The Wall Street Journal


Theory & Practice
Teamwork Raises Everyone's Game

Having Employees Bond
Benefits Companies More
Than Promoting 'Stars'

November 7, 2005; Page B8

It turns out your high-school coach was right: Teamwork matters.

Research from a variety of settings, from hospital operating rooms to Wall Street, suggests that the way people work together is important for an endeavor's success -- even in fields thought of as dominated by individual "stars." The studies may offer lessons for executives on boosting productivity and innovation.

In the case of heart surgery, teamwork literally can be a matter of life and death. Robert Huckman and Gary Pisano of Harvard Business School analyzed the work of Pennsylvania heart surgeons who practice at more than one hospital. The professors found that the death rates from similar procedures performed by the same surgeon can vary as much as fivefold at different hospitals. Most of the time, patients did better in the hospital where their surgeon performed more operations.

Mr. Huckman says the results suggest that the surgeon's interactions with anesthesiologists, nurses and technicians are crucial to the outcome of the surgery. "The argument has always been that if you want to get something done well, you go to the best surgeon," he says. "Our findings suggest that the skills of the team, and of the organization, matter."

A second group of Harvard professors reached the same conclusion by examining star Wall Street research analysts. They found that stars who jump from one firm to another lose their luster, falling off published lists of "all-stars" for as long as five years. Nearly two-thirds leave the new firms within five years.

"It's the match of analyst and firm that makes a star," says Boris Groysberg, who conducted the study with colleagues Ashish Nanda and Nitin Nohria. When analysts switch firms, "it's hard to re-create that match again," he says. Indeed, the professors found that analysts who brought assistants and salespeople with them to another firm did better than those who did not.

Teamwork has been a buzzword in management and business-school circles for years. But Mr. Groysberg said he still sees companies in fields from technology to finance that focus recruiting efforts on a handful of stars. That approach generally fails, he says. On the contrary, he says, "nurturing matters."

As an example of a successful team approach, the authors cited the way Jack Rivkin ran the research department at Lehman Brothers from 1987 to 1992. In an interview, Mr. Rivkin, who is now chief investment officer of Lehman's Neuberger Berman unit, says he tried to make analysts, who tend to operate individually, work more as a team. He encouraged them to chat regularly with colleagues following the suppliers and customers for their industry. And he mandated that every analyst presentation mention at least two other analysts.

Mr. Rivkin hadn't seen the heart-surgeon study, but said the results made sense. "If you're surrounded by other smart people ... who know their job well, it adds to your knowledge and information," he says. He compares his research group to a basketball team, where players constantly adjust to what teammates and opponents are doing.

That may be an apt analogy, because another recent study suggests -- not surprisingly -- that teamwork counts in basketball, too. After analyzing 14 years of National Basketball Association results, Shawn Berman, an assistant professor of management at Santa Clara University, and two associates found that teams where players had played together longer won more games -- as many as five additional wins in an 82-game NBA season. The teamwork effect held up even for bad teams; bad teams that played together a lot won more often than they should have based on other criteria.

Mr. Berman attributes the gains to what researchers call "tacit knowledge," such as anticipating where a teammate will be on a fast break. But he warns that the boost from playing together diminishes over time, and eventually can hurt a team, suggesting that occasional infusions of fresh blood are important. Mr. Rivkin concurs. "You have to introduce new bodies on occasion," he says.

Richard Couch didn't need studies to find value in teamwork. Mr. Couch is chief executive of Hypertherm Inc., a closely held maker of metal-cutting equipment in Hanover, N.H., with annual revenue of roughly $200 million. He has long promoted cooperation, with a companywide profit-sharing plan that pays the same percentage of salary to each employee, for example.

As Hypertherm grew in the 1990s, Mr. Couch saw increasing friction between departments, such as engineering and marketing. So in 1997, he reorganized the company into cross-functional teams based on Hypertherm's five product lines. He forced the teams of researchers, engineers, marketers and salespeople to sit together in closely bunched cubicles. He wanted the teams close to the shop floor, but retreated in the face of safety rules requiring that manufacturing be shielded by a wall.

The plan met resistance at first. One engineer complained about " 'sitting next to this marketing guy. I don't have anything to say to him,' " Mr. Couch recalls. "I thought, precisely my point. Maybe you will actually say something to him." Some employees quit, he says, although the once-unhappy engineer is still at Hypertherm.

Today, Mr. Couch credits the reorganization with helping Hypertherm grow faster and more profitably. Instead of one product-development team, Hypertherm has five, which helps the company introduce new products faster. Mr. Couch says the new organization is also more efficient, because salespeople and marketers, who know customers best, are more involved in product development. Last December, Hypertherm said it would pay $6.7 million in profit-sharing, equivalent to 26% of salaries, to its then-612 employees.

Mr. Couch acknowledges that the team approach doesn't appeal to everyone. "The star can make more money going somewhere else," he says. But with attrition below 5% annually, Mr. Couch believes Hypertherm is doing a good job screening out nonteam players before they're hired.