Teamwork at the Top

What could our senior leadership team achieve if we worked at full potential? And what’s keeping us from achieving it? Those were the questions the leaders at Root Capital found themselves asking in 2022.

Founded in 1999 by Willy Foote, the nonprofit investment firm provides small working-capital loans to farm cooperatives in Africa, Latin America, and Southeast Asia. In its successful first two decades, the company was run by Foote and a team of passionate, energetic leaders. But as it grew in both size and ambition, its management challenges grew as well. In 2018, the firm added a chief operating officer to run day-to-day operations so that Foote could devote more of his attention to organizational culture and stakeholder relationships.

In 2020, Root launched a five-year growth strategy, which included new lending and advisory services. It required changes to certain roles on the top team and the addition of several new roles. It also required a high level of cross-functional integration and collaboration—neither of which were strengths of the firm. Innovation often seemed disconnected from the business, strategy execution was moving too slowly, and too many decisions were bubbling all the way to the top, slowing down the organization. Then Covid hit, and all aspects of leading the firm became harder, with compounding repercussions for the inner workings of senior management and the organization as a whole.

By 2022, Root’s top leaders had lost the structure and discipline of meeting, debating, and leading as a team. Some executives were included in discussions about how to deploy new capital infusions while others were not. Communication became siloed and inconsistent. The broader organization was hungry for clarity of purpose and direction from the top but was not getting it. “We were a team only in name,” Foote says. “We were drifting, and the organization saw and felt it.”

Root’s leaders had arrived at a point of reckoning. So they held a mirror up to themselves, and with vulnerability and humility they began to focus on developing new collective behaviors that would help them be more effective as a team. They examined everything from how often they met and how they debated issues to how they developed strategy together.

Root’s investment in its top team had a big impact on organizational performance. This is not surprising: A recent Bain & Company study of 1,250 companies found that organizations led by highly effective executive teams had revenue growth, profitability, and total shareholder returns that were three times higher than the study group’s average. Research also shows that highly effective leadership teams are correlated with consistently high employee retention, productivity, and morale. In short, they are force multipliers: Effectiveness radiates from the top team throughout the organization.

But so does ineffectiveness. Poorly functioning top teams can spread malaise across their companies, creating a powerful drag on productivity, lowering revenue, and leading to higher employee turnover. The problem is pervasive: Roughly two-thirds of the senior executives surveyed in 2020 by the Center for Creative Leadership felt that their top team was ineffective, and only 20% felt that their team was high performing. (We define a top team as any leadership team responsible for the creation of a strategy and accountable for its execution by others in its organization, business unit, or function.)

It’s easy to sympathize with the challenges that leaders face. Teaming is difficult at any level, but for top teams, the challenges expand exponentially. They are responsible for addressing their organization’s weightiest and most complex problems, so their struggles are almost existential. As one expert put it, these teams “exist to get really hard stuff done.”

Part of the problem is that companies prioritize the development of individual leaders over leadership teams—an understandable choice, given that business schools, management books, and the media all celebrate leadership as a solo skill. Another obstacle to high-performing teams is internal dynamics. It’s common for individual members or factions to have opposing viewpoints or conflicting communication styles; it’s also common for teams not to address—or even recognize—those dynamics. To their detriment, top teams tend to keep such difficulties secret, fearful that acknowledging their struggles could shake the confidence of their many stakeholders. Instead, they either grind along in silent mediocrity, or the CEO tries to root out the problem by replacing seemingly problematic team members.

Both paths lead to dysfunction. Instead, organizations need to prioritize the development of strong and effective leadership teams that function as a collective behavioral unit rather than a loose affiliation of individual leaders. That’s what the team at Root Capital did: The leaders acknowledged that the hard, deliberate, and sustained effort that it takes to become a team is actually part and parcel of being a team.

In this article, we’ll discuss the key traits of effective top teams that we (together with our colleague Ineet Narula) identified in our research and on-the-ground consulting work. Then we’ll lay out a four-step process to help you use those behaviors to boost the effectiveness of your own team.

