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Google co-founder and CEO, Larry Page, continues to have big expectations for his employees: come up with products and services that are 10 times better than their competitors, hence “10x” – that’s one order of magnitude!
10X vs. 10%
Many entrepreneurs and start-up companies, they seem to ‘shoot for the moon’! Far more than 90% of these ventures fail within just a few years. Few, such as Google, succeeded and grew to dominate internet giants. The question remains though if they can maintain the innovative pace of 10x when the innovation rate tends to sink closer to 10% in matured companies.
How big dreams changed the world
This challenge effects also other visionaries that changed the face of the world and transformed society in ways nobody has imagined, such as:
- Apple building a micro-computer at times when mainframes ruled the digital world and only few could envision a demand for personal computing
- eBay establishing a new online sales model that millions around the globe use every day
- Google taking over the browser market through simplicity, by giving everyone control to use the most complex machine on Earth, the Internet
- Microsoft cultivated software licensing to sell one piece of software millions of times over effortlessly at minimal cost.
As disruptive and transformative ventures grow and mature, the definition of what is perceived ‘innovate’ changes. Both momentum and focus shifts. With size companies struggle to continue innovating similar to their nimble start-up origins.
What happens? With size comes a downshift from disruptive to incremental change. Simplicity makes space for adding features. Adding features makes products more complex and ultimately less usable and appealing to the majority of customers.
Look at Microsoft’s Offices products, for example: Wouldn’t you wish they came out with a ‘light’ version with reduced feature complexity by let’s say 75%, so the software becomes easy to use again?
It also starts haunting Google, as their established products such as Search or Gmail need to be maintained. Additional “improvements” aka. features creep in over time. Perhaps you noticed yourself that recently Google search results seem to be less specific and all over the place while the experimentation-happy Gmail interface confuses with ever new features?
Even the most iconic and transformative companies experience the reduction of their innovative rate from 10X to an incremental 10% or so.
Funny thing is that -at least in technology- incremental improvement quickly becomes obsolete with the next disruptive jump. The current technology matures up along the S-curve (see graphics) and generates revenue, but the next disruptive technology emerges. Companies hold on as long as they can keeping revenue flowing by adding features or improvements of sorts to gain or maintain a marginal competitive advantage. Thus, incremental improvement and process optimization found their place here to minimize cost and maximize profit in a market where the product became a commodity, so the competition is based only on price.
The new technology does not yet make significant money in the beginning at the beginning of the next S-curve. The few early units produced are expensive, need refinement and are bought by enthusiasts and early adopters who are willing to pay a steep premium to get the product first. Nonetheless, development reached the point of “breakthrough,” becomes appealing to many and quickly takes over the market: the big jump onto the next S-curve gains momentum. Suddenly, the former technology is ‘out’ and revenue streams deflate quickly.
Large and matured organizations ride on an S-curve as long as possible. They focus top-down on optimizing operations. Little effort is made to address the underlying limitation of the current technology and seeking out risky new successors. Maturing companies tend to transform into a ‘machine’ that is supposed to run smoothly. A mind shift happens to avoid risk in order to produce output predictably and reliably at a specific quality level to keep operations running and margins profitable. Incremental process improvement becomes the new mantra and efficiency is the common interpretation of what now is considered ‘innovative’.
10X has turned into 10%. To keep up with the ambitious 10x goal, companies would have to constantly re-invent themselves to replicate their previous disruptive successes.
How Goliath helps David
Even our recent iconic ‘giants’ find themselves in a tighter spot today:
- Google struggles to integrate a fragmented product landscape and maintain the ambitious 10X pace of innovation
- Microsoft suffocates loaded with features that make products bulky and increasingly unusable while consistently failing to launch new technologies in the growing mobile segment successfully
- Apple waters down their appealing simple user interface by adding features and clinging to defend their proprietary standards from outside innovations.
