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X-teams – a must for companies to succeed, says study by INSEAD prof

X-teams


After studying some 1000 teams across companies and countries in a span of ten years, Henrik Bresman, Assistant Professor of Organizational Behaviour at INSEAD has concluded that perfect teams are those that balance internal processes with an external focus. He has labelled these as X-teams. In his book X-Teams: How to Build Teams that Lead, Innovate, and Succeed, co-authored with Deborah Ancona, Harvard Business School Press, 2007, Prof Bresman has explained that X-teams cultivate important leadership functions and change the pathway for an organization. But good teams can also fail when it comes to innovation, this is if they do not keep external factors and conditions in mind, he has warned.

Pagalguy caught up with Prof Bresman at his office in INSEAD, Singapore.


Professor Henrik Bresman

Define an X-team?

X-teams are those that balance internal activity with an equal commitment to external activities. Theyre different from traditional teams because they go outside from day one and do so throughout their life cycle. The actual balance between internal and external activity shifts as per work requirements but the external mindset is always there. An X team is also able to recognize the factors outside the team and those out in the world and identify the ones that can be used for its success. The X-team is also good at starting and maintaining bridges with other teams in the company so that the work put in is evident and support is gathered easily.

The X in an 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.

Give an example of an X-team that you have worked with?

One X-team we studied at Microsoft Corp. had been tasked with developing new software for netgenersthe demographic cohort born after 1982 and thus raised in the digital era. The NetGenteam engaged in extensive scoutingresearching a wide array of products and market trends related to the target segment, and then conducting a deep study of a group of college students charged with creating a business plan. As the students worked on their project, the NetGen team studied videotapes, interviews, and textmessaging transcripts to really understand how the students used technology.As their project rolled out, the NetGen teams ambassadorship activities included working hard to win the support of key outside managers.

Every member of the team mastered a brief pitch making the business case for targeting netgeners as potential customersand then presented it to managers in other parts of the Microsoft organization. To ensure that their work remained appropriately aligned with the companys overall strategy, team members also made frequent presentations to top management. Finally, the NetGen team members engaged in task coordinationactively recruiting the assistance of other Microsoft development groups, such as a group focused on creating photo management tools and a testing unit that could provide critical feedback as the team developed prototype applications.

Any other examples?

At BP, X-teams have created new structures and architectures to improve project management. Working in distributed teams with members throughout the world, they have come up with new ways to contract with suppliers, new ways to evaluate projects, new ways to structure joint ventures, standardize projects and gain value from technology. These teams will now work with top management to implement these ideas, and the process will be repeated year after year. This same process occurred at Merrill Lynch & Co., as X-teams came up with new products that brought debt and equity groups together as never before, while at Hewlett-Packard Co., X-teams created new ways to improve services provided within and outside the company. At Vale, a Brazilian mining company, the program has yielded new ways to go global, while at Newscorp, it has helped information technology (IT) managers find new ways to integrate IT into business strategy.

So do X-teams never fail?

By my earlier definition, an X-team is always in close contact with its external conditions so it is less likely to make the same errors a traditional team would make. You could say traditional teams fall in the trap of making mistakes like coming up with a solution to a problem that no longer exists, or coming up with strategies which customers dont rate as important. These teams are often not on the same level as the management and rarely get their work put to practical use. No matter how talented or committed a team is, it can fail if the external support it needs is slow to come by. An X team is the one which has invested time with the outside world and nurtured the contacts to bring about great results for the company.

That means a successful company is also one that has successful teams?

Ask employees in a company whether teamwork is mandatory for the success of their company and they will agree. Ask whether their company is known for successful team work, and very few will agree. Creating and leveraging effective teams across an organization is an intricate and problematic effort. Our research clearly shows that high-performing companies have stood up to this effort. Such companies have the knack of sustaining layers of high-performing teams which are pushed to take up critical leadership jobs for the company. Such teams are called X-teams which offer distributed leadership. Companies such as Microsoft, BP, Merrill Lynch, Procter & Gamble and Southwest Airlines as examples of companies which have successfully used X-teams because they work hard at building linkages with other groups within their own big company. These companies also demonstrate that X-teams are powerful enough for the top brass to foster a culture of innovation across the board.

What is it that keeps a team going?

Good teams can often fail when it comes to innovation. And this does not mean that there is an issue of talent in the team or that the team cannot work as a group. It happens when the team does not give enough importance to external stakeholders and conditions. Often teams do not see external activity as a part of their central work or path to work. Over the years, managers have been drilled in team-building sessions and training guides/presentations for what goes on inside the team. Due to this, many teams spend a huge amount of time and energy looking inward, asking questions like: can we get the job done with these people? Can we get along? How will we coordinate our efforts? Can we finish the work in time? To deal with this anxiety, team leaders and members try to find areas of agreement, ways to co-ordinate, goals to achieve, and a sense of camaraderie, accomplishment and hope early in the process.

