Team Development - The Executive Team |
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Team Articles:
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Section One: Why Executive Team Development Is NeededFOCUS: The Changes in the Competitive Landscape
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This series of documents focuses on Executive Team Development and provides a set of proven concepts and development methodologies useful to any organization that is trying to improving the performance of their executive team. |
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Main content below |
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Why Top Management Needs a Team Approach
Much has been written about teams. Project teams, process improvement teams, functional organizational teams and self-directed work teams are several of the more common types of teams to which a great deal of thought has been given and a lot of attention has been paid.
The executive team, however, poses some unique requirements and challenges for several reasons. First, the executives of an organization hold a collective set of responsibilities that is exclusively their own. They are the group in whose hands the future success of the organization rests. It is from their collective vision and direction that the longer term strategic direction and success of the organization will flow.
The second reason is more subtle, and perhaps more dangerous. It is generally assumed that by the time a group of individuals reaches the executive level of an organization they have developed and honed their management and leadership skills. These skills would include those of serving on a wide variety of teams, working in a team environment, and functioning as the leaders of their own teams.
Unfortunately, the reverse is more typically the case. In more than 200 years of collective consulting experience with hundreds of organizations across the globe, it has been a rare occasion in which we have found an executive group that functions as a high performance team. More typically, the executive group consists of a number of fiercely independent individuals who enjoy competing with everyone, including each other. Power struggles are common, and separate fiefdoms that divide the organization according to its functional structure are the more common manifestations of executive “teams.” As a consequence, guidelines for the formation and performance of team behavior among top management are sorely needed.
Top Management in the Traditional Business Model
A brief review of how individuals become senior executives and the reward structure for top management provides a clear understanding of the circumstances that actually mitigates against team behavior. Executives typically rise to the top of their organizations because of their high achievement orientation and their skills, honed through years of successful performance in competitive environments. Success is often defined as the scope of an executive’s power - measured by the size of that manager’s organization, staff, budget and scope of decision-making authority. Executives often see each other as rivals both in terms of accumulating their “share” of the organization’s power base, and as possible rivals for the chief executive position.
The overall balance of the organization is the sole responsibility of the President or Chief Executive, and a rivalry among the senior team is often used by the CEO as a valuable tool to “stir the competitive pot” and get the best results from each function.
In a stable marketplace with an organization that seeks to maintain a consistent, predictable output, a functionally driven organization in which the members of the top management team control their individual areas with minimal cross-functional involvement might be justified. In fact, it was just such a control-driven environment that created the structures we have seen in organizations since the implementation of the industrial revolution. However, rapid shifts in the competitive marketplace have caused a major examination and reconsideration of the basic business models needed for the competitive environment of the decades ahead.
In a stable business environment, the executives of a firm function more as managers than leaders. They are typically concerned with the establishment of the core business strategy, agreeing on the structure of the organization, and developing the systems required to control activity that ensures the achievement of the business plan.
The system is fundamentally hierarchical, and assumes that those higher up in the organization are more knowledgeable and skilled than those lower in the organization. It also assumes that problems and decisions should be driven up to the level at which the expertise and authority exists to respond to these problems and make appropriate decisions.
In such a system the organization is typically “divided up” into its logical parts based on the functions performed by the organization. These functions are divided among the members of top management, and each is responsible for his/her part. The overall success of the business and the integration of these elements is the responsibility of the CEO.
In such a context, there is no compelling need for the individual members of top management to function as an executive team. The individuals may need to share information with each other and collectively review overall business results. Adjustments and course corrections, however, are assigned to the various functional members who “own” the source of the problem. Even business planning is the roll-up of the various functional business plans, and the subsequent negotiations among these individuals to “divide up the budget pie.”
The essence of the entire system is designed to create and ensure stability and predictability. It is assumed that the whole is the sum of the parts, and that if each part performs well, the whole will be achieved. In order to ensure the success of each part, individual variability must be minimized if not eliminated. To create the required uniformity, the performance of individuals is identified in great detail at all levels of the organization. Individuals are expected to be compliant implementers of orders given to them. The source of knowledge for these orders comes from the top of the organization. Management control of the successful execution of these orders is the key to success.
However, the core assumptions regarding business conditions: mass services provided to everyone in similar fashion; these services delivered in a stable economic environment with a limited number of competitors; and business growth based on general growth of the population and economy, no longer reflect the nature of the world. In today’s changing marketplace, the economic environment is neither predictable nor stable; economic growth is no longer assured; competition abounds from all quarters; and customized services even to manufacturing in “batches of one” replace the previous assumptions that created the industrial revolution and mass production.
New Top Management Requirements for the New Economic Environment
In this changing environment a top down hierarchical, compartmentalized, control oriented management culture simply will not work. It is:
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too slow;
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too rigid;
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too far removed from the customer;
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too insensitive to receiving and responding to feedback;
and the layers of bureaucracy required by the hierarchy are too costly.
The management system required by the new economic conditions is one in which the various elements of the system are interdependent and function as an integrated system; products and services are based on customer needs; the entire system is highly responsive to customer and marketplace feedback; and the organization is fundamentally flexible. Knowledge and the ability to solve problems no longer flows down from the top of the organization which is far removed from the customer. The best source of knowledge comes from the workers who are closest to the customer where the work gets done. Knowledge and wisdom are not resident in the upper offices; they prevail on the shop floor, in the cubicle, and in the field. Power is not derived by position or control; but rather by knowledge and the ability to serve customers. The role of employees shifts from one in which individual differences are to be suppressed to one in which individual differences - knowledge and skill - are the most essential competitive advantage for the firm. The former psychological employment contract of job security in exchange for employee loyalty is replaced with a new contract of employability skills in exchange for performance.
The New Team-Based Leadership Role for Top Management
Today's executive is responsible for guiding the work of a much more amorphous, flexible, distributed network of core competencies that must be brought together with great speed and fluidity to meet the needs of rapidly changing markets, using technologies whose life cycle is often shorter than the product or service they are offering.
As a consequence of these major changes in the business world, the role of top management must similarly change. The new role is one in which top managers must guide an interdependent system, rather than control their own “piece of the action.” This requires several fundamental changes in skills and behaviors. Top management must now function primarily as leaders rather than managers, guide the interdependent elements of a system, applying all the concepts of systems thinking to their job, and treat their employees as the greatest source of their firm’s core competence and competitive advantage, rather than as interchangeable parts to be controlled.
In order for top management to achieve these results, it too must function as an interdependent system. This requires a well oiled machine that is called an executive team. The primary responsibility of this team is leadership for the firm, rather than management. The following section describes the core responsibilities of leadership in an organization.
Effective functioning in Vision - Alignment - Deployment is an essential responsibility of the Executive Team. This requires a well defined system for achieving traction in creating substantial strategic improvement in the competitiveness of the organization.
The next section deals with how effective executive team dynamics affect the ability to provide enterprise leadership.
NEXT: "Section Two: The Executive Team and the Leadership Role"
Vision - Alignment - Deployment within the Executive Team.