On top of it, all giants tend to face the stiffening wind of governmental scrutiny and regulation that influences market dynamics to protect the consumers from overpowering monopolies that jeopardize competition and innovation.
Observing the down-shift
What can you observe when the down-shift happens? How do you know you are not on the transformative boat anymore? Here are just some examples:
- Small Jobs – job descriptions appear that narrow down the field of each employee’s responsibility while limiting the scope by incentivizing employees to succeed within the given frame.
- Safe Recruiting – practices shift to playing it safe by hiring specialists from a well-known school with a streamlined career path to fit the narrowly defined mold of the job description. They newbies are expected to replicate what they achieved elsewhere. To risk is taken to getting the ‘odd man out’ for the job, a person who took a more adventurous path in life and thinks completely different, as this may disrupt the process and jeopardize the routine output by shifting the focus away from operations.
- Homogenized workforce – as a consequence of hiring ‘safely’, the workforce homogenized thereby lowering the innovative potential that comes with the diversity of thought and experience.
- Visionaries leave – with the scope of business shifting, the visionary employees that drove innovation previously lose motivation when innovation and creativity slows. Now they are held to operate in a business space where they do pretty much the same thing as their competition. Naturally, these go-getters move on, as it is easy for them to find a challenging and more exciting new job in a more dynamic place. – This ‘leaky talent pipeline’ gets only worse and costly when the talent management focus shifts to talent acquisition and leaving talent retention behind.
- Complexity creeps in – the temptation to constantly add features increases the complexity and starts a spiral that is hard to leave again (see also ‘Complexity’ is the 2015 challenge! – Are leaders prepared for ‘glocal’?)
- Procedures for everything – operating procedures regulate every detail of the job. The new ‘red tape’ is not limited to the necessary minimum but rather by the possible maximum.
- Short-term focus – work output becomes mediocre and focuses on short-term goals and sales targets; the next quarter’s numbers or annual results take priority over following the big dream.
- Sanitized communications – broader communications within the company become ‘managed’, monitored, ‘sanitized.’ A constant stream of (incremental) success stories pushes aside an open discussion to target the bigger problems. Opportunities are missed for open dialogue and creative disruption that fuels the quantum leaps forward to outpace the competition. Peer to peer communication is monitored to remain ‘appropriate’ and can even be actively censored. Trust in management and subsequently also among employees erodes.
Management fear of being the first
The real problem is the shift of mindset in top management that quickly works its way down: not wanting to take the risk of being first, which includes avoiding the risk to fail while chasing to next big opportunity or technology. Instead, they sail the calmer waters among more predictable competition fighting for small advantages and holding on to the status quo opportunistically as long as they can. In some cases, the management even acknowledges the strategy shift from ‘leader’ to ‘fast follower’ despite whatever the company motto proudly promotes – and thereby accepting 10% and avoiding to leap ahead of their competition by bold and game-changing 10x moves.
Interestingly, these same managers still love to look over the fence to awe the iconic leaders but steer away to take charge and work to become the leader again themselves. The nagging question remains if they could actually pull it off getting into first place.
Outside-of-the-box thinking may still be encouraged in their organization but is not acted upon anymore. Internal creativity or ideation contests become more of an exercise to keep employees entertained and feeling engaged, but the ideas are hardly being funded and executed. Instead, company resources are concentrated to run the incremental machine predictably and reliably at 10% as long as its profitable, no matter what. – They simply have no resources to spare and dedicate to 10x!
These businesses undergo a cycle of breaking through by successful disruption in a narrow or completely new segment, then continued growth to a size where the organization slows down to an incremental pace and somewhat stagnating innovation. It may then get driven out of business by the next disruptor or pro-actively break up into more competitive fragments that allow for agility and risk-taking once again to become leaders in their more closely defined space of business. This closes the cycle they are to go through next. There is a strong parallel between evolution and Charles Darwin’s survival of the fittest.
