10/18/2018
DOUG FARREN: It's been said that talent wins games, but teamwork wins championships. Learn about how high performance teams can help middle market companies beat the competition.
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SPEAKER: Welcome to "The Market That Moves America," a podcast from the National Center for the Middle Market, which will educate you about the challenges facing mid-sized companies, and help you take advantage of new opportunities.
DOUG FARREN: People come to work every day as individuals. So how does a group of ordinary people become high-performing teams? That's the subject of today's episode of "The Market that Moves America."
I'm Doug Farren, Managing Director of the National Center for the Middle Market at the Ohio State University Fisher College of Business. We're the nation's leading research center studying mid-sized companies, which account for a third of private sector employment and GDP, and the lion's share of economic growth. It truly is the market that moves America. The National Center for the Middle Market is a partnership between Ohio State and SunTrust Banks, Grant Thornton LLP, and Cisco Systems.
With me today is a special guest. John Schaffner, Senior Lecturer in the Department of Management and Human Resources at Fisher College of Business, and Director of the Coaching Program for the Fisher Leadership Initiative. As well as a doctoral candidate at Case Western Reserve University, studying millennials and coaching. Welcome, John.
JOHN SCHAFFNER: It's really nice to be here. Thank you.
DOUG FARREN: Great. So John the center released a study of the drivers of growth in midsized companies. We took literally five years of research data, 20,000 different midsize company data points, and analyzed that to understand what were the main factors driving growth.
What we found was that 25%, about a quarter of company growth can be attributed to talent management. Finding the right people. Keeping the right people. Developing that talent.
JOHN SCHAFFNER: Firing the right people.
DOUG FARREN: Perhaps, perhaps. But combined, what this is telling us is talent perhaps matters more than finance strategy, operational efficiency. Does that surprise you at all? What do you think about that?
JOHN SCHAFFNER: Not at all. And I'm sure the tone of my voice will demonstrate a little bit of frustration with that being seen as something novel. I think we all know from our own anecdotal stories that the people that we work with matter. And that we go to lunch, and have beers with, and interact with people who we have a social identity connection to.
We're able to create-- to get a little bit nerdy-- emotional contagions through either the way that we create resonance in the workplace or the way we create dissonance in the workplace. And I could talk a little bit about those, because that kind of factors into my classes and my research. But really, this idea of teams and talent, and managing it, I feel like sometimes comes at it from a different perspective.
And I guess, as I'm speaking out loud to you here-- and I appreciate you listening to me as I speak out loud. And unfortunately, this is kind of the way I think is, I'm a practitioner scholar. So I've moved from a world where-- I used to be a tour manager with the jazz trumpet player, Wynton Marsalis, who is quite a famous trumpet player, as well as bandleader, as well as leader of a nonprofit, Jazz at Lincoln Center in New York City. And I was able to sit by his side for six years when I was just a knucklehead, when I was just 22 years old. And I was taking his bands out throughout the world.
And I think, in terms of this topic, we're kind of starting to edge towards this concept of team. Is that what we're playing around with a little bit, right? So this idea of talent and team seem interchangeable in a lot of ways. Like, how do you get the right team? How do you put those sort of teams together?
And I'm being very tangential here. I'm aware of that. But your question just started-- it illuminated this idea of going all the way back to that beginning of my career, which is like, how do you create a band? How do you put together a musical band?
And is that is that a paradigm that actually works, necessarily, for an organization? Large or small. Or middle market, necessarily. Does that make any sense to you?
DOUG FARREN: It does. It does. That makes perfect sense.
And so therefore, I would assume that it doesn't surprise you that industry doesn't really matter either, right? Sometimes, you think of teams being more important maybe in, oh, I don't know, places where there requires, maybe, a little bit more collaboration. But yet our data would suggest that it really doesn't matter. This is prevalent across all industries. Does that surprise you at all?
