As recently as 10 years ago, virtual teams were rather novel; now they are standard fare. In the collaboration economy, employees are knowledge workers and teams are knowledge integrators. One of the challenges of the information era is in finding the information that is located within the company, or connecting and communicating with others who may be working half way across the globe. What do people look for in experts? They look for expertise, trustworthiness, communication skills, willingness to help, years of experience, and awareness of other resources. For example, at AT&T, internal activities and interactions happen on TSpace, which includes blogs, wikis, forums and SharePoint sites. Because many people are reluctant to learn new technologies, professional training on new media increases internal adoption.6

In the collaboration economy, the role of managers has shifted accordingly; they are no longer primarily responsible for gathering information from employees working below them in the organizational hierarchy and then making command decisions based on this information. Their new role is to identify the key resources that will best implement the team’s objectives and then to facilitate the coordination of those resources for the company’s purposes.

The jobs of the team members have also changed significantly. This can be viewed as a threat or a challenge. For example, in 2012, the U.S. Census Bureau estimated that 13.4 million people, or 9.5 percent of all workers, worked from home at least 1 day per week. That’s up from 7 percent of the workforce in 1999.7 Decisions may now be made far from their traditional location; indeed, sometimes they are even made by contractors, who are not employees of the company. This dramatic change in structure requires an equally dramatic reappraisal of how companies structure the work environment.

Information technology has also allowed customers and clients to gain immediate access to knowledge and information about products and services. This knowledge creates greater competition among companies vying for customers and market share. At least 65 percent of a typical company’s business comes from existing customers, and it costs five times as much to attract a new customer than to keep an existing customer satisfied.8 With so much at stake, companies aggressively compete in a winner-take-all battle for market share. Thus, bringing out the best in teams within the company has become even more important. This means that people can be expected to specialize more, and these areas of expertise will get ever more narrow and interdependent. This is the core structure of a team-based approach to work. For example, the Apple iPhone holds 73 percent of cell phone profits worldwide.9 The team that developed the iPhone included over 200 engineers and involved thousands of others. This coordinated task was difficult because the applications had to work together. Thus teamwork was critical to coordinate activities of the various groups. Engineers who developed the iPhone worked through the night on coding, hardly sleeping for days. Product managers worked hard to make deadlines, and the tension was high in the office as doors were slammed and arguments broke out in the hallways.10

Another challenge is globalization. An increasingly global and fast-paced economy requires people with specialized expertise, yet the specialists within a company need to work together. As acquisitions, restructurings, outsourcing, and other structural changes take place, the need for coordination becomes all the more salient. Changes in corporate structure and increases in specialization imply that there will be new boundaries among the members of an organization. Boundaries both separate and link teams within an organization, although the boundaries are not always obvious.11 These new relationships require team members to learn how to work with others to achieve their goals. Team members must integrate through coordination and synchronization with suppliers, managers, peers, and customers. Teams of people are required to work with one another and rarely (and, in some cases, never) interact in a face-to-face fashion. With the ability to communicate with others anywhere on the planet (and beyond!), people and resources that were once remote can now be reached quickly, easily, and inexpensively. This has facilitated the development of the virtual team—groups linked by technology so effectively it is as if they are in the same building. Furthermore, cultural differences, both profound and nuanced, can threaten the ability of teams to accomplish shared objectives.

Multigenerational teams refer to the fact that people of different generations work in fundamentally different ways and have dramatically different norms when it comes to collaborating and teaming. This is largely due to the shaping experiences some generations have had with technology at a young age that have affected how they think and work. For example, born in the mid-1980s and later, Generation Y professionals (also known as millennials) are the fastest-growing segment of the workforce.12 Sometimes, communicating with someone from a different generation can be as challenging as communicating with someone from a different culture. Unless managers and companies take the time to understand the different work and value systems of the other generations, they are doomed to be disappointed and frustrated. Moreover, mixed generations in the office can often lead to awkward face-to-face interactions. For example, millennials have been referred to as the “new office moron” by Businessweek because they don’t know how to dress, use a landline, or be professional in a meeting—using their cell phones to text or browse the Internet.13 Values to consider in teams composed of different generations are as follows: the importance of family, achievement orientation, team versus individual orientation, and the need for feedback, attention, and coaching.