Keeping this cycle in mind, it becomes easier to see why management undergoes the mind shift to predictable and incremental improvement during the massive growth phase of the company in the center of the S-curve. It is also the time when the disruptive innovators have jumped ship to join the next generation of cutting-edge innovators and risk-taking disrupters that prepare to take the leap working on the next S-curve.
Which way to turn?
The question is where you want to be: the true risk-taker or the incremental improver? Understanding the trajectory and current location of your company helps to make the right decision for you. It can save you from frustration and be banging your head against corporate walls and be wasting your energy in a dinosaur organization that is just not ready anymore for your ‘big ideas’ and quick moves outside its production-house comfort zone.
This leaves some of us thinking which way to turn. If you are looking for predictability, longer-term employment (an illusion these days one way or another) and good night sleep, this is the place you will feel comfortable in.
Otherwise, dare to follow the risk-taking visionaries like Elon Musk (the brain behind PayPal, SpaceX, and Tesla Motors; see his recent great interview) to move on.
And then there is ‘intrapreneuring’ as a third direction that tries to change the company from within. (See ‘The Rise of the Intrapreneur‘)
To say it with the words of Niccolo Machiavelli, the wise and sober realist: “All courses of action are risky, so prudence is not in avoiding danger (it’s impossible), but calculating risk and acting decisively. Make mistakes of ambition and not mistakes of sloth. Develop the strength to do bold things, not the strength to suffer.”
Shoot for the moon (or Mars, if you are Elon Musk), change the world no matter what and enjoy what you do!
In times where many companies push their employees to work from home and employees request this new freedom, YAHOO’s announcement surprised putting away with it all and returning to the old 9-to-5 office hours. (WSJ, March 5, 2013)
Senior leaders like YAHOO’s new CEO, Marissa Meyer, have doubts if remote working models work – or they struggle how to make it work effectively.
When organizations move to remote work models such as “working-from-home” or variations of it, their primary objective is either
- Saving fix cost by reducing their office space footprint or
- Increasing the productivity of their workforce.
They cannot have both because once hard decisions have to be made, the other side falls short – and hard decision will have to be made on the way.
If the chosen approach is to increase productivity, the implementation focuses on how to enable employees to become significantly more productive in a sustainable way, even if it incurs cost lower than the productivity gains.
Open spaces for collaboration
Sadly, however, cost cutting tends to rank top on the list for large and mature organizations, which can ultimately sacrifice productivity. Reducing office space “footprint” aims to cut cost from entertaining the real-estate and work environment including everything from utilities, to furniture, to site security, to property taxes, etc.
In practice, individual (‘closed’) offices are replaced by open office environments with the goal to have more employees working in less, shared space. Setting up colorful open office environments with cubicle clusters or zones for different work purposes is often sold as boosters for creativity and innovation, which somewhat obscures the true motives.
These office setups typically mimic the environment and agility of entrepreneurial start-up companies. They suggest increased collaboration by enabling those spontaneous and valuable ‘water cooler’ talks that randomly bring together a diverse mix of employees to exchange their ideas and collaborate on a spur, which then leads to new products and creative solutions. Some offices spaces even seem inspired by “Willy Wonka’s Chocolate Factory” (with less edible elements): nice to look at and tempting to get close but caution is advised before taking big bites…
Why not to focus on cutting cost
While architecture and interior design can very well affect creativity and collaboration, there are many reasons why this approach tends to fall short:
- The goal of cost-cutting is to have more people sharing less space, so the open office environment works best when not all employees work there at the same time, which becomes the end-game of cutting cost. The approach consequently requires some employees to work remotely, typically from home as ‘tele-commuters’, which effectively leads to creating virtual teams.
Thus, not all employees are physically present at the same time to start off with, which defeats the idea of spontaneous meetings around the water-cooler or pulling teams together spontaneously as needed.
