The business world has been obsessed with all things Internet lately. Companies that have attached a “” to their names have seen their market valuations soar almost without regard either to revenues or profitability. The valuation of these companies depends not on large production facilities, but rather on the effectiveness of a small team of individuals working together to offer products or services through a new distribution channel. The success not only of these companies, but increasingly all companies depends upon the effectiveness of the individuals within the company working together as a dynamic team.

Teamwork, a concept that a few years ago seemed to be simply the next management fad, is enjoying a robust comeback. It was never a management fad; rather it was and is a powerful vehicle for achieving top performance. A conference held on May 13 in Philadelphia sponsored by Wharton’s Center for Human Resources and the Center for Leadership and Change Management, gave senior executives the opportunity to learn from some of the best minds in business why teams can be so effective and how best to use them.

Jon Katzenbach, the individual who literally wrote the book on teams (The Wisdom of Teams), is more focused on the importance of teamwork than ever. But he is quick to point out that not every situation requires a team approach. There is a crucial difference between situations that require the attention of teams, and ongoing work within an organization that may at times require teamwork and at other times, move along more effectively and more quickly outside of a team concept. Katzenbach stresses that it is critical to determine when and where a team approach can assist and where a team approach might simply just slow things down and muddle the mix. Katzenbach’s key question could not be simpler: “Is this a team task?” The more complex the task and the less important speed is, the more likely it is that the task would benefit from a team approach.

It is essential that everyone within the organization understand exactly what a team is. Katzenbach defines a team as:

A small number of people (ideally fewer than 10)

Committed to:

–A meaningful purpose – they must believe in what they are doing

–Clear performance goals

–A common working approach

Mutual accountability – the team holds one another accountable for individual and group results.

Most organizations tend to set numerical goals and targets for teams: increase market share by 10%; reduce costs by 5%. Team goals should not be numbers-driven; that weakens the chances for success. Rather, the team must have a qualitative goal that everyone on the team understands, such as examining a new market opportunity, making a decision to expand or contract in a certain market, or dealing with a crisis. Setting numerical targets is important, but should not be the team’s objective.

There is a time for teams and a time for single leaders. It is not an either-or decision. Look at the situation, argues Katzenbach, and then determine whether it might benefit from a team approach. If so, create a small team with a specific goal and let them go to work with a great deal flexibility and freedom.

Donald Hambrick of Columbia Business School emphasizes Katzenbach’s call to provide the team with a distinct identity. This is especially important for teams composed of senior management. This group will share behavior, resources, and decisions. They will also share responsibility for the final decisions, so they must have a collective sense of identity and be committed to the goal. This becomes even more important at the senior levels of an organization. As individuals move up through the company, they tend to work less as part of a team, and more as individuals with specific responsibilities (e.g,. Executive Vice President for European Sales and Marketing).

Psychologist Janet Spencer, a consultant with Delta Consulting Group in New York, specializes in working with senior executives. She observes that top management have a legitimate concern about getting the best from their executives who are asked to serve on teams. Rising stars who are asked to serve on a team often have as their first question, “what’s in it for me?” As individual recognition becomes increasingly important for the executive on the rise, his or her willingness to operate within the confines of a faceless team will decline. The CEO must deal with these issues – they are real. Senior executives are not, by their very nature, team players. The team leader must be strong and top management must make clear the importance of the team’s task. The team must have a very clear, very specific focus.

Why Some Teams Fail

Teams do fail, especially at higher levels. Typically, these teams fail because team members are not fully committed to the team’s task and goals. Politics also interferes with a team’s work. Hambrick stresses that teams are much like families: there will be conflict and disagreement, but team members must learn to live with the conflicts and work through them.

The family analogy is appropriate. Teams do not work smoothly all the time, nor are they always appropriate. But teams can work extremely effectively to solve problems and create solutions in a highly competitive world. The first step senior management must take is to create an environment that encourages teamwork. Those who work on teams must understand the dynamics and be committed to the team’s goal. The team must have a clear focus: is it dealing with a specific situation, or will it deal with ongoing market opportunities; will membership remain the same for the team’s life, or will individuals come and go? What are the benefits to the individuals who are on the team, and what are the risks? All of these issues must be addressed.

Not every situation requires the work of a team. In fact, many situations are better handled by an individual. But there are many situations which can best be addressed by a small, cohesive team. Teamwork was never a management fad. It is a powerful resource that is often overlooked because of its seeming simplicity. Understand the power of teams and you can unlock greater potential within your organization than you had ever thought possible.