Team Genius: The New Science of High-Performing Organizations

To all of our teammates through the years—
and all that they taught us about creating
something bigger than ourselves

S
uccessful teams are at the core of powerful organizations. But what explains game-changing teams—start-up teams, creative teams, R&D teams, project teams, and sales teams? What makes them stand out? Can we decode their winning algorithms? Can we apply this knowledge at different companies and industries—even across different cultures and generations?

The authors of this book have spent their lives in the petri dish of successful team formation—in both our home base of Silicon Valley and around the world. We have started companies, sat on boards, and observed winning and losing teams up close. But in
Team Genius
, we’ve gone further than anecdotal observation. We’ve tested our observations and theories against cutting-edge research in anthropology, sociology, neuroscience, and cognition science. We will explain our research and methodology later and in copious footnotes. Readers of this book will be the beneficiaries of this work.

We believe that the pace of technological innovation plus rapid changes in the global economy, combined with huge demographic shifts now under way, will raise the stakes for team performance. Average will die. High mediocrity won’t be enough to win and sustain success.

Let us be clear. When we talk about teams, we are not talking about formal teams as depicted in company org charts and those
“About the Company” Web pages.
Team Genius
is about how work
really
gets done. The sum of our experience says that the world’s most creative and impactful work—at start-ups, inside large organizations, in sports, and within creative operations in arts and entertainment—gets done by informal teams.

Business literature is remarkably clear about this. After Nazi Germany put the world’s first fighter jet—the Messerschmitt 262—into action in 1943, before World War II’s outcome was known, the Allies faced a problem. Lockheed’s chief aircraft designer, Kelly Johnson, promised an American fighter jet in six months. Today, as then, it would normally take six months just to write a proposal for funding the jet. But Johnson picked a team of Lockheed rebels like himself, installed them in a tent next to a smelly plastics factory, and delivered the P–80 Shooting Star right on schedule. Steve Jobs famously put his informal Macintosh development team away from Apple headquarters in a low-rise building next to a Good Earth organic restaurant. IBM built its first personal computer not in Armonk, New York, but in a few ratty buildings in Boca Raton, Florida. Twitter was designed largely on a bus heading from San Francisco to Austin, Texas, for the 2007 South by Southwest conference.

In the years ahead, will virtual teams and crowdsourcing change the way we think about teams? Well, it so happens that Mike co-wrote a best-selling book called
The Virtual Corporation
. . . in 1992. His answer is yes—but it doesn’t change everything, as some futurists like to assert. The deeper answer is what neuroscience and anthropology have to say about teams . . . and you will be surprised by their findings.

As we began putting the final touches on
Team Genius
, both of us were struck by conversations we’d recently had on a pair of themes. One was speed of change in the global economy and how even the most dynamic companies are challenged to build teams that can cope. Rich had dinner with a top executive of Lenovo, the
US $40 billion-annual-revenue Beijing-headquartered maker of personal computers, laptops, tablets, and phones. (Lenovo, if you recall, bought IBM’s PC division in 2005.)

Lenovo is known for its nimble management—much of it based in the United States, in the Research Triangle Park area of North Carolina—as well as for its rapid response to opportunities and threats. Lenovo is a rare elephant that can dance. And yet the Lenovo executive explained at dinner how a Chinese phone upstart, Xiaomi, had outmaneuvered Lenovo in Asian markets. How so? Was this a case of the “innovator’s dilemma,” as defined by Harvard Business School’s Clayton Christensen? In the innovator’s dilemma, a profitable incumbent company (Lenovo, in this case) can see a disruptive threat. It just can’t figure out what to do about it. Matching the prices of the Xiaomi’s products would surely hurt the profit margins of Lenovo’s. Was it that?

No, Lenovo had seen Xiaomi coming. It had seen Xiaomi’s products gaining fast acceptance in Asian markets. And Lenovo was perfectly willing to get in a price war with Xiaomi. The problem was more practical. Lenovo just couldn’t build local market teams fast enough to stop Xiaomi’s momentum.

The second conversation we heard again and again was that of senior managers worried about the demographic shift to the millennial generation. And their concern wasn’t about market shifts, product tastes, social media, and the other usual sources of concern. Rather, it was about whether millennials could actually lead companies and manage other people. For all that generation’s known skills in science, technology, social media, and risk taking, senior managers in large organizations everywhere complain about a general lack of managerial talent coming up in their ranks.

Let’s stop here. Is this the perennial phenomenon of a grouchy older generation complaining about the shortcomings of up-and-comers? A bit, perhaps. But in the main we don’t think so. Absent in these complaints was any of the usual carping about work ethic,
education, creativity, and abilities. Rather, the complaints were specific to management experience and team-building skills.

What we do know is that millennials will soon be populating the management ranks of corporations around the globe. They will preside over a world that is so fast-changing and competitive that they will have to do markedly better job at building, managing, and motivating teams than has been demanded of any previous generation. The stakes will be that high.

That’s why one of our chief purposes in writing this book was to bring together both the best practices of today and the past, with the latest in scientific research, to show the next generation of leaders in every field how to build the dynamic, robust, and
great
teams they will need in order to compete in this new world. Their learning curve will be shockingly steep—and we want to help them survive the climb. If they can succeed, it will benefit us all.

TWENTY QUESTIONS

Teams compose a large part of our private and public lives. We depend on them for both our success and our happiness. Isn’t it odd how little scrutiny we give them? The teams that make up our lives are created mostly by luck, happenstance, or circumstance—but rarely by design.

