Why Small Teams Work


(N.B. This post is part of an occasional series I'm doing, drawing from some of the thinking that's going into the book I'm writing - any feedback is appreciated)

'From the Founding Fathers in politics to the Royal Society in science to Fairchild Semiconductor’s “traitorous eight” in business, small groups of people bound together by a sense of mission have changed the world for the better.' Peter Thiel

There is a story (seemingly from a former executive) that whilst at an offsite retreat where Amazon’s senior staff had gathered, some of those staff suggested that employees of the company needed to start communicating more with each other. Jeff Bezos apparently stood up and declared to all in the room: "No, communication is terrible!". Bezos was referring to the potential for over-burdensome communication to slow everything down. Yet many managers at many large organisations still loudly advocate the need for more communication. It’s the kind of rallying cry that very few others will disagree with. The kind that feels like it is just what is needed to solve a broad range of internal issues that need attention. 

I've written before about the power of small teams, and am fascinated by their potential for bringing greater agility and speed of delivery to organisations, and also for generating significant change. But this is not just conjecture. There is plenty of research into how small teams can do this, some of which is summarised by Janet Choi in this excellent blog post on the subject. Janet draws on the work of J. Richard Hackman who was Professor of Social and Organizational Psychology at Harvard University to make the point that the issue with larger teams isn’t necessarily the size of the team itself, but the number of links between people.

As group size increases, the number of unique links between people also increases, but exponentially. So whilst a small team of 6 creates 15 links between everyone, a larger team of 12 will generate 66 links, and a team of 50 has no less than 1225 links to manage. This exponential increase means that coordination and communication costs are soon growing at the expense of productivity. Hackman, writing in The Psychology of Leadership, explains that:

“The larger a group, the more process problems members encounter in carrying out their collective work …. Worse, the vulnerability of a group to such difficulties increases sharply as size increases.”

Leaders, says Hackman, may often create oversized teams in the faulty assumption that ‘more is better’ for team effectiveness, or due to emotional considerations such as sharing responsibility and spreading accountability across larger numbers of people, or for political reasons such as ensuring that all relevant stakeholders are represented:

“For these reasons, individuals from various constituencies may be appointed to a team one by one, or even two by two, creating a large politically correct team - but a team that can find itself incapable of generating an outcome that meets even minimum standards of acceptability, let alone one that shows signs of originality."

Janet also mentions research conducted by Bradley Staats, Katherine Milkman, and Craig Fox (The Team Scaling Fallacy: Underestimating The Declining Efficiency of Larger Teams) showing that larger team sizes can lead to overconfidence and an under-estimation of time needed to complete tasks. One experiment conducted by the researchers set different groups the task of building the same Lego figure. In spite of the fact that the larger teams were almost twice as optimistic about how long they’d take to complete the task, four person teams took 52 minutes whilst two-person teams took only 36 minutes.

It’s tempting in digital transformation to think that since the outcome is so important and speed (in delivery of transformation or digital development) is often such a factor, more people will lead to a greater chance of success. But we underestimate the increasing burden of communication at our own cost. Small, nimble teams can achieve amazing things. So rather than throw numbers at a problem, ask yourself this - what's the smallest number of people you can put together to achieve a result? It's likely to be less than you think.

Image courtesy

Mullet Strategy

The following is a notated version of a talk I gave last night at the APG Noisy Thinking event on 21st Century Strategy.

When the APG asked me talk about '21st Century Strategy' I’d not long before read Emily Bell’s brilliant Hugh Cudlipp lecture about the future of journalism. Emily talks in that lecture about the growing ‘tabloidisation’ (and not in an entirely negative way) of news output and specifically about (like the new breed of ‘digitally-native’ news organisation) news rooms that now feature optimisation desks, insight, analytics and data specialists, and even aggregation desks. A kind of journalism that is fully integrated with the social web:

‘Tabloid  or popular journalism is being done by the same outlets that produce the most serious chin-stroking think-pieces. In 2005 the Huffington Post pioneered this ‘mullet strategy’ for journalism, which looked neat and respectable at the front, wild and hairy at the back.’

I think there are many parallels that can be drawn between the challenges faced in the practice of journalism, and those in the craft of strategy. But I think you can’t really talk about the future of strategy or planning without talking about the future of agencies. And the context in which agencies are now operating is of-course shifting dramatically. It’s a context that threatens the very lifeblood of our clients. Work done by Professor Richard Foster at Yale University showed that the average lifespan of a company in the S & P 500 had declined from 61 years in 1958 to 18 years today.

Data from IBM has shown that the majority of marketers believe that their roles will change in the short and mid-term, and a sizeable minority believe that they need to actually reinvent their roles (yet comparatively few know how). Small wonder when technology provision in just the marketing sector alone (let alone all the other vertical functions in a business) is exploding, marketers are increasing talking about the ‘marketing technology stack’, and the most exciting things for them in both the short and longer-term are creating joined-up customer experiences and this thing called content marketing.