The most traditional type of team is the manager-led team . In the manager-led team, the manager acts as the team leader and is responsible for defining the goals, methods, and functioning of the team. The team itself is responsible only for the actual execution of their assigned work. Management is responsible for monitoring and managing performance processes, overseeing design, selecting members, and interfacing with the organization. Examples of manager-led work teams include automobile assembly teams, surgery teams, sports teams, and military teams. A manager-led team typically has a dedicated, full-time, higher-ranking supervisor, as in a coal-mining crew.

Manager-led teams provide the greatest amount of control over team members and the work they perform; they allow the leader to have control over the process and products of the team. In addition, they can be efficient, in the sense that the manager

does the work of setting the goals and outlining the work to be done. In manager-led teams, managers don’t have to passively observe the team make the same mistakes they did. These teams also have relatively low start-up costs. However, there can be some key disadvantages, such as diffusion of responsibility and conformity to the leader. In short, members have less autonomy and empowerment. Manager-led teams may be ideally suited for simple tasks in which there is a clear goal, such as task forces or fact-finding teams. The capture of bin Laden, presented in the chapter-opening vignette, is an example of a manager-led team, with Vice-Admiral Bill McRaven, the SEAL in charge of the JSOC (Joint Special Operations Command). Other examples include surgical teams, flight crews, and stage crews.

In self-managing or self-regulating teams , a manager or leader determines the overall purpose or goal of the team, but the team is at liberty to manage the methods by which to achieve that goal. Self-managed teams are increasingly common in organizations. Examples include executive search committees and managerial task forces. Self-managing teams improve productivity, quality, savings, and employee morale, as well as contribute to reductions in absenteeism and turnover.15 These benefits have been observed in both manufacturing and service settings. For example, gaming development company Double Fine was headed for bankruptcy after their most popular game was cancelled. In an unprecedented self-managing move, the owner assigned people to several teams and gave each team 2 weeks in which they were free to develop new game prototypes. The process was called Amnesia Fortnight. Notably, team members were not locked into any one specific job; rather, programmers could become producers and artists could become designers. Staffers were able to explore their capabilities and discover hidden talents. After the 2 weeks ended, Double Fine developed four new games, which saved their company.16

Ruth Wageman formally studied 43 self-managing teams in the Xerox service organization.17 According to Wageman, seven defining features emerged in the superbly performing teams but not in the ineffective teams, including the following: clear direction, a team task, rewards, material resources, authority to manage their work, goals, and strategic norms (see Exhibit 1-3).

A study of self-managing companies revealed that they performed much better than did others when the recession of 2008 hit, and they also created more jobs.18 Self-managing teams build commitment, offer increased autonomy, and often enhance morale. The disadvantage is that the manager has much less control over the process and products, making it difficult to assess progress. Self-managing teams can also be more time consuming.

Self-directing or self-designing teams determine their own objectives and the methods by which to achieve them. Management has responsibility only for the team’s organizational context. Self-directed teams offer the most potential for innovation, enhance goal commitment and motivation, and provide opportunity for organizational learning and change. However, self-directed or self-designing teams are extremely time consuming, have the greatest potential for conflict, and can be very costly to build. (For a step-by-step guide to setting up self-designing teams, see The New Self-Directed Work Teams. 19) Furthermore, it can be extremely difficult to monitor their progress. Other disadvantages include marginalization of the team and lack of team legitimacy. However, self-directed teams are often capable of great accomplishments.