Five Traits of Effective Top Teams

Not all effective top teams are the same, of course. But after studying hundreds of them across 11 industries and six continents, we identified five behavior traits that effective top teams have in common: direction, discipline, drive, dynamism, and collaboration. These traits are collective: They characterize the behaviors of the team as a whole, not those of its individual members.

Let’s consider each trait in turn.

Direction.

How a top team works together to set the organization’s direction—its purpose, vision, and strategy—is a cornerstone of its effectiveness. Team members must be aligned on and share ownership of their short- and long-term priorities. They must exhibit public commitment to one another and their strategy, even when facing pressure from outside forces and other teams within the organization.

When a team is not aligned on the priorities that propel its strategy, it can easily lose direction. That’s what happened at a rapidly growing technology company in Southeast Asia that we worked with. As it navigated a major scale-up, its top team lost its way. Although the team members shared a bold long-term vision to achieve unicorn status, they had not articulated their immediate and short-term strategic priorities, and in that vacuum, they individually began pressuring the founder to fund their particular strategies. This created divisions within the team and pulled the company in different directions, causing collaboration, innovation, and growth to suffer. The team was very busy, but much of its time and energy went to working on the wrong things.

When the top team recognized that it had a problem, the leaders looked inward to address it. First they developed an inclusive list of all the strategic priorities, and the members each ranked their top three. After discussion and debate, they settled on the five most critical priorities for the business overall. At subsequent meetings, they kept their focus on those priorities. If things got off track, every team member had permission to stop the discussion and refocus the team. Through practice this became a team behavior.

The team also built a stronger sense of direction through clear communication and active listening. Together, they arrived at an understanding of how individual and team goals related to the overall business strategy and began to cultivate a culture of ownership and commitment. Those efforts paid off: The team stopped funding initiatives in isolation and began moving in a unified direction.

Discipline.

In order to make and execute decisions consistently, have productive meetings, and practice healthy norms and routines, team members need to have a clear understanding of their own and one another’s roles—and all too often, they don’t. CEOs are often perplexed to learn that members of their top team don’t sufficiently understand their peers’ strategies, objectives, and deliverables, or how they spend their days in pursuit of them. When members don’t know those things, they can’t fully support one another or identify the interdependencies among their agendas that would encourage cooperation. More concerning perhaps, team members are often not clear on the role of the team itself. Many are unable to answer the question “What kind of team must we become to lead our strategy and people?” They may even struggle with a more existential one: “Why are we here?”

For many top teams, a lack of discipline, particularly in managing meetings, can be at the core of problems. Meetings are a mainspring in team effectiveness because they create the time and space for effective traits and behaviors to flourish. But getting meetings right is deceptively difficult, often because team members don’t appreciate their importance to business performance and thus fail to give them their due focus. To get the most out of meetings, each team member must be disciplined in properly preparing for, participating in, and following up after them. At Root, Foote and the COO introduced a seemingly simple procedural shift that had an outsize effect: They stopped cochairing meetings and deputized team members to preside over them instead. The effect was to distribute leadership among the members, giving the whole team a greater sense of shared ownership. The new regime sharpened the team’s decision-making discipline and produced better alignment between decisions and strategy.

Teams can further strengthen their discipline by coauthoring a one-page charter clarifying the team’s purpose, focus, collective behaviors, norms, and routines. This work is both pragmatic and symbolic. When the members of the top team at Root Capital engaged in this exercise, they found that it not only helped them improve focus and efficiency but also gave them a powerful vision of themselves as a single cohesive unit rather than a collection of individuals.

Drive.

Top teams with drive prepare assiduously, debate constructively, and are industrious and resilient over the long term. They know how to prepare for and surmount obstacles. As the COO of one global consumer-products company told us, teams with drive do “the hard work of doing the hard work.”

Drive is pivotal when a top team faces a crisis. That was the case for one life-sciences company we worked with after it learned that it was being investigated by the Securities and Exchange Commission. The CEO and his top executives were certain that there had been no wrongdoing, so they devised a plan for how they would behave as a team: They would face every difficulty head-on, immediately, and with optimism. When the SEC made a request, they would work together to address it, regardless of whose domain was at issue. They would pay careful attention to detail. Most important, they would be resilient, engaging in constructive debate throughout the process.