- Size does matter: start-ups take their energy and agility from everyone collaborating in the same space at the same time, which is the opposite scenario of large companies trying to reduce this footprint and, subsequently, ending up moving towards remote working models.
The start-up model does not scale for large, mature companies. This is one of the reasons why large companies often break the monolithic organization at some point to form more agile hence competitive entities. A lesson learned perhaps from Charles Darwin’s “survival of the fittest.”
- Since cost cutting has priority, typically, the workforce was trimmed down, so the remaining staff carries more work on less shoulders. Not only does this leave less time for the remaining office staff to hang out next to the water-cooler for a random chat, but there is less staff to meet and hang out with in the first place.
Little to no attention is given on how to make the remaining workforce more productive to manage the increased workload and invest accordingly, as here these ‘hard decisions’ come in and cost cutting is given priority.
Now, this does not mean there are no more water-cooler talks – they do happen and can be extremely valuable. But they happen less frequent and with a smaller pool of people you could possible bump into randomly. Since this “water-cooler innovation” model does not scale under the cost-saving paradigm, it effectively reduces the innovation potential resulting from random meetings overall.
What does your workplace look like, does this sound familiar at all?
Paying the price for cutting cost: Virtual Teams
Under a cost-cutting paradigm, the need for working remotely leads to the formation of more virtual teams throughout the organization. We already find 66% of virtual teams in Global 500 Enterprises include members from at least three time zones and 48% including external business partners (Harvard Business Review study of Project Management Best Practices in Global 500 Enterprises).
When ‘cost-cutting’ has priority, the performance of virtual teams still comes second. Faced with the increasing need to enable communication for a distributed workforce, for ‘cost-cutting’ organizations here comes the next challenge: how to facilitate collaboration and information flow on a budget?
This is one of the hardest decisions management is confronted with.
With tight budgets in mind, the focus turns to ‘enabling technology’ and often leads to implementing a better phone or teleconferencing system. However, cost-saving and -consequently- company-wide standards lead to compromises and mediocre features due to (what else could it be?) cost saving considerations.
What is the cost of ‘rich’ communication?
Face-to-face communication remains the ‘gold standard’ (more about the why follows in part 2 of this blog post.)
Typically, information-rich channels such as latest ‘tele-presence’ systems are disregarded for their ‘expensive’ price tag. They allow communicating in the broadest possible (virtual) way peer-to-peer.
If they are purchased at all, they often remain restricted for privileged use by executives; so there is an implied business case for rich communication channels.
Unfortunately, these are far less frequently shared with their staff lower in the organizational hierarchy. Regular employees and middle management are often enough left alone with more limiting conferencing systems and other technology to figure out how to make ‘virtual teams’ work.
Interestingly, I have never heard serious consideration given to quantify the opportunity cost, i.e. what the costs are of not implementing a tele-communication system that gets as close to face-to-face conversations as possible. It would be interesting to find out if the actual cost to buy a more expensive system is offset by the gains for its users and businesses across the organization, don’t you think?
Though this would be coming from the less popular approach to increase productivity…
Composing effective teams
Also the mix of the team members should be considered and lots more can be said about this aspect alone, so let’s just pick a few that that tend to be less on people’s minds:
For example, generational differences translate into different work styles and preferences than can strengthen or weaken a team. As an example: “Generation Y for managers – better than their reputation?“
Another soft factor that remains stubbornly neglected is the team composition of introverts and extroverts complementing each other for better results. Extroverts seem favored by hiring managers over introverts, but extroverts don’t necessarily make good team mates as recent UCLA studies show:
Introverts are often perceived anxious or neurotic, which feeds into the stigma of volatility and negativity that can drag on the team, when in fact they tend to work very hard so not to let their team mates down.
In contrast, extroverts appear to be the better team players yet in their core personality its all about being in the center of attention. Extroverts are good at building relationships and getting themselves noticed; this self-presentation may leave a good first impression but the self-centric core proves rather disruptive in collaborative situations, so the researchers concluded.
