Team Genius: The New Science of High-Performing Organizations (2 page)

Second, your teams must be designed to work with, not against, your members’ brain structures. Why? It’s the oldest reason of all, one we’ve long suspected but only recently proved scientifically:
Humans are genetically wired for teams.
This is the message emerging from the latest brain research. What’s more, as many of us learned as children, being on a team can rewire our brains and make us
better
as people. In other words, we are meant to be part of teams. This imperative is not some external social construct, but an innate part of who we are.

Third, your teams must be given the support they need to reach their full potential—rather than putting too much faith in any one individual in your organization. Businesspeople around the world share a common misbelief. It is one promoted by the media for its own reasons. It is this: the faith in the power of solitary entrepreneurs, leaders, and trendsetters. Confession: Both authors of this book are members of the media, but we have also started companies and served on boards of directors. We can state with authority: Boards and investors almost always overrate individual genius and underrate genius
team
contribution.

Fourth, the size and composition of your teams matter greatly when setting strategic goals. We will show you that when teams fail, they are almost always too big. We will show you that a large size ironically works against diversity, which itself is a very poorly understood concept. We will also argue that many of the most
successful endeavors have depended on the smallest team size of all: the pair—a coupling that occurs in more forms than you may have ever imagined.

If this book teaches you nothing but (1) how to think about team size, and (2) how to staff and manage for diversity, you will be pleased and so will we.

Are you up to improving your team management skills? You’d better be! How you build, manage, and reconfigure teams in a fast, disruptive, and turbulent economy will play an ever larger role in your success or failure. To prepare ourselves for the world to come in the rest of this century, we need to find the genius that resides in great teams.

It is time to revisit the idea of the teams—and not just in story and lore (and perhaps a few rules of thumb). It’s time to take a look at teams systematically,
scientifically
, using the latest discoveries in anthropology, sociology, cognition, and neuroscience. To prepare ourselves for the world to come in the rest of this century, we need to find the genius that resides in great teams. And to do that, we need to develop a
new science of teams
.

T
alking about the rapid pace of technology-driven change has become commonplace. These days, even schoolchildren are taught about the power of
Moore’s law
, that measure of semiconductor memory chip development that has now become the metronome of the modern world. But our acceptance of the reality of this change doesn’t necessarily mean that we understand it, or that we have developed effective strategies to cope with it. In fact, the reality of this ever-accelerating change is stranger and more challenging that we can imagine.

Gordon Moore, a cofounder of Fairchild Semiconductor (and later of Intel Corporation), first devised his law in 1965 in an article for
Electronics
magazine. The point Moore wanted to make was that memory chips, invented just a few years before, were improving at a dizzying speed. He tried to plot their price and performance points on regular graph paper, but they took off too fast, so he switched to logarithmic graph paper (that is, to show exponential
growth), and he got a nice straight and shallow line. It showed that the performance of these chips was doubling every couple of years (eighteen months at the time, twenty-four months now).

It was an impressive graph, but no one then, not even Moore, realized that this graph would continue to hold for
fifty years
and set the blistering pace of change for the modern world. We all now live in the world of Moore’s law, and we likely will for at least another quarter century. It’s interesting to note how shallow that curve is for the first forty years, until about 2005. Yet along that comparatively flat curve can be found the births of the minicomputer, the microprocessor, the digital calculator, computer gaming, the personal computer, the Internet, robotics, wireless telephony, the smartphone, and electronic commerce. After 2005, as we race toward twenty-five billion transistors per chip, the curve goes almost straight up, heading toward infinity. Are we really prepared for this? If the entire digital age occurred in the foothills, what happens now that we are entering the Himalayas?

We have grown so accustomed to living in the world of Moore’s law that we forget we’re dealing with one of the most explosive forces in history. We’ve become so adept at predicting, incorporating, and assimilating each new upward click of the curve that we assume we have this monster under control. We don’t.

There is a second great exponential law that has emerged out of the digital world to redefine modern life:
Metcalfe’s law
. It says that the value of a network is proportional to the square (or a similar multiple) of the number of users. In other words, each new addition adds value to the Web out of the usual proportion to its presence. And with the emerging Internet of Things, those “users” may soon include 100 billion new smart devices as well—sensors, cameras, robots, drones, and the like. As far back as 2005, Google’s CEO, Eric Schmidt, estimated the Internet’s data size to be 5 million terabytes (that’s
eighteen
zeros).
¹
Today, the Internet is 60,000 times larger, at 300 exabytes.
John Chambers, CEO of Cisco, says the “Internet of Everything” is worth $14.4 trillion, growing more than 20 percent per year.