The strategy worked. “Our team lived and breathed these behaviors for six months,” the company’s general counsel told us—and the SEC ultimately cleared the company of any violations. In the process, the team developed an enduring mindset and behaviors that have since allowed it to surmount other obstacles and to differentiate between problems that can be solved and those that can be only mitigated. Not surprisingly, our research shows that the top teams of many of the companies that thrived during Covid exhibited high levels of drive.

Dynamism.

Dynamic teams treat change as constant and positive. They actively scout information from outside and inside their organization so that they can take advantage of opportunities and head off challenges. They have a bias for action and respond with speed and flexibility to new scenarios, modifying plans and executing accordingly. They invest in resources to accelerate innovation and protect initiatives from anything that might undermine them. They set compensation and incentives to support risk-taking and don’t penalize for failure.

In business, as in life, allowing for the possibility of failure is important because it’s a prime source for learning and positive change. But top teams typically avoid practicing this behavior. In the high-stakes world they work in, failure can be a terrifying prospect, but aversion to risk undercuts dynamism and means that leaders can’t respond effectively to change.

A better approach is for top teams to publicly recognize the opportunities for learning that failure provides. That’s what happened at a major pharmaceuticals company we worked with. The team that leads the firm’s center of excellence for talent—which serves a workforce of 80,000—spends 15 minutes of every monthly meeting studying the “failure of the month.” It’s an agenda item that many look forward to because it’s constructive and free of judgment.

Collaboration.

The very heart of teaming is collaboration. It combines direction, discipline, drive, and dynamism, and it thrives in an environment of connection, inclusion, and trust. Collaborative behaviors include developing personal relationships, giving everybody an equal voice, and sticking to commitments. Teams that excel at collaboration create the psychological safety needed to give and take feedback, listen actively, brainstorm, solve problems, and hold themselves accountable. None of this just happens on its own. It’s hard to collaborate well and consistently without instruction and practice.

Collaboration can be especially challenging during mergers or in multicultural team environments. Consider the case of an Asia-headquartered technology firm we worked with. After acquiring a European competitor, it entered a prolonged period of integration, during which a fierce battle raged over who would become the combined regional CEO. When the selection was finally made, the new regional CEO was left with a fragmented, angry top team that somehow had to find a way to meet high-growth expectations from the corporate center. For the first six months the members of the team chased individual goals, struggled to make decisions, and increasingly avoided one another.

Matt Stevens

To break the cycle, the regional CEO scheduled a series of top-team off-sites designed to build personal relationships and foster mutual empathy—two key enablers of collaboration. The first meeting started with the team sharing stories that highlighted their values and past experience. Anonymous quotes and data about the team’s functioning were gathered from members in advance and shared to help build a picture of strengths and gaps. Two things in particular helped the team bond. First, the regional CEO modeled vulnerability by highlighting an area in which he needed to improve. And second, the team created a charter that identified their purpose, desired behaviors, focus areas, and priorities for the year.

Building cohesion was also a key priority. After the off-site, the team began every meeting with a “team moment” during which members talked about their behaviors and made plans for relationship-building social outings. Within a year, the regional CEO saw a meaningful improvement in collaboration. Mutual support and empathy were clearly evident during meetings. Leaning on the team charter, the team had begun to behave as a collective.

Four Steps to Success

Top teams seeking to become more effective can take these four steps.

1. Commit and invest.

The first step is to make a commitment that teaming is a core skill at all levels of your organization—and that you and your team will model the right collective behaviors. Your team must make an explicit commitment to invest time and money establishing and nurturing the five traits discussed earlier. Four hours once a year during the executive off-site won’t cut it, and funding can’t be patched together from other budgets. You’ll need to secure resources and make time on your calendar at regular intervals to work on capabilities so that they become routine behaviors.

The price of not making this investment became clear to many companies during the Covid era. In the two years of remote work that followed lockdowns, one leadership team watched its cohesion erode. “We lost our personal connections,” the CEO told us. “It felt like we had disbanded.” When subsequently drafting a new team charter, the team committed to routinely meeting in person. A sprint team devised a budget for travel, accommodation, and other costs for two days every quarter, one half-day of which was devoted to team-effectiveness training.

