The Wall Street Journal
Theory & Practice
Teamwork
Raises Everyone's Game
Having Employees Bond
Benefits Companies More
Than Promoting 'Stars'
By
SCOTT THURM
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
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
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
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.