Chapter 13: The Comparative Advantage of X-Teams

Deborah Ancona, Henrik Bresman, Katrin Kaeufer

Overview

The current environment demands a new brand of team—one that emphasizes outreach to stakeholders and adapts easily to flatter organizational structures, changing information, and increasing complexity. Often teams that seem to be doing everything right—establishing clear roles and responsibilities, building trust among members, defining goals—nevertheless see their projects fail or get axed. We know one such team that had a highly promising product. But because team members failed to get buy-in from division managers, they saw their project starve for lack of resources. Another group worked well as a team but didn't gather important competitive information; its product was obsolete before launch.

Why do bad things happen to good teams? Our research suggests that they are too inwardly focused and lacking in flexibility. Successful teams emphasize outreach to stakeholders both inside and outside their companies. Their entrepreneurial focus helps them respond more nimbly than traditional teams to the rapidly changing characteristics of work, technology and customer demands.

These new, externally oriented, adaptive teams, which we call X-teams, are seeing positive results across a wide variety of functions and industries. One such team in the oil business has done an exceptional job of disseminating an innovative method of oil exploration throughout the organization. Sales teams have brought in more revenue. Drug-development teams have been more adept at getting external technology into their companies. Product-development teams have been more innovative—and have been more often on time and on budget.

The current environment—with its flatter organizational structures, interdependence of tasks and teams, constantly revised information, and increasing complexity—requires a networked approach. X-teams have emerged to meet that need. In some cases, they appear spontaneously. In other cases, forward-looking companies have established specific organizational incentives to support X-teams and their high performance levels.

Our studies all support the notion that the rules handed down by best-selling books on high-performing teams need to be revised. (See "About the Research".) Teams that succeed today don't merely work well around a conference table or create team spirit. In fact, too much focus inside the team can be fatal. Instead, teams must be able to adapt to the new competitive landscape, as X-teams do. X-teams manage across boundaries—lobbying for resources, connecting to new change initiatives, seeking up-to-date information, and linking to other groups inside and outside the company. Research shows that X-teams often outperform their traditional counterparts.^[1]

About the Research

Our research occurred over many years and with many types of teams and industries. The bottom line is that certain team characteristics coincided with better performance. We call the highperforming teams X-teams.

When we asked some managers with responsibility for consulting teams to rate teams with Xteam characteristics, they ranked them high—1 or 2 on a 5-point scale, with 1 being the best performer. But they ranked more-traditional teams 3, 4, or 5.^[*] In another study, 37 percent of X-team customers said that the teams were meeting customer needs better than in the past, compared with 23 percent of more-traditional teams' customers.^[†]

Teams in two companies we call Zeus and Pharma Inc. are of particular interest. Zeus. Swallow is a product-development team at Zeus, a multidivisional company developing proprietary hardware and software products. It is especially illustrative of X-team activity. Zeus has since been acquired by one of the world's largest computer makers.

Pharma Inc. Pharma is a large international pharmaceuticals enterprise. At the time of our research, it had experienced a string of mergers and acquisitions that resulted in drugs being developed by different organizational units, each of which had a distinctly different management approach. The unit with the best-performing teams illustrates organizational characteristics conducive to X-team behavior.

Table 13.1: Studies that Served as Basis for X-teams Research

Type of Company	Number of Teams	Length of Time Studied	Methodology
One telecommunications company	100	4 months	Interviews, survey
One educational-consulting company	5	1 year	Interviews, surveys, logs, observation
Five high-tech, product-development companies	45	2 years	Interviews, surveys, logs, observation
One multinational, integrated oil company	2	Life of the teams	Project reports
One computer manufacturer	5	2 years	Interviews, observation
One large pharmaceuticals company, 3 units	12	2 years	Interviews, survey, observation, project reports

^[1]Gladstein 1984, Ancona and Caldwell 1992a, Ancona and Caldwell 1992b, Ancona 1990, Ancona and Caldwell 2000, Ancona and Kaeufer 2001, Bresman 2001.

^[*]Ancona 1990.

^[†]For the product-development teams, using X-team characteristics as predictors of adherence to budget and schedule—and innovation, as rated by managers—yielded statistically significant results at greater than .01.