Also little attention is given to whom needs to work together and should be closer connected or even collocated; this approach of looking at network and workflow is usually sacrificed by enforcing cost-control top-down. Established departmental silos and cost-centers effectively become barriers for collaboration rather than by following the internal workflow and connections throughout the lower levels of the hierarchical pyramid that often remain hidden from the executive view down from the pyramid’s tip.
Why to Invest in communication and collaboration
A study on communications ROI by Towers Watson finds a 47% higher total returns to shareholders by companies that are highly effective communicators. (Capitalizing on Effective Communications, ROI Study, 2010)
Even more reason to focus on enabling collaboration and productivity – and to invest into enabling communication and relating technology accordingly.
Let’s leave the misery of why virtual teams fail here – check back soon for part 2 on How to make virtual teams work!
Here are my Top 10 posts for Employee Resource Groups (ERG) / Business Resource Groups (BRG):
The answer is as simple as this: Because it makes good business sense!
The increasing diversity of employees at the workplace led to employees gathering along affinity dimensions like birds-of-a-feather to form networking groups within organizations. The next step goes beyond affinity and establishes employee resource groups (ERGs) strategically as a business resource and powerful driver for measurable business impact and strategic innovation bottom-up.
Let’s start with what it takes to found a successful ERG on a high level and then drill down to real-life examples and practical advice. What you cannot go without is a strategy that creates a business need before you drum up people, which creates a buzz!
While many companies demand creativity and innovation from their staff few companies seem to know how to make it work. – Is your organization among those hiring new staff all the time to innovate? The hire-to-innovate practice alone is not a sustainable strategy and backfires easily.
Strategic innovation hands-on: Who hasn’t heard of successful organizations that pride their innovation culture? But the real question is what successful innovators do differently to sharpen their innovative edge over and over again – and how your organization can get there!
What every new employee resource group (ERG) requires most are people: the life-blood for ideas and activities! But how do you reach out to employees, help them understand the value of the ERG and get them involved to engage actively?
What do Generation Y (GenY) oriented Employee Resource Groups (ERG) share with the military? – More than you expect! A constant supply of active members is the life-blood for any ERG to put plans to action and prevent established activists from burning out. The U.S. Army faces a similar challenge every year: how to attract and recruit the youngest adult generation? Next-generation ERGs listen up: Let the U.S. Army work for you and learn some practical lessons!
If you are planning to found an ERG or are a new ERG Leaders, you might find the attached Q&A helpful.
It’s a long list to describe Generation Y with a commonly unfavorable preconception. This youngest generation at the workworkplacern after 1980, also called Millennial) is said to be: lazy, impatient, needy, entitled, taking up too much of my time, expecting work to be fun, seeking instant gratifications, hop from company to company, want promotions right away, give their opinion all the time and so on. But is it really that easy to characterize a new generation?Don’t miss my Top 10 Innovation posts and Top 10 posts for Intrapreneurs!
Finding a sponsor can be frustrating!
Have you ever had a great idea and went to your manager for support but found they were just not interested in it? Did nothing come out of it in the end, and you were disappointed? Perhaps, you just turned to the wrong sponsor for your project, a common mistake of intrapreneurs. Here are some thoughts on whom to turn for with ideas to make them happen within an organization.
Intrapreneurs are ‘executive champions’ that connect people with specific ideas (‘technical champions’) to ‘business champions’ who can provide the resources to make this idea happen; typically an executive sponsor providing funding and political support. More on intrapreneurship at The Rise of the Intrapreneur and the intrapreneurial role of the executive champion at How to become the strategic innovation leader? (part 2 of 3).
Managers and leaders innovate differently
Let’s look at the ‘business champion’ or executive sponsor. It is crucial to understand the motivation of executive sponsors for a simple reason: only if your idea or proposition fits their agenda are they be willing to listen to you and getting actively involved. Consider that they take on risk too in supporting as poor results also reflect on them. You need to know whom to turn to for what kind of idea to find adequate support.