Could we have imagined a few years ago that a consumer electronics manufacturer (GoPro) would have already garnered over three quarters of a billion views on YouTube, a soft drinks manufacturer would have 700 people (larger than many media owners) in a building in Austria devoted to nothing but content, or that Amazon could get so adept at customisation that it is serving up different content to every one of its 250 million odd monthly active users, or that a company (Facebook) could completely transform its revenue base from a standing start in little more than two years, or that a search engine gets so good at using data that it can understand the nuanced context of how we talk about something to give us a better answer to our question.

But as I said before, the future of strategy is closely intertwined with the future of agencies. Drawing on the work I did for The Progression of Agency Value project, repurposing Gilmore and Pine’s Economic Value model gives us a good model for understanding that the future of agencies, and therefore strategy, will be about progressing from providing services toward delivering value through experiences and ultimately about helping to affect transformations or changes in the client organisation itself. We seem to ask the ‘What is Strategy?’ question a lot, and I wonder if it’s because whilst the fundamentals of what strategy is remain the same, the context for how it is deployed is always shifting. Lawrence Freedman’s definition talks about strategy as a fluid, flexible, continuous thing that responds to unforeseen situations. Noah’s thought about strategy really being about building algorithms (rules) that help drive optimal outcomes in decisions is good because it takes account of the fact that humans are critical to designing those rules, and that algorithms are constantly being updated to take account of evolving environments. So clever ways of putting people together with technology will always win.

Columbia Business professor Rita Gunther McGrath (in ‘The End of Competitive Advantage’) talks about how organisational strategy is shifting from maintaining sustainable competitive advantage to building a series of transient advantages, which in turn has implications for the fluidity with which you allocate talent, organising resources around opportunity rather than existing structures, continuous innovation, continuous experimentation and a ‘fast and roughly right’ approach. This, and the increasing convergence of strategy, innovation and transformation creates opportunity for agencies and for strategy. And if strategy is increasingly starting to look like innovation which is starting to look like transformation, then the interesting places are in the overlap between planning, service and experience design, and organisational change.

The exemplar of GAFA and their ‘vertical stack’ approach shows the possibilities of creating user-centric systems that use data to join up customer experience, taking value from interaction at one touchpoint and using it to enhance the experience at another touchpoint. So opportunity exists at the centre (optimisation, automation or augmentation through creativity, of BAU or core services and functions), and at the edges where innovation happens (emerging understanding, set-up and design of the new). But all of this, as the Cap Gemini/MIT Sloan study shows, requires us not to pursue shiny new technology for the sake of it but to always remember the value of the skills, behaviours, culture and leadership that surrounds it.

My final thought was about Sturgeon’s revelation that 90% of everything is crap. There’s a lot of crap advertising around. There’s a lot of crap content marketing. When it’s so easy and cheap to create stuff and put it out there, more than ever the role of the planner/strategist is to stop stuff being crap.  

So 'Mullet Strategy' is about being neat and respectable at the front (creating exceptional joined-up experiences and good campaigns based on great insight, strong creative ideas - and not being crap). And it’s about being wild and hairy at the back (working with clients to create continuous, responsive interactions and experimentation that might generate new learning, improve capability, and ultimately change the organisation itself - and of-course, not being crap). In this way, and in reference to Oliver Burkeman’s wonderful piece in The Guardian about how 'Everyone is totally just winging it, all the time', perhaps we just need to join with our clients in winging it a bit more.

The Role of Short-Term Wins in Organisational Change

I'm a big fan of the value of short-term wins in helping to support, and generate momentum for, change in companies. In Leading Change, John Kotter has a pithy summary of why they work. The role of short-term wins:, he says, is to (and I quote):

  • Provide evidence that sacrifices are worth it: Wins greatly help justify the short-term costs involved
  • Reward change agents with a pat on the back: After a lot of hard work, positive feedback builds morale and motivation
  • Help fine-tune vision and strategies: Short-term wins give the guiding coalition concrete data on the viability of their ideas
  • Undermine cynics and self-serving resisters: Clear improvements in performance make it difficult for people to block needed change.
  • Keep bosses on board: Provides those higher in the hierarchy with evidence that the transformation is on track.
  • Build momentum: Turns neutrals into supporters, reluctant supporters into active helpers, 

He goes on to say that a good short-term win needs to be visible (so that large numbers of people can see for themselves whether the result is real or just hype), unambiguous (so there can be little argument over it) and clearly related to the change effort (so the context is clear). Significant issues can occur when a change programme does not systematically plan for the creation of short-term wins.

Makes a whole bunch of sense.

The Digital Board

"If the rate of change on the outside exceeds the rate of change on the inside, the end is near."