JOHN SCHAFFNER: No. And I think what you bring up there is-- if we want to get granular in terms of, what we hire for, and how do we interview people sometimes? Which is very much within the sweet spot of what talent management ultimately is, is how do you source talent?
How do you develop talent? How do you offload talent? Either to a retirement, or to another organization. Those are parts of that process.
And within that process, you want to think about, what do you ultimately want to grow to as an organization? And you brought up this word earlier that I actually wanted to jump on. And I'm jumping back to it, because I just remembered it now.
This idea of growth. And are you in the middle market. And this idea of growth seems to be a word that sometimes I want to challenge. Is that really the goal? Is growth the goal? As a small company, what does growth mean, in your opinion?
DOUG FARREN: Well--
JOHN SCHAFFNER: How do we define this idea of growth, Doug?
DOUG FARREN: It can mean a lot of different things, right? Traditionally, I would say we look at it as growing profit.
JOHN SCHAFFNER: Right. There's a financial component to it, right?
DOUG FARREN: Increasing your top line, decreasing your bottom line.
JOHN SCHAFFNER: But is that good for everybody?
DOUG FARREN: Not necessarily.
JOHN SCHAFFNER: So I push against that sometimes. But I come from a very hippy side of the world. So I also worked for this small, midsize-- well, I guess we were midsize at the time-- called Manta Media here in Columbus after I left a career at Home Depot and Abercrombie and Fitch with these massive companies. I was really interested in going to a smaller company to see what the trappings of growth were. I wanted to see how a company that wasn't public, like Abercrombie and Home Depot were.
We had clear systems put in place around growth. We were responding to the capital markets in our quarterly fashion, in our quarterly calls. If numbers were up or numbers were down, the leash was yanked in certain ways in terms of where your budget was. And you always wanted to run out of your budget by October, because God forbid you're not in line with them, you're not going to be able to spend your money.
So there was this sort of cause and effect component around growth. And growth was one of those things that you'd become somewhat inoculated against. You don't challenge this idea of growth.
So what my thought has slowly emerged to is-- and I got this working at Manta-- was we were a small firm, about 75 people. To help us bridge to 125, we had some corporate backing. We had, actually, some Silicon Valley investing that gives a valuation of about $250 million at the time.
And everyone was like, OK, we're backed by big money. We have this board of directors. How do we grow? What's growth all about?
And we sat down with the executive team, and we just had it out for a while. And we came out of that meeting with a different word, which was, how do we thrive? And how do we flourish? Which brings in a broader conversation to me, which is about the whole person.
So you speak about growth most specifically, and you measured it from a financial perspective. A quantitative analysis. And I think that's totally understandable.
But that's not the whole story. You want to think about talent, you're going to start having to have a conversation about generations. When you start talking about generations, you're going to have to start saying the M word, or the C word, which is millennial and centennial. What are these generations going to do? How are they going to affect us?
And I'll be very frank with you, because some of my research orients around them. They respond to the concept of flourishing much more than they respond to the concept of growth. Because the idea of growth is-- it's not necessarily anathema to their worldview. It's, in some ways, I would say, incongruous.
DOUG FARREN: Hm. Interesting. So just as you're challenging the definition of growth, I think you've also challenge the definition of a high performing team, or at least that term. Could you describe that a little bit? What do you view as a--
JOHN SCHAFFNER: Well, a high performing team is not what my New York Yankees did last night. So that would be the opposite. Losing 16 to 1.
But quite frankly, I'll use a sports analogy because sports analogies are easy for us to understand. It's a pretty simple heuristic for us to be able to work through the complexities of things like teams, because you have a human being within a system. All of a sudden, that system becomes an open system, meaning that complexity is afoot.
You just hearkened in chaos because there are three of us sitting in this room. Chaos is bound to happen. I guess especially with me and a microphone in front of me. It can be part of that.
But this idea of high performing teams. So does high performing means-- is that a financial measure?
DOUG FARREN: Could be.
JOHN SCHAFFNER: So what does that mean? How do we define high performing? And is high performing to win?