Good internal team functioning is definitely a must for success but it can’t be the only thing as the team has to manage across team boundaries. X-teams monitor, market, and manage across the team lines and also build strong bonds and processes within the team.

Has this concept been understood at b-school level?

MITs Sloan School of Management has developed a program to help organizations establish, manage, and leverage such a network of X-teams. The X-team program consists of multiple X-teams created by an organization to work on a problem of strategic importance. Training in X-team leadership and X-team concepts and practices is provided at the Sloan School, along with relevant content training, and then the teams return to their organizations to move through the exploration, exploitation, and exportation phases.

The goal of the program is to distribute leadership across the organization, creating a network of champions for a new organizational future and inventors of a new organizational design. These leaders become partners with top management in shifting organizational practices and culture. To date the program has been very successful.

What is the role of a CEO or the top leader in such organizations

From my research I have found out that most CEOs preside over companies packed with teams whose talents and capacity for greatness are never fully harnessed. When companies grow, they get caught up with issues like co-ordination and control. Growing companies tend to create more intricate procedures, increasingly firm hierarchy, and more silos around functions and tasks. The result is greater compartmentalization, even as critical knowledge simultaneously becomes more advanced and spreads out. In this situation 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.

What do you propose as a solution?

Fierce competition forces organisational life to change in a number of basic ways. Rather than multilevel centralised hierarchies, modern organizational structures have to become loose, spread-out systems with numerous alliances. When companies are faced with critical issues and resources are spread, 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. Sadly, many teams still depend on a model of teamwork that doesn’t work very well under duress which is to focus within on its own process, on the problem on hand and on each other as team members. When leadership is distributed, the team and the company cannot afford to look inward. It has to be a two-way view.

Any typical characteristics too look out for in an X-team?

We have identified three distinguishing principles of X-teams compared to traditional teams: external activity, extreme execution, and flexible phases.

External activity means that X-teams constantly seek out information about the customer, the technology, the market, and the competition. To identify successful goals, members go outside the team. X-teams find out the direction of the top management and either link their activities to it or change their direction if need be. X-teams also learn and adjust to other teams in the company.

X-teams practise extreme execution inside the team. They create internal processes which learn from the external environment and adjust to it. Aims are shared and goals are made very clear for every team member. A transparent decision making structure is put into place and team members have respect for and trust in each other.

X-teams also believe in flexible phases. They move well from one phase to another to push a project forward. Traditional teams get caught in information-gathering with one project itself. High performing X-teams, instead move quickly and effectively from information gathering to implementing the plan.

How do teams execute such principles? They sound good on paper?

We have come to call them X-factors. First is extensive ties to useful outsiders who enable teams to go beyond their boundaries, co-ordinate 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. Such new teams perform great jobs for their company.

Is there a way to select an X-team and sustain it?

Creating a suitable environment for X-teams to work harmoniously is the greatest job of a manager. X-teams cannot survive in a traditional command-control atmosphere. Leaders of the company need to put in place a culture that gives importance to honest communication and acknowledges that risk taking and disagreements are necessary elements of innovation. While putting together a team, managers often select people who are good at their jobs. The manager should also be able to include in the team those whose networking skills within a team and more importantly outside a team are good. 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 life cycle efficiently and effectively.

Are X-teams easy to manage and do they work in all conditions?

No, they are not easy to manage since co-ordination between internal and external processes is more difficult. And such teams do not work on all types of tasks. For example, if a team is asked to handle a routine task and operate in a stable organisational environment, then following the X-team principles may not be worth the co-ordination costs. But in the face of challenging and complex problems, in business and beyond, 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 in their collective energy to come up with the most innovative solutions.

Do such teams work well in flat organizations as well?

Its because organisations are working with relatively flat structures, that X-teams have emerged. Now to say that organisations have flattened, that might sound like a fad, but its arguably true and its a response to innovation-driven competition that demands more in terms of a teams ability to absorb knowledge and so on. Though it doesnt mean that X-teams cannot thrive in hierarchical organizations. It probably makes their work more difficult, but maybe it also means theyre needed more in such an organization.

Henrik Bresman has done his PhD from the Massachusetts Institute of Technology. He also holds a degree in Economics (MSc) from the Stockholm School of Economics and is presently teaching at INSEAD, where his focus lies on teams and leadership, technological innovation, and change management. His articles have appeared (or is forthcoming) in peer-reviewed academic journals such as Organization Science, Journal of International Business Studies, and MIT Sloan Management Review. His work has been profiled in media outlets such as Time Magazine, New York Times, Wall Street Journal, Financial Times, and the Economist. Prior to entering academia, Professor Bresman worked in several roles as a manager, consultant, and entrepreneur. He co-founded a venture capital firm focused on early stage technology businesses.

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