For an intrapreneur, it is critical to understand the nature of the executive position. More specifically if you approach a manager or leader to find support for an innovative idea.
Managers and leaders look at innovation differently, hence both groups innovate very differently and for different reasons. It translates directly into their understanding of what ‘innovation’ is, its risks and rewards, and consequently their willingness to listen to you. Turing to the wrong executive easily gets your idea rejected and you may not even know why.
Let’s take a look how the views of managers and leaders differ and how this molds their understanding of innovation and what kind of change. On a side note organizations need both, managers and leaders. Each role serves a different yet necessary purpose in the organization; see “Leadership vs. Management? What is wrong with middle management?”
Managers focus on predictability
Managers are charged with running the daily business smoothly. They manage a well-oiled ‘machine’ of people, tools and processes to deliver a certain output, a product or service, reliably and at a fixed cost ceiling.
The paramount goal for managers is business continuity – it is the daily bread and butter of the organization and what pays your employee salary today. Running a fast-food restaurant is a good example, the expectation here is predictability: to deliver food to the customer at a specific quality level with as little variability as possible at a defined cost and within a certain time. A competent manager delivers this predictability reliably over and over again.
With operational targets clearly defined, the appetite for improvements focuses on speeding up the process or cut cost here and there without compromising quality. Favorable changes to the status quo are small, gradual tweaks. This is the world of optimization and continuous improvement.
Little risk, little gain
Managers need to keep the risk small to fail or to jeopardize the production process with its predictable output. The low risk of disruption comes at a price though as it limits also returns.
Here innovations are primarily of non-disruptive nature, they are incremental or evolutionary. This approach is process driven. It lends itself to automation as it aims to make the process repeatable, reliable, predictable. No senior executive needs to be closely involved in operations to keep this ‘machine’ running; it comes down to the floor manager executing.
This is also the environment of a conventional development project, the ‘next version’ of something and ‘getting it right the first time.’
With an incremental change in focus, managers tend to look for ideas in their own organization, think ‘suggestion box’. It means following a clearly defined and detailed process with development stage-gates or other review mechanisms that filter ideas typically the criteria of cost, time, quality and, more recently, variations thereof such as customer satisfaction and being ‘green’ and sustainable.
Managers are interested in learning about ‘best practices’ from outside the organization but are often enough reluctant to adopt and implement them if they appear to be risky and disruptive.
Leading in uncertainty
Leaders face a different challenge. They ask: what needs to be done to prepare the organization for success several years down the road with much uncertainty ahead? – Well knowing that the answer may disrupt the established organization.
It is this uncertainty that opens up the so-called ‘fuzzy front-end’ (FFE) to develop entirely new products or services: It is too early to know exact specifications of a solution at this time, the future markets and technologies are yet unknown. Leaders focus is on getting a deep understanding of the problems that customers face to develop the technology and capability to address and monetize them.
What we talk about here is, for example, a completely new product line, a major (adjacent) product line extension or a new (transformative) business model entirely. Think howiTunes Store started selling digital media and apps has changed the way we use technology and whose devices we use (hint, hint) – this gamble worked out for Apple and was based on a deep understanding what customers are willing to pay for.
With nebulous solutions in far sight, a tightly governed development process with stage-gates makes little sense because this development model is designed for incremental change and tuned for refinement. It stifles the creative and broad view necessary to create something completely new in an unpredictable and yet undefined scenario of the FFE where much imagination, creativity, and flexibility is needed.
Creative with discipline
However, flexibility and creativity do not thrive only in the absence of discipline or some sense of order. The early-stage research or design process does not need to be chaotic – it’s quite the opposite. A company like IDEO, for example, operates successfully in this space and is famous for their disciplined process and methodology in producing creative and tangible prototypes over and over again.
