From Davos to DC: Top teams face universal challenges

Note: This article was originally published on Colin Price's LinkedIn page.

Top teams and leadership are squarely in the spotlight this week, with the combination of the World Economic Forum Annual Meeting in Davos, Switzerland and the continued confirmation hearings for the US president-elect’s incoming cabinet in Washington, DC.

At a glance, the two expressions of leadership—call them Davos and DC—might seem entirely different, particularly to a business leader or member of a corporate top team. Yet as I’ve met with various business leaders and joined in hallway conversations at this year’s World Economic Forum event, I’ve been struck by the similarities. Indeed, the challenges of top teams appear universal.

Consider, for example, how US president Abraham Lincoln included in his cabinet three competitors of his for the 1860 Republican presidential nomination and has been lauded for assembling what historians call a “Team of Rivals” that helped put him in the books as one of the world’s greatest leaders. President-elect Donald Trump, meanwhile, is assembling what might be called a “Team of New Arrivals,” because some of his cabinet choices have little experience in government or in the areas related to the agencies they’ve been selected to run. But focusing on individual qualifications, let alone the politics involved, misses some underlying challenges that our research shows can thwart a high-performing top team in any organization. Whether you are a president-elect or president of a business unit, it’s important to understand how regular teams differ from top teams in order to lead one successfully.

As part of a continuing research project into how organizations accelerate performance, we have studied the behaviors of more than 3,000 teams across global organizations. A closer look at 845 of these teams found that senior teams face severe challenges. In fact, junior teams were 1.6 times more likely to be high-performing (what we call “accelerating”) than were teams composed of director-level members and above. 

Why is it worse at the top? While junior teams are generally organized by geography, department, or product line, teams at the top of the organization are, by definition, doing quite different things: one person runs marketing, another runs manufacturing, and so forth. In the case of Trump’s cabinet, individual members will focus intently on international relations, on defense, on the economy, and so on. At the senior level, the challenge is to integrate a portfolio of activities into a coherent whole. On an issue such as US relations with China, for instance, the secretaries of state and defense will certainly have to coordinate with (and likely need to draw in) the secretary of commerce and others.

Too much energy at the most senior level is typically consumed in dealing with ego problems driven by instincts for self-protection: “I want more power than you,” or “I will agree with your proposal if you agree with mine.” Furthermore, senior team members have invested a lot in their careers by the time they’ve risen to the top, and they are vulnerable. If they fail, they have a much longer way to fall.

For CEOs—or even presidents—who are reflexively inclined to see their teams as immune to these challenges, our research offers a note of caution: the leader of a top team typically is far more optimistic about his or her team’s performance than other members are.

To get maximum performance out of any team, leaders should begin by seeking ways to generate a shared sense of purpose. For a politician, this might mean sorting through campaign themes, simplifying them, and putting them into a commission that a team can rally around. For a business leader, it means getting beyond platitudes about customer experience, revenue, and growth and finding ways to make sure the team has a deep and shared understanding of why it exists. Lack of a shared purpose is a team killer: fully 49% of the 3,000 teams we studied cited “allowing priorities to pull in different directions” as hampering performance.

Leaders also need to be sure that there are explicit accountabilities. People need clarity on what they are to deliver if they are to deliver it. And to avoid confusion during times of transformation, decision rights and responsibilities need to be clear, information needs to be shared seamlessly, and streamlined mechanisms need to be in place. Decisions about risk require particular attention: Too risk-averse, and opportunity is left on the table. Too risk-“loose,” and risk is managed poorly, with potentially disastrous outcomes.

Following are two final things to remember:

  • Our research found that the further a team is away from the customer, the harder that team must work to accelerate its performance. Teams that have their purpose for existence “in their faces”—that is, customer-facing teams—are 1.4 times more likely to be top performing compared with internally focused teams. So finding ways to bring customers (or constituents) into the room for those senior teams that do not naturally face the customer becomes even more important—whether for a consumer goods company or a cabinet.

  • Many leaders (corporate and political) are not known for containing their optimism, but they should consider doing so—at least in the privacy of team interactions. While it’s true that teams thrive on a leader’s energy and passion, they also need a healthy dose of reality to achieve their commission. 

How big is the prize for superior team performance? Taking bonus payments as a proxy for corporate performance, we found that, across all the teams we studied, accelerating teams had a greater economic impact—22.8% greater, on average—than derailing teams did.

While we have no way of anticipating, let alone measuring, the impact that increased performance would have if applied to a top team as powerful as the president’s cabinet, it’s intriguing to imagine how the same organizational benefits that accrue to an “accelerating” CEO might apply to a commander in chief as well.