But, as with Moore’s law, the exponential implications of Metcalfe’s law are less noticed. Fifteen years ago, about a billion people regularly jumped onto the Web. Even then, that number already made the Internet the largest market in human history. But that was just the beginning. As of 2010, another billion people had joined the global marketplace. By 2012,
2.5 billion
people around the world had joined the global, Internet-based marketplace.
²
Today that number likely exceeds 3 billion. And that number has yet to include those scores of billions of sensors and smart devices that will also soon be joining the Internet. Thus, according to Metcalfe’s law, the number of possible digital connections among people and sensors will grow into the trillions times trillions—a practical infinity.

But just sticking to humans, we find that the third billion is very different from the first two. Most of this cohort lives in the developing world and probably in a teeming metropolis that barely existed twenty years ago. These users may never see an annual income of more than a few hundred dollars per year, and may have never driven in an automobile, much less flown on an airplane. Nonetheless, even if they are just selling items on eBay from a cellphone rented by the minute in a corner of some Third World city, they are adding value to the global economy. Just as important, they are helping create yet one more new submarket in addition to the millions springing up throughout the world. Even in developed countries, the Internet’s contribution to global GNP is now 21 percent, double what it was just five years ago.
³
It is growing at an even faster pace in the developing world.

Let’s keep going—because waiting out there is a fourth billion, about which we know almost nothing. They live in some of the poorest and most isolated places in the world, with little contact with even the products of the developed world—many have never
used money or been in a car, and have seen an airplane only from afar. But they will join the global economy when the planet is completely covered with wireless connectivity. They will do so through minutes rented on a smartphone offered from a cardboard hut on a corner in some teeming Third World supermetropolis, or from one of the free phones handed out by the millions by the big telecom companies looking for new customers.

Soon these third and fourth billions will be part of the Internet-based global economy. Companies, desperate for their business and the benefits of Metcalfe’s law, will use creative new means to seek them out and bring them onto the Web—even as the nature of that Web will be continuously transforming, thanks to Moore’s law.

TWO LAWS BUT NO GUARANTEES

So where does that leave us? Mass scale and, with it, global reach, will be incredibly valuable in the twenty-first century. But will they be enough to capture the huge opportunities offered by the third and fourth billions? Our conclusion: no. That’s because scale and reach are rapidly being commoditized. You can be a small company, and your opportunities to make products and services with large-scale efficiency are better than ever—and will become better yet in the future. A crucial understanding of Moore’s law is that it creates excess capacity—and not just in the world of electronics. For instance, extremely precise horizontal drilling far beneath the earth’s surface makes it possible to tap new oil sources trapped in shale rock. This level of precision is made possible by advanced electronics, itself made possible by Moore’s law. As the oil billionaire T. Boone Pickens told
Forbes
, “You can drill two miles down, take a right turn, drill another two miles, and pick the lock to someone’s front door. That’s how precise it is.”
⁴
Moore’s law, then, describes a
tendency to create excess capacity not just of electronic chips but of oil, factories, shipping—everything.

As for global reach, you might wish you had a billion-dollar advertising budget to reach the global marketplace. But no budgets will be large enough in the future, because of our other friend, Metcalfe’s law, which describes the exponential creation of a near infinite number of connections and ways to reach customers. Fast-moving small companies can find more niches and customers than ever. The same is true of technology power. The cloud is rapidly commoditizing the availability of top-class technology. You don’t have to buy equipment from IBM; you can rent it by the second from Amazon, Alibaba, Google, Microsoft, and others.

Our point is to show you that although access to scale, global reach, and powerful technology is a requirement for success, it is not sufficient to create
sustained
success. It is being commoditized. It is losing its former status as a barrier to entry. It is becoming, as poker players like to say, mere table stakes in the game of economic competition. Instead, it is
maneuverability
that will be the new barrier to entry, the new essential for sustained rising value. Such maneuverability will come from the combination of global reach, great technology,
and
highly optimized teams—
team genius
, as we call it.

Here is the uncomfortable truth: Humans run to a much slower evolutionary clock than our inventions. To use an engineering term, we are the “gating factor” that keeps a process from running faster. It is people, not scale or technology, who determine how well an organization adapts to change.

So, whether we know it or not, the difference in our rapidly accelerating world between a perpetually successful enterprise and a struggling, dysfunctional also-ran comes down to the people in those enterprises—and even more, to how those people relate to each other as they form and re-form into teams.