Note, we are not talking about final products ready to go on the self in your neighborhood store tomorrow. Check out this case study on how IDEO works in more detail: What does it take to keep innovating? (part 1 of 3)
This transitional step narrows down the broad funnel of uncertainty to develop a range of concepts towards increasingly detailed specifications of the final product. The development of the final product itself is better left to the established development organization – back to the managers to cross the t’s and dot the i’s, if you will.
Active sponsorship needed
With disruption and revolutionary change comes high risk. The outcome is unpredictable and the reward uncertain, failure is likely. Yet, if the gamble works out the rewards can be enormous and the key players ‘rainmaker’.
When exploring which direction to go, the serial intrapreneur’s approach is trying many things. Expect to fail most of the time. See what ‘sticks’ and explore this option more.
Rather than rigid procedural guardrails, intrapreneurs need to secure top executive sponsorship for their continued active support, political weight and funding. Thus, for a unique and exploratory venture what you look for is a leader, not a manager. There is no staged process to follow really, only success determines what was right or wrong.
Maxwell Wessel’s blog for HBR on “How to Innovate with an Executive Sponsor” has some good practical tips for especially if your project takes the company down the disruptive, transformative route.
What kind of sponsor to you need?
Distinguishing the professional motives of managers and leaders comes down to the question of ‘Innovation Strategy: Do you innovate or renovate?‘
In general, leaders act more as strategic innovators and game-changers assuming the role of a Sponsor or an Architect while managers take more renovation-associate roles such as a Coach or an Orchestrator. Follow the above link for a more detailed description of these roles and when to chose which role.
What is my idea again?
Start by taking a hard look at your idea first to find out which category it falls into. Then decide what kind of sponsor, a manager or a leader, is best suited to approach and is, therefore, most likely to listen and catch interest.
Even better if you can already identify the role associated with the nature of your project (Coach, Orchestrator, etc.) which helps you framing and pitching the idea or a specific project to the appropriate executive sponsor in your organization.
How to increase group intelligence for better decision-making – or why not to rely on a group of geniuses! New research breaks the ground to understand collaborative intelligence – but how to apply it to the workplace?
Better alone than in a team?
Think about this: What teams make the best decisions?
We all experienced it at some point: Even a group of the best and brightest people often ends up with poor decisions that do not do its individual member’s intelligence justice.
What goes wrong? How does a group of smart individuals, even geniuses, end up with poor decisions when they stick their heads together? What are they missing? Moreover, how can we avoid those obstacles to come to better decisions as a group?
Intelligence of individuals has been well studied for over a 100 years: A solid framework exists to measure the intelligence quotient (IQ). Individuals undergo a series of mental challenges under the premise that someone performing well in one task tends to perform well in most others too. Overall, the IQ is regarded as “a reliable predictor of a wide range of important life outcomes over a long span of time, including grades in school, success in many occupations, and even life expectancy,” as researchers put it.
Modern IQ tests consider an IQ close to 100 as average.
Does ‘Group Intelligence’ exist?
When we look at what it takes to make more intelligent decisions as a group than as individuals, the first question this raises is whether something like a measurable ‘group intelligence’ actually exists. If so, is it measurable and –perhaps‑ higher than the intelligence of its members?
Only recently, scientists took a deeper look at the intelligence of groups and made surprising findings. The joint team included MIT’s Tom Malone, whom we met previous in a post (“Collective Intelligence: The Genomics of Crowds”) as well as others from well-known academic institutions comprising the MIT, Carnegie Mellon, and Union College.
The researchers approached group intelligence following a similar systematic approach as the intelligence metrics for individuals. However, they linked group intelligence to performance as an endpoint, which makes their finding even more valuable for the workplace!
