our traditional models of teamwork obsolete and introduce the three core principles of x-teams.