ChiefExecutive.net

Leading High-Performance Teams

January 16 2008 by Howard M. Guttman

When Catherine Burzik became president of Applied Biosystems (AB) in 2004, top-line revenue was flat, the stock price was depressed, and R&D productivity was low. AB was the world’s largest developer of “tools” for the life sciences industry, but the market and employees had lost confidence in the company. Just two years later, AB’s stock price was up significantly, and its market cap had jumped from $3 billion to $6 billion. Wall Street’s confidence grew, and employees became true believers. 

In 2001, the founders of women’s clothing retailer Chico‘s FAS appointed Scott Edmonds president. His challenge? Turn an entrepreneurial, single-brand company with revenues of $378 million into a growth-oriented, multi-brand powerhouse. By the time Edmonds was named CEO in 2003, revenues had grown to more than $760 million. Three years later, Chico‘s had three brands with revenues of $1.6 billion and enjoyed nine years of double-digit, same-store sales growth. 

In 2004, executives at Novartis Oncology discovered that the company’s breakthrough leukemia therapy, Glivec, was threatened by a new product projected to gobble up 20 to 30 percent of market share. CEO David Epstein swiftly called on his division vice presidents to put together competitive action teams that played out alternative business scenarios and possible responses. They evolved a strategy to boldly reposition Glivec and accelerate development of another Novartis medicine. The result? The competitor’s drug took a modest 5 percent of the market, and Novartis’s sales grew robustly. 

What sets these leaders’ achievements apart is not merely their success in overcoming a challenge. Senior executives get paid to do just that. What Burzik, Edmonds and Epstein did was develop a “burning platform” to drive fundamental changes in how their organizations were led and run. 

Flat Vision 

Leadership is about creating a unique and compelling vision. These three executives did that by espousing radically new visions for their organizations: trading the traditional hierarchical model for a “flat,” horizontal one. “Most organizations function on a hub-and-spoke model, with decisions radiating from a central base of power,” explains Burzik. “They’re not built for high performance and speed.” In Edmonds‘ view, a horizontal organization is “ruled by high-performance teams with real decision-making clout and accountability for results, rather than by committees that pass decisions up to the next level or toss them over the wall into the nearest silo.” 

Moving to a horizontal approach required a number of actions, from gaining clarity and consensus on the overall strategy and ensuring a tight fit between the strategy and specific business goals to making sure new roles were clearly defined. 

These are de rigueur for any significant change effort. But, in moving horizontally, Burzik, Edmonds and Epstein had to cut more deeply to bring about change in two core elements: people’s mindsets and the rules of engagement, or “protocols,” by which decisions are made and relationships forged. 

Changing Mindsets 

“What’s key is creating teams in which everyone puts the good of the team before functional self-interest,” explains Epstein. “Team results become the driving force.” 

To accomplish this, leaders have a number of tools at their disposal, from creative influencing to modifying the incentive system. Changing mindsets entails changing how everyone in an organization defines accountability. Think of accountability as a ladder, with the first two rungs dealing with accountability for individual results and those of the people who report to you. The next level up is a steep climb-holding peers accountable. And, finally, the most formidable leap: team members holding the team leader accountable for results. When team members operate at the top of the ladder, they are well on their way to becoming a high-performing team. 

But bringing them there is a tough feat. Edmonds points out that it all starts with the CEO’s willingness to allow the team to hold him or her accountable. Several years ago, Edmonds hesitated to take action when a newly hired senior executive wasn’t delivering. “Then a couple of members of the senior team came and told me I had to make a move,” he recounts. He thanked them and two days later the executive was gone. His team got the message: Holding one another accountable was the new high-performance requirement-with no exceptions. 

The Power of Protocols 

Any leader interested in playing-and having the organization play-at high-performance levels must overcome the often deep confusion surrounding decision-making. At Applied Biosystems, Burzik’s team of 15 vice presidents were spread throughout the U.S., Europe and the Pacific Rim. Making fast, smart decisions was a challenge. Her solution was to put in place formal rules for decision-making. “All strategic-level decisions were made by the full team, but specific operational decisions were made by sub-teams,” says Burzik. “We operated like a board of directors that has committees to which it delegates fact finding and decision-making.” 

One of the most effective sub-teams was a Division Presidents’ Council made up of the presidents of Applied Biosystems’ four global businesses. The council came to be view ed by the larger team as one of the most effective ways in which issues common to the global businesses get raised and resolved. 

In high-performing organizations, protocols may dictate that certain types of decisions, especially those with tight timelines, need to be delegated to teams closer to the action and information. When Novartis Oncology’s core product, Glivec, was under competitive siege, David Epstein and his team decided that strategic decisions related to the product should best be made by an empowered sub-team: a “Glivec Readiness Team” made up of people from a vertical slice of the organization, including the global and U.S. brand directors for Glivec; the global medical director for the chronic myeloid leukemia (CML) franchise; the global head of product strategy; the heads of European and North American operations; and the heads of legal and communications. 

This group met in person every other week during the crisis. They agreed on an overall strategy for the franchise and the kinds of decisions that the team was empowered to make, and then they identified five key “do-or-die” actions that had to be taken. The group continued to monitor the situation closely, intervene to remove roadblocks, and ensure that the necessary resources were in place. Their successful outcome is a testament to the wisdom of spreading decision-making power throughout the organization and to the importance of clear protocols to guide the process. 

Whether the responsibility for decisions resides with the top team, its subteams or teams further down in the organization, there are three basic decision modes: unilateral (made by one person with no input from others), consultative (made by one person after getting input from the fewest number of players to add value), or consensus (everyone has input and everyone must agree to live with the decision). As Epstein points out, no one mode is best. “What’s important is to be clear on which mode applies to a specific decision,” he notes. Otherwise, there is confusion and possibly subterfuge.

Whatever the decision-making rules, they are meant to shift much of the decision-making action away from the leader and onto the other team members, thereby freeing up top leaders to think more strategically. And it works. “Since moving to the horizontal team model, 60 percent of my calendar has been freed so I no longer have to deal with nitty-gritty operational issues,” reports Edmonds. “I can sit back and think more strategically and focus just on the trouble spots.” 

In addition to decision-making protocols, high-performance teams re quire ground rules to govern their personal interaction. In fact, most performance shortfalls occur because of an inability to confront issues openly. For example, Cathy Burzik’s team abides by a “no-hands-from-the-grave” protocol: Once a decision is made, there are no qualifiers and no second guessing around the water cooler.

What separates the new breed of high-performance leaders is not just prescribed styles or traits, but the ability to build a rational business case for change. They create a unique and compelling vision and are skilled at influencing players to think differently about their accountability. To that end, these leaders enable their team members to act with a strong sense of ownership for the entire team’s results.