So in a sports analogy, it's easier. The idea is to win the game, to win the World Series, to win whatever event it might be. The Red Sox did that last night. They did that by having a team that had a multiplicity of talents. I think that's one of the things that is indicative of high performing teams, is one that has the capacity to have a multiplicity of talents as opposed to a paucity of them, so to speak.
My Yankees, they can hit for power. They're handsome. I don't know if that translates into anything outside of season tickets. And they have some name recognition, and they have some pretty solid pitching and a pretty decent bullpen. They're lacking in defense, and they're lacking in just base hits when you need them.
The Red Sox are very different. The Red Sox have only one weakness. That's their middle relief. But everything else, they are massively strong.
And so I think part of that is a sense of inventory. How do you inventory what talents are needed? And then, what talents are going to ultimately be needed, I think is also the conversation we have a hard time having.
DOUG FARREN: So it's about the complementary sum of the parts, but also maybe that they're strong enough to overcome maybe any single weakness, in your example?
JOHN SCHAFFNER: I think you hedge your bets that way, for sure. But you come up with the complexity around hiring is challenging. I think I'm chasing my tail here a little bit too. Like, how do you pay for things that you may not necessarily think that you ultimately need?
So Google tried to attack this problem. So as Google does, which is-- I'm sure, now this is going to go onto the interweb, and now I'm going to have my email address revoked. But Google has a wonderful capacity to try to solve the world's problems. I have deep respect for the fact that even something that doesn't seem like it's in their lane, they consider in their lane.
So what they did was they had a research question. The question you're asking me. What is the source code, let's say, of high performing teams?
And they started with a hypothesis, which was one that I think we all ascribe to, which is like, if we get along, if we're beer buddies, then we're going to work really well on a team together. If we like to go and cheer on the Buckeyes, or go to karaoke or what have you on a social dynamic, that's the trappings of a good team. So this idea of friendship was ascribed to good teams.
So that hypothesis was proven false in the survey that they did. So they had a reputable survey. They called it Project Aristotle, and a quick Google search-- no pun intended-- could pull up the result. And there was a good New York Times article about it.
And essentially, they came up with two components of high performing teams that were somewhat surprising. But not necessarily to me. One of them was-- the reason why it wasn't surprising to me, because I've seen it in my classrooms.
And one of them was the capacity for everybody to take a turn. So the reason why that's interesting to me is because I teach MBA courses. And by and large, the paradigm of MBA courses are set up so that people have conversations. So you're learning from the knowledge that's in the room. The collective intelligence is something that you're paying your money for.
And when that doesn't always show up, I always say, we're dumber as a class. Like if there's a third of the class that's dominating the conversation, and 2/3 of the class is just listening, we're missing the mark a little bit. Google kind of proved that a little bit, which was--
There's also a lot of implication for this around bias. Our natural orientation to biases. We have a treasure trove of biases by being human beings. Other people taking turns speaking, one, lowers the capacity for bias to show up. And it also allows for what's called team voice to be eliminated, which means you get closer to a sense of truth, for lack of a better word, when more people speak up.
What it's also an indication of is what Google finally said. While their second measure was the emotional intelligence of that group-- and I can explain a little bit of that too. But the emotional intelligence of that group, combined with the group orientation towards everyone turn-taking within expressing themselves, led to what they called psychological safety, which was the sense that I can be more myself here. And so that was one of the trappings of high performing teams at Google, most specifically, was this element of psychological safety.
And they quantified it in certain ways. There's an online test called the Eye of the Mind test in which you look at, I believe, 36 people's eyes. Everything else is blacked out but sort of a strip across their eyes is demonstrated on the screen.
And you look at these 36 eyes, and you determine what emotion you're seeing. It could be contempt. It could be anger. It could be frustration. It could be flirtation. It could be a whole litany of things. And you figure out from looking at these eyes what emotion you're seeing.
