There’s nothing really wrong with the way organizational teams work – except for the fact that they are inward looking. This exception is critical, since the connections that enable the firm to seize market opportunities and leverage technological breakthroughs are on the outside. X-teams are externally oriented, and enabling them will lead the organization to step up the pace of change and innovation.
Business pundits tell us that we live in a new world – a world that’s flat, global, diverse, and networkedi. In this world, information flows freely across organizational, geographic, and cultural borders. The result is a hyper-drive environment where innovation is the name of the game, rules are invented on the fly, and the challenge always is to do it better and faster or fall prey to some unknown competitor who just arrived on the playing field.
This article examines how three very different enterprises are dealing with this new reality. In doing so, the article will explore the application of two key concepts. The first is the idea of distributed leadership – a way of harnessing, aligning, and leveraging the leadership capabilities that exist all across an organization to make it more agile, responsive, and creative. The second concept is that of X-teams – teams that enable companies to practice distributed leadership and to reach beyond internal and external boundaries to accelerate the process of innovation and change.
Responding to a new world
Let’s take a look at some of the ways people have reacted to the new world. Some have focused on building virtual enterprises – nimble networks of ad hoc teams leveraging new information technologies to accelerate innovation. Others have created more stable organizational structures and cultures designed for consistent and steady innovation over time. Still others have focused on strategic partnerships to spur innovative practices.
One example of the nimble-network approach is the Vehicle Design Summit, an MIT student-led international consortium formed to design a two-hundred mile per gallon car for sale in India. With over thirty-six teams on six continents, funding from major corporations, input from the best universities on the planet, the consortium has already created a working prototype. Each team works on its own part of the design and gets its own funding, while coordinating with other teams and outside individuals and companies. Coordinators – like the logistics people working on how to keep the value chain as green as possible – create rules and tools that enable the teams to reach specific targets. A management team energizes the effort, brokers conflicts, and arranges meetings where teams bring their respective parts of the car together. This is not your typical student project.
A different example is W.L. Goreii, best known for Gore-Tex®, and which operates on a very different scale from the Vehicle Design Summit. The company has been in business for 50 years, has operations in forty-five countries, and generates $2.1 billion in annual revenues. In dealing with the change sweeping across today’s corporate environment, Gore has taken the approach of designing more formal organizational structures and cultures that foster innovation and change.
While the traditional role of top-level leadership is to set strategy – including choosing key products, markets, and development priorities – W.L. Gore has turned this process on its head. At Gore, employees get to spend “dabble time” on projects they see as particularly interesting and promising. They elect their own project leaders who then engage in a peer-review process to determine which projects will eventually get funded and become part of the corporate portfolio.
One of the company’s engineers working on cardiac implants chose to use his “dabble time” to develop a more tone-resilient guitar string, using the polymer prominent in gore-tex fabric. Over a three-year period the engineer assembled a small team of volunteers to develop the new string and explore the market demand. The peer-review committee awarded the resources to bring the project to scale, and today the company’s Elixir strings outsell their closest competitor by a two-to-one ratio.
Multiply this process many times over, add a lattice-type flat organizational structure and an elected top leadership team, and you will get an innovation hot house. Gore has leveraged its knowledge of polymers to develop thousands of products, and step out of its original textiles market into areas such as medical devices, high-tech cables, and new energy technologies.
The new world we live in has spurred even the largest firms to become more agile. One such success story is Procter & Gamble. Historically, this Fortune 50 giant relied on internal capabilities and a small set of suppliers to invent and deliver new products and services to the market. By 2000, however, the company realized that this invent-it-yourself model was not cutting it in today’s more competitive environment. The result was a shift from R & D (research and development) to C & D (connect and develop) – from “7,500 individuals inside to 7,500 plus one and a half million innovators outside the company with a permeable boundary between them”iii.
In this new C&D environment, P&G cast a broad global net to find a solution to allow it write on a Pringle’s potato chip. Instead of taking months to put together a product development team and charge it with creating a new technology, it found a baker in Italy who could write on a cookie. It used that technology on Pringle’s. The same collaborative approach, in this case between P&G and a Japanese competitor, led to the highly successful Swiffer dusters product line.
A new form of leadership for a new world
Despite this shifting organizational terrain that includes everything from virtual enterprises to multi-billion-dollar global giants struggling to become “elephants that dance”iv, we cling to our old notions of leadership. We still think of leaders as those within our own organizational boundaries. We still look to the omniscient leader at the top to come up with an inspiring vision, the right strategic direction, exciting new ideas, and the answers to our most pressing problems. Leadership research and training still focuses on the individual leader – his or her traits, behaviors, charisma, character, values, and political savvy.
But the single leaders alone at the top or our organizational units cannot understand the complexity of our interdependent, information-driven world. One leader cannot manage the ever increasing levels of interconnectivity within and outside the organization. Nor can organizations afford to wait for information to be passed up to the top for decisions to be made.
In today’s new world, there is a greater than ever need for leadership at all levels of the organization – what we call “distributed leadership”v. Leadership needs to be distributed across many players, both within and across organizations, up and down the hierarchy, wherever information, expertise, vision, and new ways of working together reside. The result is a whole network of leaders who are aligned to move the organization in new directions based on market opportunities and technological breakthroughs. In this environment, influence does not just flow downward, but moves up, down, and laterally, empowering those who are best able to lead at any given time. Equally important, leadership is shared with those outside the firm who can help bring in new ideas, more efficient processes, and stronger links to outside markets and distribution channels.
