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BOOK REVIEW: Teams that go to the top

Jul 13 2017 05:00
Ian Mann*

Extreme Teams: Why Pixar, Netflix, Airbnb, and Other Cutting-Edge Companies Succeed Where Most Fail, by Robert Bruce Shaw

A COMMON mistake is to use a team when a team is not needed, and the work is better done by individuals. Many sales teams are not teams at all, simply a collection of people who hunt alone.

So when should a company think of using teams? Only when the return on the investment in a team is greater than not having a team at all. Such a commitment is not only monetary, but the time, thought and effort that is required to design the appropriate team and ensure it really performs.

Consider how a poor reward system can work against the team. Microsoft teams used to rank performance on a curve. In a team where everyone performed well, few were rewarded. This resulted in talented people joining weaker groups, where they were inevitably more highly evaluated and paid.

This book focuses on 7 exceptional companies, each of which has outmanoeuvred much larger competitors to become the best in its category. They are Whole Foods, Pixar, Zappos, Airbnb, Patagonia, Netflix, and Alibaba.

All are using teams in innovative ways to outperform their competitors. I will select just a few practices that illustrate the point.

Whole Foods, the 450-store upmarket health food chain, rests on teams. Every new employee becomes a member of a team within a store, and each team operates in many respects as an independent business.

The degree of autonomy that these teams have is exceptional in an industry with widely distributed stores. More commonly chains of grocery stores are controlled by a few people sitting in a store’s central headquarters office.

Employees at the store level are largely responsible for hiring new people. After working with a new employee for several months, the team votes as a group on who stays and who goes. People who lack what is needed to contribute to the team’s success don’t last.

With their team bonus paid monthly, vetting of new members is treated very seriously. Poor performers can reduce the bonus pay of all team members.

Emotional investment in success

Two-thirds of team members have to vote for a new employee to remain. Once voted in, there is an emotional investment in the team’s success, which includes a friendly work setting.

Three principles underpin the team focus at Whole Foods.

First, the company believes that people are social beings who feel most comfortable when part of a small group. Teams create familiarity and trust, natural to people: after all, people evolved over hundreds of thousands of years in small bands and tribes.

If this sounds like a soft environment, it has a hard core. There is a relentless focus on standards such as profit per labour hour, and 300 other measures.

Patagonia, an outdoor clothing store, was among the first companies in the United States to build a day care facility for its employees. Patagonia’s approach to teams is more in the spirit of a family. Its culture is very much centred on “dirt bags”, the term used for people who love nature and the outdoors. They believe technical and professional skills can be taught - but a passion for the outdoors is innate.

As such, being a “dirt bag” is part of the firm’s selection criteria. Their employees are teams of likeminded, committed people driven by more than profit. When the company decided it would use organic cotton in its clothing because this causes less damage to the environment, the commitment was evident. This was despite the cost of doing so.

For a long time the company was staffed by friends of the owners – all with the same passion. 

Netflix, on the other hand, goes to great lengths to remind its people that they are part of a team and not part of a family. Families don’t fire their children, but Netflix will fire you if you cannot provide what the group needs.

Netflix gives employees a great deal of autonomy while at the same time holding them to high performance standards. Staff track their leave time and take as much as they need. But freedom and responsibility are never worth much to a company if people lack the will and ability needed to deliver results.

The key ingredient in making this model work is having the right people; Netflix calls this “talent density”. With talent, work is done faster and better with far fewer people.

“We tried to figure out why. And we realized now there was no more dummy proofing necessary ... everybody was going fast and everything was right,” founder and CEO Reed Hastings reports. Everyone could be trusted to do an exceptional job, and they enjoyed working in a company with only highly talented people.

Generous severance pay

Most companies will try to prove you incompetent if they want you to leave. Netflix wants their people to leave with dignity and pays a very generous severance pay in a country where this is not mandatory.

Footwear company Zappos makes a great effort to create a family-like ethos to promote its brand: a sincere caring for customers. To ensure people really want work at Zappos, those who make it through the hiring gauntlet are offered $2 000 to walk away. Only 2% of its new hires accept, preferring to walk away from R26 000 just to stay with the firm.

Building great teams that will add to the company’s profit and growth should be tackled only when they will add real value. More importantly, only where teams will be supported effectively by their organisations.

There is no generic model for using teams effectively; they are particular to a firm, its history and culture as well as its aspirations. Designing and managing teams is a complicated undertaking requiring a level of creativity and commitment that many firms - and their leaders - just don’t have.

For those who see teams as a compelling advantage, I recommend this book highly.

Readability:  Light ---+- Serious
Insights:      High +---- Low
Practical:      High --+-- Low

* Ian Mann of Gateways consults internationally on leadership and strategy and is the author of Executive Update. Views expressed are his own.

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ian mann  |  book reviews

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