And then, apparently, the high performing teams collectively scored something like 26 or 27 out of 36, which is a high emotional intelligence score. We gauge people's intelligence by looking at each other in the eye. And so that was an indicator of emotional intelligence. That was a long answer, but one that I hope was somewhat relevant.
DOUG FARREN: Sounds very interesting. So what can companies-- or maybe more specifically, leadership at companies-- do to enable some of those things, or support some of those things? What is the role of the owner of a midsized company, or the CEO? What could he or she do to foster that environment?
JOHN SCHAFFNER: That's a good question. And so I will answer that quickly that one of the other indicators of high performing teams is this idea of a shared vision. So we look to leadership for that, right? We look to leaders who create a sense of resonance with others.
So if we're looking to leaders-- and looking to leaders most specifically-- we want leaders to be resonant. And resonant leaders means that they create a sense of compassion, and they create a sense of mindfulness, and they create a sense of hope with the people that follow them. So I can explain that a little bit more, but that would be a question as a leader. If you want to engender an environment that's safer, you should engender an environment in which you first take on the responsibilities of being more of a resonant leader.
So how would you rate yourself on your level of compassion? And compassion can be more detailed in terms of a very simple equation. Compassion is empathy plus action.
So Doug, if we are in the same office all the time, and you're usually bubbly and friendly-- as you are today-- and one day you're not. Empathy is like, oh, he's probably having a bad day. Maybe you too are a Yankee fan, and you're a little down.
And I can just sort of nod and move on. I notice the emotion. I'm a social being, and I'm quite deeply skilled in emotional intelligence. We all are, actually. That's part of our ancient brain.
But I notice that, but I don't say anything to you. That's empathy. I can-- ah, he's feeling bad today. I'm not going to bother him.
Compassion is coming up and being like, hey, is everything all right? You just don't seem like yourself today. That's compassion.
And the groups at Google that were seen as high performing teams were ones where people had the comfort level-- the psychological safety, is the words they were using-- to feel comfortable in being able to address that. That's compassion. Compassion is empathy plus action.
Leaders who do that are powerful leaders. I am a coach. My area of expertise in coaching. I'm an executive coach. I do a lot of that work. And one of the core components of coaching is listening.
And one of things we talk about in my class all the time is, if you can listen to somebody's emotional state-- which doesn't have sound, necessarily, but it has a look-- and respond to it, you actually make people feel like they were listened to much deeper. So if you're talking to someone, and you say something to the effect of like, it sounds like you're really upset today, or, your voice cracked there when you were talking about that, is everything OK, that's listening to an emotion. That's a reflective listening response. That makes someone feel heard far more than me repeating back to what you said, or answering your question, necessarily.
So that's a part of compassion. The other piece of mindfulness is, how do you operate yourself in a state of awareness? Mindfulness is, am I aware of my emotional effect on you? Am I aware of whether my jokes offended you or tickled you? Am I aware of, when I walk in a room, do people turn to me and have eyes bright, or do people go back to their desks and shoulder up?
One of the tests I ask my students to do is, next time they go into a conference room and they get there early for a meeting, watch what data comes to you. Do people walk in, flip open their phone, and get onto their phone? Do they say hello to you? Do they nuzzle up next to you? Do they have a conversation with you about your weekend?
Those are all very informative data points about what they think about you without them saying, I think you're a piece of, or, I don't want anything to do with you, or, I would like to build a relationship. Those are all data points that is within that bucket of mindfulness.
The other component is hope. So if leaders can create a sense of compassion around the people that they work with, they live with the orientation of mindfulness, and they create hope, which is-- hope is not nonsensical. Hope is something that's actually possible. But something I would like to endeavor to too. Something that's impressive and reachable.
DOUG FARREN: So building on this a little bit, I want to talk about family businesses, because--
JOHN SCHAFFNER: 60% of the world.