Thus, even as the companies that expand their reach around the world grow bigger and more ambitious in their vision, they will, paradoxically, also have to become smaller and more focused in their execution. And, contrary to what many business prognosticators have assumed for the last half century, the more gigantic the enterprise and the more virtual and wired it becomes, the more likely that it will be dependent on dozens, hundreds, even thousands, of small, closely knit internal teams.

That’s why, at the nexus of two almost unprecedented forces in human history—the unrelenting, exponential advance of technological performance (speed), and the explosion of new connections in the global marketplace (reach)—one of the oldest human cultural phenomena,
the team
, finds itself as vital as ever before.

MASTERING MANEUVERABILITY

Both of the authors of this book knew Bill Walsh, the great San Francisco 49ers football coach of the 1980s. Walsh won three Super Bowls and left his successor with a team that won two more. Walsh died in 2007, but his playbook and team innovations redefined professional football for two generations.

We once asked Coach Walsh why he drafted Jerry Rice, a little-known wide receiver out of tiny Mississippi Valley State University. Rice went on to become the National Football League’s all-time scorer. But in 1985, Walsh was alone among scouts and coaches in perceiving Rice’s true potential as a future Hall of Famer.

“Rice was considered to be too slow for NFL greatness,” explained Walsh. “His time in the forty-yard dash was only 4.7. Most great NFL receivers run 4.4 or faster. But when you studied the film from Rice’s college games, you saw two things different about Rice. One, he could turn on a dime. He could run sideways faster than anyone I’d seen. His
maneuverability
left defenders wondering what
happened. Two, Rice always finished his pass route within one foot of where he needed to be. Like he had a GPS in his head. [Quarterbacks] Joe Montana and Steve Young could count on him.”

Rice’s abilities give us an insight into success in the modern economy beyond scale, reach, and speed. In today’s economy, it is essential to be
maneuverable
.

Maneuverability is more than rapid evolution. Sometimes even that is too slow. Rather, maneuverability is the capacity to turn, even reverse direction, quickly, to deal competently with whatever new change—technology, market opportunity, or competition—has just burst onto the scene, and to do so without losing internal cohesion and breaking up. This is a challenge facing almost all institutions, from small retailers to the governments of great nations around the world.

The exponential forces at work in today’s culture and economy reward winners quickly and punish losers mercilessly. Over here you’ll find a resurgent Apple, but over there is sad, old Eastman Kodak. Germany on the one hand, Greece on the other. South Korea and North Korea, Silicon Valley and Detroit. As this book goes to press, prosperity and futility are being sorted out more swiftly, and dispersed more unevenly, than at any other period in our lifetimes. Whether the global economy improves or worsens, this new unevenness is here to stay.

History, of course, is filled with stories of maneuverable teams somehow surviving in incredibly dangerous situations—and even triumphing—against almost impossible odds. Xenophon’s march, Magellan’s and Cook’s voyages, Marco Polo’s journey to the East, Cortés and Pizarro, Stanley’s search for Livingstone, the Bolsheviks, Shackleton’s expedition,
Apollo 13
. There are a multitude of such stories, and no doubt thousands more that were never recorded, such as the inhabitation of the South Pacific islands, the first exploration of North America across the Bering land bridge, and, most important of all, the survival of those few families of
early humans who managed to avoid near extinction on the northern coast of Africa and gave birth to modern humankind.

What does this mean for those of us who lead businesses and organizations? Where will we find maneuverability? One answer, and one that seems counterintuitive at first glance, is
structure
. The size and composition of the most successful teams match archetypes that are as old as humankind, which suggests (as we’ll see in later chapters) that there is a kind of organic strength and stability to these structures that cannot be matched by other, synthetic groupings—much less by very large organizations.

Stability enables these teams to move with a common purpose, sometimes even when a situation demands that a team move in a different direction than the one for which it was created. The Silicon Valley legends Bill Hewlett and David Packard pursued bowling pin resetters, automatic flush urinals, and other failed ideas before they lit upon Hewlett’s old grad school project, the audio oscillator. Jim Clark, Marc Andreessen, and the other founders of Netscape were originally planning to go into the computer game business. Google was founded with no clue whatsoever about advertising. Amazon launched by selling books to consumers, not cloud services to businesses. Who knew Apple would become a giant in music? Organizations lacking maneuverability find such moves—almost second nature to proper teams—almost impossible to execute.