Self-designing teams may be ideally suited for complex, ill-defined, or ambiguous problems and next-generation planning. Some companies have “free time” policies that

allow employees to pursue novel projects they feel passionate about. According to Google, by allowing employees to have “20 percent time” for their projects, several successful launches including Gmail electronic mail service, the Google News service, Google Maps, and social networking site Orkut were possible. Similarly, at Southwest Airlines, self-directing teams are a core value. The company limits the emphasis on formal organizational structure and instead trusts decision making to the individual worker or management committee. When a well-known author forgot his identification card needed to board the plane, the empowered team member was able to assure his identity from the back cover of one of his books, and permitted the author to board the plane, preventing a dreaded flight delay. In a traditional top–down structure, the team member would have to call her manager, who then may have to call another manager, but the power of the self-directing team circumvented the bureaucratic hassle.20 By reducing bureaucracy, self-directed teams help the bottom line. At W.L. Gore company, 9,500 employees across 50 locations work without formal hierarchies, no bosses, and minimal job titles. Associates choose their work and negotiate roles with team members. Manufacturing facilities are capped around 200 workers to keep the focus on “we decided” instead of “they decided.” The company scores high in annual lists of best places to work and innovation leaders.21

Self-governing teams and boards of directors are usually responsible for executing a task, managing their own performance processes, designing the group, and designing the organizational context. They have wide latitude of authority and responsibility. In many companies, the president or chief operating officer has been replaced with an executive, self-governing team.22 For example, LPN Founder Dov Seidman stood in front of his executive team and tore up the traditional organizational chart and announced that all members would now “report” to the company mission. The company is managed through elected employee councils and is responsible for recruiting, performance and resource management, and conflict resolution.23

Yet, there are trade-offs involved with each of these four types of teams. Self-governing and self-directed teams provide the greatest potential in terms of commitment and participation, but they are also at the greatest risk of misdirection. When decisions are pushed down in organizations, team goals and interests may be at odds with organizational interests. Unless everyone in the organization is aware of the company’s interests and goals, poor decisions (often with the best of intentions) may be made. An organization that chooses a manager-led group is betting that a manager can run things more effectively than a team can. If it is believed that the team can do the job better, a self-governing or self-designing team may be appropriate. One implication of this is that the manager’s traditional role as a collector of information is less and less important. However, it is important to think about the direction of movement. One investigation tested predictions from Structural Adaptation Theory on the longitudinal effects of centralizing versus decentralizing decision-making structures in teams.24 Results from 93 4-person teams documented that it was more difficult for teams to adapt to a centralized decision-making structure after formally working within a decentralized structure than it was to adapt in the opposite direction.

When companies are in trouble, they often restructure into teams. However, organizing people into teams does not solve problems; if not done thoughtfully, this may even cause more problems. Perhaps it is for this reason that 37 Signals, a Web application company, instilled a “month off” policy under which employees take a month off from coming into the office and instead work on mock-ups or prototypes of new products. They are free to work wherever they want. By having a full month to dedicate to innovation without the hassle and interruptions of team meetings and administration, individuals can innovate.25

Teams can outperform the best member of the group, but there are no guarantees. Admitting the inefficiency of teams is hard, especially when most of us would like to believe the Gestalt principle that the whole is greater than the sum of its parts! Teams are not a panacea for organizations; they often fail and are frequently overused or poorly designed. In the best circumstances, teams provide insight, creativity, and cross-fertilization of knowledge in a way that a person working independently cannot. In the wrong circumstances, teamwork can lead to confusion, delay, and poor decision making.

Imagine yourself in the following situation: The wonderful team that you put together last year has collapsed into lethargy. The new product line is not forthcoming, conflict has erupted, and there is high turnover. What has gone wrong? If you are like most managers, you place the blame on one of two things: (1) external, uncontrollable forces (e.g., a bad economy), or (2) the people on the team (e.g., difficult personalities). Conveniently for the manager, both of these problems do not directly implicate poor leadership. However, according to most research investigations, neither of these causes is the actual culprit. Most team problems are not explained by external problems or personality problems. Faulty team design is a key causal factor in underperforming teams.