But how do organizations move in this direction? How do they create the culture and structures that enable distributed leadership? How do they innovate, adapt, and execute rapidly while developing networks of leaders aligned to carry their organizations in new directions? One solution is X-teams.
A new team for a new world
X-teams are externally oriented teams in which team members reach across their boundaries from day one, forging dense networks of contacts inside and outside the firm. These connections enable members to keep pace with shifts in markets, technologies, cultures, and competitors. They enable team members to learn about complex problems and find innovative solutions. They help the team link upper and lower levels of the firm, so that those with the knowledge of markets and potential new products and services can align with those forging new strategic directions and change. These connections can also enable players inside and outside the firm to share expertise and create new synergies that take advantage of emergent opportunities. These external connections enable innovation and adaptation.
X-teamsvi not only reach out across their boundaries to become networked teams (see Figure 1), they also enable rapid execution by moving through three phases: explore, exploit, and export. During exploration, X-Team members act like scouts making sense of their new terrain. They try to understand their task or challenge with new eyes and new ideas – generating as many potential insights and possibilities as possible. Then, during exploitation, they shift gears and envision the one product they wish to create and move from possibilities to reality, doing rapid prototyping along the way. Finally, during exportation, they find ways to move their product, knowledge, and excitement to the rest of the organization or marketplace, assuring that their work is diffused into the broader environment.
Figure 1: X-Teams build external networks
Take a product design team at IDEOvii, a product design firm headquartered in Palo Alto California. Asked to design a new emergency room, team members first explored emergency rooms from multiple perspectives. To capture the experience of the patients they placed a camera on the head of a patient. After watching ten hours of different views of the ceiling, they exploited this information and decided to create a new design for the emergency room that included writing that was projected on the ceiling. They tested the new design with actual patients, doctors, and hospital staff, made some additional changes, and then exported their design to a real hospital setting.
X-teams at VDS, W.L. Gore, and P & G are bringing to life the concept of distributed leadership in each of those very different enterprises. For example, each of the thirty-six teams of the VDS initiative operates as an x-team. The teams reach out to get expertise from surrounding companies and universities, and to secure funding from a variety of external sources. They collaborate closely with other teams, whether those teams exist within the VDS consortium or outside of it. They coordinate with the leadership team to ensure that their work is in sync with the overall plan.
Thus, each of the VDS x-teams has a rich network of connections inside and outside the consortium. Through these connections, leadership is distributed across the consortium to more effectively move the entire organization closer to its ultimate goal. Leadership is also distributed within the teams themselves: as the teams move through the phases of explore, exploit, and export, the specific individuals taking on leadership responsibility changes.
When multiple x-teams are aligned they can be a powerful driver of change. At BP, for example, senior project leaders have been tasked with improving the company’s project management capabilities. With billions spent each year on major oil and gas projects around the world, making such improvements could result in huge cost savings and strategic advantage.
Set up as X-teams, these leaders go through a BP/MIT executive program in groups of about thirty (a cadre). Melding six weeks of classroom work with their x-team work, the leaders spend a year moving through explore, exploit, and export. They reach out to benchmark other companies within the industry and those outside of it. They pull together expertise wherever they can find it. They collect data to better understand where there are problems and where there are new solutions. They communicate with top management to gain support and align with strategic goals. They invent and test new ways of managing projects, including new management systems, new modes of contracting with suppliers, and new methods of project evaluation and staffing. And then they present their ideas to top management, inspiring a whole new set of organizational initiatives that spread new programs throughout the projects community.
BP’s gains as a result of this process go beyond the specific projects – although the projects have generated financial gain. More broadly, the process of embedding x-teams into the corporate mindset has created an ”infrastructure of innovation” in which new ideas are emerging, knowledge is building, and the improvement in project management practices increases with each year and each new set of x-teams.
In BP’s new project management model, there is no one omniscient leader at the top. Instead, multiple leaders work within a team structure. This team creates a network of connections (See Figure 2) that carry out the leadership functions of making sense of a changing environment, creating a web of relationships that foster commitment to change, establishing a vision of what is possible in the future, and inventing new structures and processes that make the vision a reality.viii Major change occurs as multiple teams work together over time, pulling in top-level leaders, as well as leaders outside the firm.
At organizations such as BP, VDS, W.L. Gore, P & G, and at many others, the X-Team model is an engine of distributed leadership, institutional change, and on-going innovation. As a new corporate landscape evolves, x-teams and distributed leadership will be needed to create the connectivity among these new organizational forms and to create value for employees, customers, partners, and stakeholders alike.
Figure 2: Single Leaders versus Distributed Leadership
Single Leaders
Distributed Leadership
References
- Thomas Friedman, The World is Flat.
- Elaine’s case.
- P & G
- Lou Gerstner
- Ancona, Malone, Orlikowski, Senge, In Praise of the Incomplete Leader. Harvard Business Review, February, 2007.
- Ancona and Bresman. X-team: how to build teams that lead, innovate, and succeed. Boston: Harvard Business School Press, 2007.
- Taken from a talk given at the MIT Sloan School by IDEO CEO Tom Brown.
- Ancona, Malone, Orlikowski, and Senge.