DOUG FARREN: And about 40% of the middle market. So a lot of these things that you just described so well, they can be overlooked, or maybe even taken for granted with a family dynamic. So what do you think needs to happen in a family-owned business? Do they need to overemphasize hope, and empathy, and compassion? Or what do you think might be different from, say, I don't know, public [INAUDIBLE], or even just a normal company?
JOHN SCHAFFNER: That's a really good question that I haven't really contemplated long enough. But this idea of a family is an aspirational state for most organizations. We should be a family. Our culture is like a family. They always speak to family.
And actually, most families I know have more dysfunctional components to them. And I think even when you start to throw in the challenges and the trappings of business, all of a sudden, you've created--
DOUG FARREN: There's more expressions.
JOHN SCHAFFNER: Right. And then one of those things that's always challenging in the workplace is this idea of fairness. And so nepotism. Does that fall into the conversation? And fairness is always challenging as people are endeavoring to-- well, I'm never going to be a leader here because I'm not part of the family, right?
DOUG FARREN: Sure.
JOHN SCHAFFNER: So how does that dynamic play there? I think it probably-- I don't know if you overemphasize it, but it's still a thing. Despite the fact that there are family ties, we do interact as human beings in certain ways. We do still create emotional contagions that make people feel good or make people feel disengaged.
I think a mother who is in charge of a big conglomerate, or a middle-sized market company, who leads with a sense resonance is going to get more out of their people-- and the data shows that she'll get more out of her people-- if she orients herself from a state of compassion, mindfulness, and hope. And so that's my quick answer, is here, rub this on anything and you'll be all right. That's my snake oil.
Unfortunately, it's not really snake oil. It's actually founded in a lot of brain science, just coming out, of our capacity now to realize that the neurochemistry of human interactions is something that we can track now. And so the way that you interact with somebody, be you a parent, or be you a fellow family member, has an effect on the brains around you. And so understanding that, I think, would be the first thing that I would discuss.
DOUG FARREN: Sure. Let's go back to the millennials and centennials. What are going to be some of the challenges-- so you think about, we're going to have this period of time where there could be four generations in the workforce together. Boomers, X, millennial, centennial. What do you think are some of the challenges are?
JOHN SCHAFFNER: There are now, actually.
DOUG FARREN: Well, there are now.
JOHN SCHAFFNER: There are now.
DOUG FARREN: As these younger folks come up through the ranks, become leaders in companies, what do you think-- you mention the idea of a flourishing environment being more attractive. What do you think are going to be some of the other necessary components to create a successful environment?
JOHN SCHAFFNER: Oof. Buckle up. So what are going to be the necessary components of these upcoming environments? Well, let's just talk about what's going on presently. And maybe we can speculate together as to what's going to happen.
What I'm seeing now is-- the numbers alone bear out that there's about a 100 million-strong millennials. And I'm using the definition of born after 1980, and centennials is born after 1996. There's some argument that there might be a one- or two-year leeway in there, but for my studies, I put my stake in the ground around those dates.
So the millennials are 100 million strong. The Gen Z, or centennials, are much smaller. And so we're looking at these bookends in the 20th and 21st centuries around these two huge cohorts. Baby boomers and the millennials.
One is probably going to retire a little slower than I think we expected them to. And as they retire, we have this other cohort that's going to fill those spots. What is happening-- and is part of, again, what I think is happening, and I think it's going to continue happening-- is part of the hypothesis that's driving my research, which is, these millennials are being called to lead much sooner than our generation. I'm Gen X. Proudly so. I still don't believe in authority, and et cetera, et cetera.
But I was put into leadership positions eventually, but I was able to cut my teeth, and stumble, and I didn't really have my strongest [INAUDIBLE] until I was probably in my 30s. I guarantee you that-- well, I worked at Abercrombie and Fitch, where my job as the leadership development coach to build out a leadership development model to put a 23-year-old-- in my mind, a kid-- running a $100 million flagship store in Paris with seven other direct reports who were 22.
So all of a sudden, the responsibilities thrust upon this generation is very real, and is very present. So what are the trappings of that? What are the responsibilities around leading when perhaps you're not ready for it? I think that's happening.
