04 Nov 2002  Research & Ideas

From Lone Star to Team Player

If you're serious about building a collaborative company and want to reap the economic rewards from doing so, you have to screen out "lone stars." Harvard Business School professor Morten T. Hansen explains.

 

Editor's Note— When does a star performer become a corporate nightmare? And what can you do about it? HBS Working Knowledge's Mallory Stark conducted this e-mail interview with Morten Hansen.

Stark: Can you describe what you mean by "lone star?"

Hansen: A lone star is someone who performs really well in his or her job but does not help others. Or one asks for help and is sometimes even abrasive when asked to do something for the company that does not benefit him or her directly. The problem with these people is that they can poison the organization—they set a bad example for others if executives keep rewarding and promoting them. Managers may feel that they need them, of course, as they do perform well. So it is pretty gutsy to fire them in today's rather poor economic environment. But if you're really serious about building a collaborative company and want to reap the economic rewards from doing so, you have to screen for lone stars.

Q: Is there a particular industry or type of firm that is most susceptible to the lone star syndrome?

The problem with these people is that they can poison the organization.
— Morten T. Hansen

A: Companies, industries, and functions that reward hugely based on individual performance are prone to this problem. It is a problem in investment banking and can also be a problem in sales organizations where individuals are compensated for their own sales and not for helping others and sharing best practices.

Q: Could you describe the relationship between the collaborative organization and knowledge management?

A: Many companies have focused on knowledge management the last couple of years. While that has been a good start, it is only one part of the overall challenge of creating an effective collaborative organization. KM is only a special case of instilling a collaborative organization, which also includes coordinating activities and doing joint work across organization boundaries.

For example, Intuit's CEO, Steve Bennett, has worked hard to instill a collaborative culture in the company, but their the main focus is on coordinating activities, such as new product launches, across business units and functions, and the focus has been much less on KM. Whether it is sharing knowledge, coordinating activities, or doing joint work across boundaries, the essence of a collaborative approach is the same: to instill in employees the capacity to work horizontally across boundaries, without always having to rely on centralized command and a big corporate staff to make sure that the firm is integrated.

Q: You point to British Petroleum as an example of a large organization that was able to reinvent itself by instilling an atmosphere of collaboration and cooperation over decentralized individualism. How can large firms like BP collaborate among units and divisions and still remain financially profitable?

A: The approach at BP was developed precisely to improve the overall financial performance of the firm. What they recognized was that you can obtain both benefits: fierce focus on individual business units, which produces solid performance in each of the businesses, and an appropriate level of cross-unit interactions, which produces extra economic value through things like cost reductions, best practice transfers and additional revenues from cross-selling of products originally developed in one unit but are now sold in other units as well.

It has become a truism that sharing knowledge and collaboratingis good, but many times it is not.
— Morten T. Hansen

The trick is to develop managers that can do both well. I call them "T-shaped managers," that is, they focus on individual unit performance (the vertical part of the T) and contributions across units (the horizontal part of the T). BP has put in place several mechanisms to nurture T-shaped managers, including the development of peer groups and a dual performance review system where both individual and cross-unit performances are assessed.

Q: What is the biggest surprise that you have encountered in your research in the area of knowledge management and collaboration within organizations?

A: It has become a truism that sharing knowledge and collaborating is good, but many times it is not. For example, in one study that I just completed with my co-author Martine Haas at Cornell University, we studied whether sales teams were successful in securing client bids and found that many times sales teams that obtained lots of knowledge from databases and from colleagues performed worse (i.e., were more likely to lose the bid) than those than did not obtain and use such knowledge, in part because some teams underestimated the search and transfer costs involved in using knowledge and collaborating. The implication for managers is to know when to obtain knowledge and collaborate and when not to.

Q: What other research is going on?

A: With a colleague at London Business School, Bjorn Lovaas, I am continuing to investigate the essence of truly effective collaborative organizations. It is still a mystery to me why some companies are able to combine individual-unit focus and cross-boundary collaboration, while others are not. I also like to believe that the business world can become a healthier and more positive work environment if people know how to collaborate and are more willing to help others and ask for help. One thing we offer executives and managers of companies is a quick poll to identify what sorts of collaborative obstacles they may face in their organization and then we provide them with customized feedback.

