Teamwork Leads to Business Success
Melissa A. Adams
A recent study at the Johnson Graduate School of Management at Cornell University has found that senior management teams with healthy group dynamics play a more significant role in a company's financial success than a CEO with strong personality traits.
The findings are reported in "Organizational Performance and CEO Personality: Explaining More of the Variance Through Top Management Team Group Dynamics," a paper by Randall S. Peterson of Cornell University with Pamela Owens and Paul V. Martorana of the University of California at Berkeley.
The group used historical accounts of teams from nine major companies, including Eastman Kodak Co. in Rochester, N.Y., that adapted to changing economic conditions from the late 1970s to the early 1990s. It found that management teams with healthy group dynamics could be credited with an approximate 40 percent return on company investments and a 35 percent increase in income, when other factors are controlled. These teams, sharing their CEO's vision, were empowered to use employee strengths to the greatest benefit.
The study found the following characteristics common to the companies that survived profitability cycles:
- A clear sense of direction that balances control with flexibility to hear new information.
- The ability to function as a team that shares strong values and is open to taking risks.
- The strength to distribute decision-making.
- A positive outlook on the future.
The history of Kodak illustrates one example of success. During the period that Peterson studied, it reached a plateau of more than $10 billion in sales in 1981 and saw technological advances such as an electronic image sensor featuring 1.4 million pixels.
Stumbling blocks for unsuccessful companies included an inability to take action or a delay in action when faced with a crucial decision, combined with an unwillingness to distribute responsibility, Peterson said. At these firms, management teams placed a fear of personal failure above company loyalty.
Published: September 1998