The misattribution error is the tendency for managers to attribute the causes of team failure to forces beyond their personal control. Leaders may blame individual team members, the lack of resources, or a competitive environment. When the leader points to a problem team member the team’s problems can be neatly and clearly understood as emanating from one source. This protects the leader’s ego (and, in some cases, the manager’s job), but it stifles learning and destroys morale. It is more likely that the team’s poor performance is due to a structural, rather than personal, cause. Furthermore, it is likely that several things, not just one, are at work.

Many new managers conceive of their role as building the most effective relationships they can with each individual subordinate; they erroneously equate managing their team with managing the individual people on the team.26 These managers rarely rely on group-based forums for problem solving and diagnosis. Instead, they spend their time in one-on-one meetings. Teamwork is expected to be a natural consequence. As a result, many decisions are based upon limited information, and decision outcomes can backfire in unexpected and negative ways. Leaders need to help managers learn about teamwork.

It may seem ironic, but one of the most effective ways to learn is to experience failure. For example, Twitter was born out of a failed project called Odeo. Twitter founder Evan Williams and his team were struggling to get excited about a podcasting service that didn’t offer everything that iTunes—a major competitor—did. Sure enough, soon after it was introduced, Odeo failed. So, Williams and his team took the experience from Odeo and developed a completely new social media that allowed people to send simple updates via text.27 A failed team effort should be viewed as a critical source of information from which to learn. However, when you are the one failing, failure is hard to embrace. The true mark of a valued team member is a willingness to learn from mistakes.

Surprises and ambiguity are often a cause of failure, so it is important to examine how teams can best deal with surprise and the unexpected. One investigation examined how SWAT teams and film production crews deal with surprises and upsets by engaging in organizational bricolage—in which they restructure their activities by role shifting, reorganizing routines, and reassembling their work.28

Many leaders naively boast that their teams are successful because they never have conflict. However, it is a fallacy to believe that conflict is detrimental to effective teamwork. In fact, conflict may be necessary for effective decision making in teams as it can foment accuracy, insight, understanding, trust, and innovation.

A common myth about leadership is that to function effectively, teams need a strong, powerful, and charismatic leader. In general, leaders who control all the details, manage all the key relationships in the team, have all the good ideas, and use the team to execute their “vision” are usually overworked and underproductive. Teams with strong leaders sometimes succumb to flawed and disastrous decision making.

As we discuss in Chapter 11, a leader has two main functions: a design function, meaning that the leader structures the team environment (working conditions, access to information, incentives, training, and education), and a coaching function, meaning that the leader has direct interaction with the team.29

Teams are often depicted as mavericks: bucking authority, striking out on their own, and asking for permission only after the fact. Such cases do occur, but they are rare and tend to be one-shot successes. Most managers want consistently successful teams.

To be successful in the long run, teams need ongoing resources and support. By resources, we mean more than just money. Teams need information and education. In too many cases, teams tackle a problem that has already been solved by someone else in the company, but a lack of communication prevents this critical knowledge from reaching the current task force.

To lay the best groundwork for teams, it is important to consider the goals and resources of the team: Are the team’s goals well defined? Does everyone know them? Are the goals consistent with the objectives of other members of the organization? If not, how will the inevitable conflict be managed? Does everyone on the team have access to the resources necessary to successfully achieve the goal? Is the organizational hierarchy designed to give team members access to these resources efficiently? If not, it might be necessary to reconsider the governance structure within which the team must operate. What are the rights of the team members in pursuing their duties, who can they contact, and what information can they command? It is also important to assess the incentive structure existing for team members and for those outside the team with whom team members must interact. Are the team members’ incentives aligned? Are team members’ incentives aligned with those of the group and the organization, for instance, to cooperate with one another and to fully share information and resources? There is no cookie-cutter solution to team structure. For instance, it may be appropriate for team members to compete with one another (in which case, cooperation may not be an achievable feature of the group dynamic). Choosing the structure of the group and the incentives that motivate the individuals inside it are essential factors contributing to the success of any team.