Jack Welch

(N.B. This post is part of an occasional series I'm doing, drawing from some of the thinking that's going into the book I'm writing - any feedback is appreciated)

In today's world, slow decision-making can generate real problems for companies. As the pace of digital development accelerates and pressure on resources intensifies, one of the key challenges that arises in organisations undergoing digital transformation is the effective prioritisation of digital projects and developments. There is just so much to do, so many different (and potentially competing) priorities that it can be hugely difficult for those at the top to know the right thing to do (especially if their level of knowledge of all things digital is not what it could be).

The issue is often not about the significance attributed to digital projects and development by the company board. Digital development of some kind is a strategic priority of just about every company I've come into contact with. A more likely scenario is that whilst an organisation may already have digital development as a corporate strategic pillar, the difficulty comes in taking account of multiple dependencies or risk factors and in elucidating a priority list that will ensure that the most meaningful and impactful changes are prioritised above those which may have less significance.

Sometimes impact is difficult to demonstrate or even to determine. Sometimes changes that have short-term impact might be unfairly or misguidedly prioritised over those with potentially much larger long-term impact. Sometimes involvement of multiple senior-level stakeholders slows the decision-making down to the point where the impact of development is negated.

Companies might try to mitigate this risk by appointing digitally-savvy people to the board, or having a board member take responsibility for becoming a digital ‘champion’. Both of these options can help. Yet there can be little substitute for a board that is conversant and experienced as well as informed. The broader this capability across the board the better. Every company is operating in a digitally-empowered world which means there is now little excuse for lack of board level competency and proficiency.

Outside of board meetings decision-making structures need to be agile in support of an empowered board. Clear delineation of responsibility helps (Peter Thiel has said“The best thing I did as a manager at PayPal, was to make every person in the company responsible for doing just one thing. Every employee’s one thing was unique, and everyone knew I would evaluate him only on that one thing”. Whilst the clarity, focus and simplicity that this brings may reap dividends for startups and small businesses, as a company scales applying this approach to small teams rather than individuals is likely to be easier). Clear and sensible escalation procedures also helps. As can empowered front-line staff and heightened team autonomy.

But sometimes more formalised senior decision-making and feedback structures are needed. The creation of a ‘digital board’ can prove to be extremely valuable in facilitating agile governance whilst providing a crucial link to the most crucial decision-making body in the company: the main board. A ‘digital board’ might typically comprise key main board members (the board ‘digital champion’, or Finance Director or perhaps even the Managing Director or CEO) and other principal digital stakeholders, and becomes the main decision-making body for the digital development roadmap, meeting regularly to make key investment and strategy decisions.

This ensures the ongoing commitment, involvement and engagement of key senior staff including the CEO, CFO, and/or the IT and Operations Director, provides a crucial link between digital operations and the main board, whilst still keeping the decision-making process as agile as possible. And when the business is in the midst of transformation, agility is exactly what you need.

The Difference Between Good and Bad Organisations

Good-bad-uglyI'm reading The Hard Thing About Hard Things which is excellent. Part of what makes the book unusually good is that it draws a lot from Ben Horowitz's personal experience launching and running a series of companies before becoming a VC. And he's very honest, focusing often on the decisions made when things were not going so well, or in other words the times when he was a 'wartime' CEO. These kinds of leaders, says Ben, don't need the typical kind of management books that 'focus on how to do things correctly, so you don't screw up,' but instead on 'what you need to do after you have screwed up'. And...'the good news is, I have plenty of experience at that and so does every other CEO'. It is, says Ben, the ability to spot the next move during the struggle that separates the winners and losers.

I noticed that Shane Parrish had pulled out a passage that I'd also highlighted in the book. It deals with a time whilst Ben was CEO of his software business Opsware. Believing a lot in training his managers, he had set clear expectations whilst personally training them about the need to meet regularly with each of your team members. The discovery that one of the managers in the company had not met with any of his team members for six months led him to have something of a crisis of confidence about how well he was communicating his expectations, until he realised that whilst he had told the team what to do, he had not been clear about why he wanted them to do it.

Calling the offending manager's boss into his office, Ben explained that the reason he was motivated to come to work was because it was personally very important to him to build a good company:

'Let me break it down for you. In good organizations, people can focus on their work and have confidence that if they get their work done, good things will happen for both the company and them personally. It is a true pleasure to work in an organization such as this. Every person can wake up knowing that the work they do will be efficient, effective, and make a difference for the organization and themselves. These things make their jobs both motivating and fulfilling.

In a poor organization, on the other hand, people spend much of their time fighting organizational boundaries, infighting, and broken processes. They are not even clear on what their jobs are, so there is no way to know if they are getting the job done or not. In the miracle case that they work ridiculous hours and get the job done, they have no idea what it means for the company or their careers. To make it all much worse and rub salt in the wound, when they finally work up the courage to tell management how fucked-up their situation is, management denies there is a problem, then defends the status quo, then ignores the problem.'

Worth reading what Ben says next, but I think that description is very apposite.