Why Employees Don't Collaborate

by Morten Hansen

Executives first need to understand why people in the organization are not collaborating and sharing as much as they should.

There are four obstacles involving employees' motivations and abilities that must be overcome.

First, unwillingness to seek advice and learn from others. Employees may not want to seek advice across the organization, either because they believe they cannot learn anything or because there is a prevailing norm that people ought to fix their problems themselves. No electronic knowledge management system can fix this problem; simply making documents and links to experts available does not help if employees do not want input from others.

For example, some years ago executives at Hewlett-Packard's European operations created a performance system that compared times taken to process computer orders across factories in various countries. Some managers in the under-performing factories were at first unwilling to use this information to learn from others and only did so when senior managers intervened.

BP uses peer pressure to make sure people seek advice and learn from others. Senior managers keep a close eye on the extent to which a business unit manager asks for assistance from peers and will intervene if they seek too little. A peer challenge is an even more direct form: Peers, not superiors, will go directly to a business unit, challenge it and help it improve in areas in which it is under-performing.

Another method is to recruit employees who have a natural inclination to ask for help. A chain of restaurants in the U.S. does this deliberately. At interview, it asks: "What obstacles have you faced in a previous job that prevented you from doing a good job and how did you overcome these obstacles?" The desirable answer should include asking for help and communicating the problem to others, not trying to be a hero and fix it alone.

Second, there is inability to find expertise. There is often someone who knows the answer to a problem but it may be nearly impossible to connect the person who has the expertise with the one who needs it. Clearly, databases and electronic search engines serve a useful role here but more in the capacity of being "electronic yellow pages" than as self sufficient electronic repositories. In most management consulting companies, for example, consultants upload sanitized documents containing their finished work into databases, which are then accessed by other consultants who review prior work and contact the consultants who did it.

Another way to help people find expertise is to create transparent benchmarking systems. At Ispat International, one of the largest steel companies in the world, there is a system that performs costing at plant level and compares the various plants around the world. Managers can compare different factors in operating units around the world, use this information to spot deviations from best practice and then contact the best performing plant in certain areas.

However, technology has its limits. Expert directories become out of date and do not fully capture what each person knows. More importantly, they do not allow for creative combinations of ideas and individuals. Companies therefore need to cultivate people who know where experts and ideas reside. These "connectors" tend to be long-timers who have worked in many different areas in the company and hence have an extensive personal network. They see opportunities for new value creation based on the combination of talent, ideas, and expertise in different units.

Then there is unwillingness to help. Is knowledge hoarded in your company? Employees may be willing to seek advice but others are sometimes reluctant to share it. The growing emphasis on performance management has fuelled this problem: People no longer have the time to help others, or they do not care, because they are only asked to deliver on their own targets. While performance is important, executives also need to develop incentives to help others and cultivate a shared identity among employees. This is a notorious problem in many investment banks, where bankers chase their own opportunities without properly assisting others.

When John Mack took over at Morgan Stanley, he set out to create a more collaborative culture by changing the promotion criteria. Bankers needed to demonstrate both individual performance and contributions to others to become a managing director, the level at which bankers reap the most rewards—lone stars would no longer be promoted. Supported by a 360-degree review procedure, individuals started to cooperate on a much greater scale than before.

Lastly, there is the inability to work together. A "chemistry" problem can sometimes prevent people working well together, even if they want to and are part of a project team. It is a very different problem from the other three obstacles and requires different responses, including training sessions on teamwork, coaching people as they try to work together, and the development of strong relations between people from different units.

For example, a study of time-to-market performance of new product development projects in a high-technology company found that project engineers who worked with engineers from other divisions took 20 to 30 percent longer to complete their projects when they had not established a personal relationship. Engineers found it hard to articulate, understand, and absorb complex technologies that were transferred between divisions when they had not learned to work together beforehand.

Managers must respond to each of these obstacles in different ways. For example, developing an electronic knowledge management system will not help if the underlying problem is that employees hoard knowledge and will not seek help; it will only make people cynical about collaboration. Likewise, making promotion contingent on the extent to which people seek advice from others will not help if there is no way of identifying experts. All four obstacles need to be overcome for effective collaboration to occur. Solving one problem, but not the others, will not help.

Excerpted with permission from the Financial Times, August 8, 2002.