Teams often get into trouble. Members may fight, slack off, or simply be unable to keep up with their responsibilities, potentially resulting in angry or dissatisfied customers. When conflict arises, people search for a solution to the team problem. A common strategy is to have a “team-building retreat,” “corporate love-in,” or “ropes and boulders course” where team members try to address underlying concerns and build trust by engaging in activities—like rock climbing—that are not part of what they ordinarily do as a team. A team retreat is a popular way for team members to build mutual trust and commitment. A retreat may involve team members spending a weekend camping and engaging in cooperative, shared, structured activities. However, unless retreats address the structural and design problems that plague the team day to day in the work environment, they may fail. For example, one company facing leadership issues decided to have a consultant run a team-building retreat. The employees played games that put them into different roles so they could understand each other more and the issues they were facing day to day. However, the retreat did not accomplish the company goal because the employees did not discuss the games process. One employee commented that it was too bad the leadership was not stronger at the company because on paper it was the perfect job, but after experiencing yet another bad team-building experience, she decided to leave the company. Another example of a nonproductive work retreat came when a large nonprofit company had a lot of discord between employees. To help resolve this, the executive director asked the staff to participate in a retreat by going into the woods, standing in a circle, and holding a stone to express their negative feelings. Needless to say, the discord continued.30

Design problems are best addressed by examining the team in its own environment while team members are engaged in actual work. For this reason, it is important to take a more comprehensive approach to analyzing team problems. Retreats are often insufficient because they encourage managers to attribute team failures to interpersonal dynamics, rather than examining and changing deeper, more systemic issues.

The most common type is the middle management team, followed by cross-functional, operations, and service teams. Cross-functional teams epitomize the challenges outlined earlier in this chapter. They represent the greatest potential, in terms of integrating talent, skills, and ideas, but because of their diversity of training and responsibility, they provide fertile ground for conflict.

Team size varies dramatically, from 3 to 100 members, with an average of 11.92. However, the modal team size is 8. These numbers can be compared with the optimum team size. As we discuss later in the book, teams should generally have fewer than 10 members—more like 5 or 6.

Most of the managers in our assessment were in self-managing teams (52 percent), followed by manager-led teams (42 percent), with self-directing teams (6 percent) distinctly less common (see Exhibit 1-4). There is an inevitable tension between the degree of

manager control in a team and the ability of team members to guide and manage their own actions. Manager-led teams provide more control, but less innovation than what stems from autonomy. We do not suggest that all teams should be self-directing. Rather, it is important to understand the trade-offs and what is required for each type of team to function effectively.

Teams vary a great deal in terms of how long they have been in existence. On average, teams are in existence for 1 to 2 years (see Exhibit 1-5).

Managers considered several possible sources of frustration in managing teams. The most frequently cited cause of frustration and challenge in teams is developing and sustaining high motivation, followed by minimizing confusion and coordination problems

(see Exhibit 1-6). We discuss issues of motivation in Chapter 2; also, we focus on team compensation and incentives in Chapter 3. We analyze conflict (and ways to effectively manage it within a team) in Chapter 8 and address creativity in Chapter 9. Not surprisingly, among the skills on the most-wanted list for managerial education are developing and sustaining high motivation, developing clear goals, fostering creativity and innovation, training, and minimizing confusion and coordination problems. Consequently, we designed this book to prepare managers and reeducate executives in how to effectively deal with each of these concerns.

It is difficult to identify a single measure of team functioning because team effectiveness is hard to define. For example, perhaps your organization beat the competition in winning a large contract, but the contract was ultimately not very profitable. Was this a victory or a failure? What will be the implications for future competition?