2. Hold up the mirror.

To determine how you’re currently working together, conduct a team-effectiveness diagnostic. Focus on understanding how your team views itself as well as how others see it. Use a survey or interviews to get members’ opinions on their experience of the team—everything from its culture and climate to its operations and routines. Survey your direct reports or run focus groups to get an outside-in perspective. Ask questions about whether the team is demonstrating the five traits or not. Whenever possible, ensure anonymity and confidentiality to encourage candor.

This process reveals truths that can help a team get better faster. Consider the experience of one fintech CEO who, on the basis of anecdotal evidence and his own observations, was certain that his team’s struggles stemmed from animosity between two business heads. Anonymous surveys and confidential interviews revealed that the problems went deeper, however, including a general lack of agreement on the company’s overall strategy and the existence of in-groups and out-groups. The CEO assigned the two business-unit heads to cochair a series of strategy triage sessions and provided training in dilemma management to help them identify interdependencies among their respective objectives. They soon shifted from obstructing or ignoring one another to collaborating. Six months later, a follow-up survey showed strong strategic alignment among team members and decreased evidence of factions.

3. Map the journey and begin.

Next, plan your team’s journey to new collective behaviors. You can’t outsource this work to HR or anybody else. Begin by asking: “How do we need to work together as a team to help others achieve our strategy?” Start with the business goals that you and your team have set for the firm, and then use the results from your team-effectiveness diagnostic to identify which gaps most affect their execution. For example, if you’re launching a multiyear transformation, it will be crucial to address deficiencies in the team’s dynamism that might hold back change. If you’re a new team formed after a merger, start by clarifying each member’s role to establish discipline and set the stage for collaboration.

4. Maintain momentum.

Mapping out and embarking on the journey are easy compared with sustaining it. Many teams quickly align around priorities, convene for a launch event, and make plans for future meetings—but then fail to follow through. Some call this “the boom splat.” When it happens, firms often rationalize their inaction, insisting that other work simply became more important. But maintaining momentum—and correcting course when necessary—is critical to changing behavior and making it stick.

Enabling Factors

Following through on those steps is hard but rewarding. Several enabling factors can help.

Get together.

The potency of in-person sessions has no substitute. Build your annual program around as many face-to-face gatherings as you can afford. Save money elsewhere.

Build habits.

In your regular meetings, dedicate a few moments for team learning. And during your monthly or quarterly meetings, dedicate an hour—or even a day—to yourselves as a team. The continual dedication of time is more important than the amount of time.

Be opportunistic.

Top teams struggle with time famine, so take advantage of meetings that have been convened for other purposes to work on teaming.

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Be adaptable.

Team members should agree on what skills and habits they need to learn and be ready to call on different ones as the business environment changes. When a team needs to power through a sudden adverse event, for example, it should pivot toward drive behaviors.

Make teaming real and applicable.

Integrate the building of skills with the execution of work activities. Practice constructive debate and listening in the context of specific questions facing the business (about, say, where to build a new factory).

Reinforce.

Between working sessions, encourage subgroups to form sprint teams to reinforce what they’ve learned—through after-action reviews, for example.

Measure.

Regular measurement of the team’s progress will keep the journey headed in the right direction. After six to 12 months, survey or interview team members and others again. Then celebrate progress and stretch further.

Communicate.

Over time, get used to making your goals public, and share mistakes and successes along the way. If you can model this behavior and foster a culture of continuous improvement, other teams throughout the organization will feel that it’s safe and productive to change as well.

. . .

Since beginning its self-improvement work, the top team at Root has become more purposeful. Members have more-constructive debates, delegate more of the right decisions, and are more collaborative and transparent. Communication is clearer. The company’s performance has been excellent. Now Root is getting ready to launch another five-year strategy review, and although senior leaders are still working to improve their effectiveness as a top team, they now know that they’re up to the task—because they’ve seen the results. Your team can do the same.