Success by serendipity is risky enough in the small matters of our life—a bowling team, the leadership of a neighborhood group, a holiday party committee. But it can be downright dangerous when it comes to actions by major corporations, nonprofit institutions, and governments. No one would launch a billion-dollar product into the global marketplace without months of product testing, customer polling, and analysis; or without establishing distribution and retail channels, marketing campaigns, sales kits, and
so forth. Yet we are likely to place this entire project in the hands of a leadership team that, right from the start and by its very nature, is doomed to failure.

As we’ll show in the chapters that follow, the planning for and designing of great teams no longer have to be a black art. To help you get started thinking differently, perhaps even more scientifically, here are twenty questions you ought to be asking about the teams you manage and those to which you belong:

  
1.
   
Is your organization, and the teams that compose it, up to the challenges they face in a hypercompetitive global economy?

  
2.
   
If not, is there some way to accelerate your understanding of teams?

  
3.
   
Can you apply that new knowledge in a way that lets you build teams both fast and appropriately for the ever-changing challenges that face you?

  
4.
   
Can you find the right team at the right moment?

  
5.
   
Can you identify the right moment when one team needs to be dissolved to create another, perhaps in a very different form?

These first five are not idle questions. They are very real and their implications are imminent. Every organization you are a part of is composed of teams, and every one of those teams is currently at some point in its life cycle. Some of those teams are clearly dysfunctional; others are suboptimal in their performance; and still others are approaching the end of their usefulness. Even great teams aren’t always being challenged to do all that they are capable of doing.

  
6.
   
If the fate of your organization depended on it, could you identify those great teams?

  
7.
   
Do you know how to staff a team for a specific task?

  
8.
   
If you were assigned the task of reorganizing the subpar teams to ensure their top performance, would you know how to do it?

  
9.
   
Would you even know where to start?

10.
   
By the same token, if you were to look at the top-performing teams in your company—in management, manufacturing, R&D, sales—would you be able to identify which ones were reaching the end of their life span?

11.
   
Would you have the courage to shut them down?

12.
   
Would you know how to handle that retirement without creating acrimony and killing morale among some of your most talented employees?

13.
   
Would you know how to recompose a replacement team to be just as effective and without losing any time?

Thirteen, and we’ve only just begun! Those were questions about your own skills in creating and managing teams. Here are some questions about your organization’s capabilities that you have likely never considered:

14.
   
Can your company’s teams stay ahead of the changes affecting your industry and customers?

15.
   
Are your teams able to anticipate and respond to sudden disruptions in technology, economics, and customer behavior?

16.
   
Are your teams leveraging globalism and multicultural values as strengths?

17.
   
Is mobile technology helping or hurting your team’s performance? How are you performing in this area relative to your competition?

18.
   
Are your teams’ missions and values being supported or undercut by social media?

19.
   
Do you have the right people in the right positions in the right teams?

Last but not least, here’s a question that almost no one asks and even fewer organizations get right:

20.
   
Are your teams the right size for the job?

The goal of this book is to help you answer all of these questions—and more. And to help you do so, we’ve brought together acquired wisdom that is as old as humankind, along with some of the latest and most stunning research just now emerging from the brand-new field of social neuroscience. Many of these findings will surprise you and challenge your prejudices. We guarantee they will make you a better manager of teams.

SOME SURPRISING NEW TRUTHS

As a preview of what is to come, here are some of the ideas we will explore that contain surprising truths about teams:

•
      
What science says about racial and gender diversity. Warning: it’s provocative.

•
      
Why cognitive diversity yields the highest performance gains—but only if you understand what it is.

•
      
How to find the “bliss point” in team intimacy—and become three times more productive.

•
      
Why too much conformity will kill you—as will too little.

•
      
How to create “whole-brain teams” with the right amount of “creative abrasion.”

•
      
How to identify destructive team members before they harm you.

•
      
Why small teams are 40 percent more likely to create a successful breakthrough than a solo genius.

•
      
Why groups of 7 (plus or minus 2), 150, and 1,500 are magic sizes for teams.

•
      
Why everything you know about performance compensation is probably wrong.

•
      
How to keep a successful team fresh and when to break up teams.

•
      
How to identify the one person you should never lay off when downsizing.

All that we ask is that you keep an open mind as you read the pages to come. Some of these theories and discoveries may seem counterintuitive, at least, and perhaps even impossible, the first time you encounter them. We felt the same way. But if you look back into your life you will find successful team experiences that, at first encounter, seemed equally unlikely.

For example, if you took part in sports, you probably played at least once for a team that looked great on paper, but on the field just never meshed—and fell far short of its potential. On the other hand, you may have been assigned a partner in college or on the job with whom you had nothing in common, whose personality was incompatible with yours, and with whom you shared no skills or experience. Yet the two of you proved to be surprisingly productive. How did that happen?

And how many times were you part of a team that did well—until the wrong members were rewarded—or that continued to operate long after you and your teammates stopped respecting one another? And, of course, how many times have you been part of a team that would have been perfect if you had just kicked out that one person who was a destructive force?

TEAMS: TOMORROW’S NEW PERFORMANCE LEVER

We begin by offering four imperatives that every leader must recognize:

First, your teams must be capable of surviving whatever today’s brutal economy throws in their path. Indeed, today’s teams will have to be able to survive on their own, often with little support from headquarters. They will have to take serious risks and make decisions, sometimes fateful ones, very quickly.