Outsmarting genius as a group
First, the researchers established that group intelligence in performance indeed exists and is measurable. They also found that the group’s intelligence does not add up to the sum of the intelligence of its individual members. In fact, the collective intelligence, or ‘c-factor’, shows only a weak correlation “with the average or maximum individual intelligence of group members” – this is remarkable finding! It means is that you cannot boost a group’s intelligence by composing or spiking the group with genius-level individuals!
Obviously, factors apply other than high individual IQ to increase the intelligence of the group.
The results from two studies consistently and overwhelmingly demonstrate that group intelligence outsmart individual intelligence – by far!
Here are more details on the science for those how want to dig deeper: Evidence for a Collective Intelligence Factor in the Performance of Human Groups.
Limited by a high IQ?
Individual intelligence only has a practical value to a certain point. There is an important difference between what an IQ test measures as general intelligence and what Robert J. Sternberg calls ‘practical intelligence’ in his book Successful Intelligence: How Practical and Creative Intelligence Determine Success in Life. The presence of one does not automatically imply the presence of the other.
What it comes down to is that a high general intelligence is merely a measurable value in the lab but it does not also translate into a more successful life! An individual IQ above 135 or so can lead to quite the opposite (for reference, ‘genius’ starts at 140 on Terman’s classification). The higher IQ becomes rather a hindrance than an advantage in real life: a very high IQ tends to clutter and confuse a genius’ mind with more irrelevant options, which make it harder for them to see the most applicable one and come to a decision.
In contrast, practical intelligence relates more to social savvy or ‘street smarts’ – a cunning and practical understanding that proves advantageous in the real world more than a high general IQ!
Here is the magic sauce!
Surprisingly, the strongest correlation of group intelligence is with three factors:
- The average social sensitivity of the group members, i.e. “reading the mind in the eyes” of another person. There is something to be said for bringing together emotionally intelligent people.
- Equality in the distribution of conversational turn-taking meaning an equal share of time to speak. Our society and businesses seem to favor smooth-talkers and attracted to extrovert and outspoken individuals that seem to signal competence, decisiveness, and determination.
Group intelligence, however, does not increase when there is a strong vocal leader, who dominates the discussion to push everyone in his or her direction. Be careful not to leave out the brilliance of individuals who may get steamrolled by the loud and dominating: introverts, in particular, are at a disadvantage. They are easily stuck in an extrovert world.
Given that the introvert/extrovert ratio in the USA is roughly 50/50 (according to the 1998 National Representative Sample), failing to include introverts effectively is a costly mistake, as it excludes their knowledge and valuable input to the decision making process ‑ and lowers the collective intelligence of the group. Introverts, for example, favor structured communication that plays to their strengths by allowing them to research and prepare; they need more time to express their refined response.
- The proportion of females in the group composition; the more women the better. This appears to account largely to a higher social sensibility that women have over their male group members in general. However, all three factors have to come together, so building female-only teams does not do the charm either.
In a nutshell
When we bring it all together, what surprises me most is how little of this solid research has penetrated the workplace. Where employees and management teams make decisions, the survival of organizations is at stake and relies on leveraging the collective intelligence of the group effectively.
A myriad of practical applications for these findings come to mind. Here are just two examples:
- Women still struggle to achieve gender equality in many organizations ‑ the amount of women in management positions is a widely used metrics that refers to the female proportion of the workforce. The common approach is to achieve this by ‘swinging the stick’ to establish and enforce quotas and leave it at that – Mission accomplished?!
Wouldn’t it be more compelling to offer the ‘sweet carrot’ of increasing group intelligence in leadership teams for better business results that includes leveraging the natural advantage of females?
Again, the female quota alone does not boost the group intelligence. We also need social sensitivity and equal shares of talking time. Thus, a flanking business application would go beyond how we compose teams based on gender. It considers social sensitivity measures and some structure to how we conduct group discussions or meetings to maximize the collective intelligence by including and engaging all participants. A challenge also for how we recruit, train, and evaluate our workforce.
Food for thought.