Many people make the mistake of looking for causes after they find effects. In the scientific literature, this is known as sampling on the dependent variable . For example, if your goal is to identify the determinants of a successful team, it may appear useful to look for effective teams in your organization and then try to determine what is common among them. This sounds logical, until you realize that there may be many common factors that have nothing to do with making a team successful. Or there may be common features that interfere with good teamwork but are nonetheless difficult to detect—perhaps precisely because they are common to all the teams, successful or not. One important example of this is the institutional background of the company, for example, taking certain established practices for granted, such as operating procedures, information sources, and even contractual relationships. In this case, the team may be effective, but not as effective as it might otherwise be. A manager who is also entrenched in the institutional framework of the company may perceive a team as effective, while overlooking its shortcomings. Thus, it is essential to be as independent and critical as possible when analyzing team effectiveness.

How do you avoid the trap of sampling on the dependent variable? From a methodological point of view, you can do one of two things: (1) identify a preexisting baseline or control group—that is, a comparison group (in this case, unsuccessful teams)—and look for differences between the two; or (2) do an experiment in which you provide different information, education, communication, and so on to one group (randomly assigned) but not the other. Then look for differences. Unfortunately, most executives do not have the time or resources to do either of these things. This book provides insights based upon research that has done these things before a drawing of conclusions. However, nothing can substitute for a thoughtful understanding of the environment in which the team operates, the incentives facing team members, and so on. We discuss these factors throughout this book.

Another problem is called hindsight bias , or the “I knew it all along” fallacy.32 This is the tendency to believe that something seems obvious, even inevitable, after you learn about it when you have not predicted (or cannot predict) what will happen. This can result in an unfortunate form of overconfidence: Managers think they know everything, when in fact they don’t. We often see managers engage in post hoc justification rather than careful reasoning. The best way to avoid this trap is to read actively to learn about other possibilities, critically examine your assumptions, and be open to a change of mind once you have the facts. As you read this book, some things will surprise you, but much will seem obvious. As a general principle, do not rely on your intuition; rather, test your assumptions.

For every managerial problem, there are a dozen purported solutions and quick fixes. How can a manager knowledgeably choose among them? The answer, we think, is the science of teamwork.

Team and group-related research is based on scientific theory. Group-related research accounts for over one-sixth of all the research in social psychology and one-third of the most cited papers in social psychology journals focus on groups and teams.33 The interventions presented in this book have a key quality going for them: They are all theory based and empirically sound. This means that they are not based on naive, intuitive perceptions; rather, they have been scientifically examined. This is known as evidence-based management.34 This book was written to provide managers with up-to-date, scientifically based information about how best to manage their teams.

Effective managers make mistakes, but they don’t make the same mistakes twice. Expert learning involves the ability to continually learn from experience. One of the great fallacies about learning is that people reach a point where they have acquired all the knowledge they need; in contrast, great leaders are always learning. In this book, we use a model that we call expert learning to refer to how managers can continually benefit, even from the most mundane experiences. Consider Chris Argyris’s distinction between single-loop versus double-loop learning.35 According to Argyris, single-loop learning is learning that is primarily one-dimensional. For example, a leader may believe that she has nothing to learn from a subordinate but that the subordinate can learn from her. Therefore, the interactions between the leader and the subordinate will be primarily one-directional, or single loop. In contrast, Argyris argues that effective leaders engage in double-loop learning processes, which involve a reciprocal interchange between leaders and teams. This means, of course, that not only do leaders coach, direct, and instruct their teams but also that teams help their leaders learn.

Another important aspect of learning is the use of examples to illustrate and convey concepts. Experiential and example-based learning is more effective than didactic (lecture-based) learning.36 An important key to whether knowledge is actually used or remains inert is what Whitehead, over 80 years ago, called the inert knowledge problem.37 The key to unlocking the pervasive inert knowledge problem lies in how the manager processes the information, and when managers link examples to concepts, they learn better.38 Thus, in this book, we attempt to provide several ways of looking at the same problem via a combination of theory, research, and real business practices.