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Published: May 29, 2012
 / Summer 2012 / Issue 67

 
 

The Right Role for Top Teams

Analysis of informal networks offers a potent leadership model for the C-suite: Make top teams the hub of the enterprise, and watch performance improve.

Think of the top teams you’ve known that have had the greatest impact. Did their value come from the meetings they conducted and the decisions they made together? Or from something else? In most companies, the phrase top team is a misnomer. Senior executives throughout the company may clamor for a seat on the leadership committee because that is where the key strategic decisions are supposedly made. But in actuality, the group rarely conducts its work in unison, as a deliberative body or a source of command. Instead, its power comes from its members’ informal and social networks, their determination to make the most of those connections, and their ability to work well in subgroups formed to address specific issues. The most effective top teams are those that recognize this reality and set themselves up to function as the senior hub of the enterprise.

“If I consider what our top team needs to do well,” said the president of an investment bank in the wake of the financial crisis, “it is not so much about senior team building or planning for 10 years out. These are overly romanticized notions of what it means to be a good executive team. It’s more important to have different networks that execute quickly on crises or opportunities — combining our expertise and that of other groups in the company. Building this ability to solve big problems quickly is a big deal, because the pace of business keeps ramping up. Yet we don’t focus enough on this, in contrast to internal team building and individual coaching.”

Organizations that want to improve the effectiveness of their top team — and therefore the performance of the full organization — need to start by recognizing the true source of the top team’s value. They need to develop the kind of team in which each member is a recognized informal representative of larger networks of alliances; in which the top team knits together the collective expertise and accountability of a much broader group of people than the executives in the room; and in which subgroups can resolve issues and make rapid, incisive decisions that gain the commitment of the full senior leadership group, and the organization as a whole.

One source of this insight is social network analysis, the mapping and mathematical study of informal links in an organization, gathered through surveys and logs of meetings, phone calls, and e-mails over time. These analyses consistently show that as much as 90 percent of the information that the most senior executives of a company receive and take action on comes through their informal networks, and not from formal reports or databases. A typical senior executive committee or council functions formally as a central meeting point, a place where the most senior executives check in with one another, present performance results and other recent information, and ratify decisions that have already been made. Its value stems less from these formal activities than from its informal role as a collection of some of the most influential and experienced individuals in the company — and from its capacity to mobilize coordinated efforts through subgroups and network influence.

For example, in one global health-sciences organization with a reasonably well-functioning “senior leadership committee,” that top team — made up of 14 people — represented only 2 percent of more than 500 senior executives in the company. But they accounted for almost 15 percent of the collaborative and informal ties in the organization. (See Exhibit 1.) The robust ways in which these executives maintained working relationships through the company had a substantial impact on execution and performance.

 
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Resources

  1. Jon R. Katzenbach and Douglas K. Smith, The Wisdom of Teams: Creating the High-Performance Organization (Harvard Business School Press, 1993): More detail on the three types of teams, including “real teams.”
  2. Jon Katzenbach and Ashley Harshak, “Stop Blaming Your Culture,” s+b, Spring 2011: The next step for an effective top team is reinforcing and building new behaviors that make the most of the existing corporate culture.
  3. Tim Laseter and Rob Cross, “The Craft of Connection,” s+b, Autumn 2006: How organizational network analysis can improve performance throughout a company.
  4. For more thought leadership on this topic, see the s+b website at: strategy-business.com/strategy_and_leadership.
 
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