So I think, here at Fisher, one of my areas of passion is, how do we push down leadership responsibilities, and conversations, and coaching conversations-- which I feel is hugely aligned to being a good leader, being a resident leader. How do I start to bring that to bear into my undergraduate classes?
And I have an undergraduate class right now that's mainly Gen Z, and they're eating it up with a spoon. I was actually quite honestly very nervous about broaching some of these topics that I talk about with executives. And they understand it, and conceptualize it really quickly, because they know that that's going to be what they're being asked to do.
So I think that's one aspect of it, which is, I think that both of these generations are going to be called to lead. They're also going to be called to lead in different environments that we are-- the hierarchy of old is no longer going to be the standard of organizations anymore. Hierarchies are seen as unfair. We're seeing a lot of aspects of the crumbling of hierarchies.
There's still plenty of people within the workforce-- women, under-supported groups-- that aren't getting the fair shake. And a lot of people think that, mainly, the hierarchical system-- which really was born from the Allied success in World War II, but was a military model that worked for a while. But it doesn't work anymore because of these inherent aspects of it that are false. Not false, but are not as supportive.
So the next thing is-- kind of taking full circle to your conversation earlier about high performing teams-- there's more of a cohort, there's more of a collective, there's more of a group approach. There's more of this ability to interact with folks on team levels. Team groups, pods, that sort of working group. But then that brings up another complexity, as I--
DOUG FARREN: We'll save that for another podcast.
JOHN SCHAFFNER: --think about that too.
DOUG FARREN: So let's just wrap up with one final question, which is, if you or I were the leader o a middle market company, what would be the two or three biggest mistakes that could be made to crush team performance, or-- what would be the things to avoid? And then subsequently, what could be the one or two things-- if you were looking to improve your teams, what could be done as a leader?
JOHN SCHAFFNER: So the things that you want to avoid. Let's go with the things to do. The things to do are, be excited about the millennials coming to the workforce. Embrace them. They're bright.
And they've been miscast. I assure you. I've worked with plenty of them during my Abercrombie experience. I work with them daily. Hundreds of students a semester here.
I'm deeply impressed with them. I am. I am enthusiastic about them. So much so that I'm back getting a PhD at the age of 47 and studying them in a developmental way.
So I'm totally jazzed about this generation, because I think the world needs changing, and I think they're the ones to do it. Whether they want to or not, they are the ones to do it, because they have to. Because our generation, it's too late for us.
So I think one of the things I would encourage is embrace it. Embrace this change and understand that change is happening. The other piece is to hearken in these ideas of the whole person. This idea of flourishing is a conversation that emerges outside of the quantitative, and it involves both the quantitative and qualitative.
And I think we all, as human beings, want our full selves to show up and work. And that sounds kind of cheesy, and maybe cliched, but it's very, very true. I want you to know me authentically. I don't want to just know you at work, and who you are at work. I don't like that facade. I think that's becoming more and more annoying to people.
And I think what you're seeing is a blending of a lot of things that used to be staunchly divided in the past. An example of that is, we're going to have to rely on corporations to solve social problems that, in the past, they would never have solved before.
But you know what? Apple's probably going to have to build some bridges for us. Right? And I mean that not technologically. They're going to have to build a bridge that cars can drive over, because our infrastructure is not going to be able to pay for it.
There's more wealth in corporations right now than there really is in the federal government. And you're already seeing those. They're going to have to solve some of our societal problems. Our big, wicked problems, from drunk driving, to racism, to inequality of all sorts of shapes and sizes.
That used to be seen as purely the auspices of the government. And it's not anymore. There is this blending of generations. There's this blending of work and life. And I think people want to show up with that sense of blending also being respected by the leaders that-- for whatever-sized company that they're going to.
DOUG FARREN: Awesome.
JOHN SCHAFFNER: I hope that makes some sense.
DOUG FARREN: Yeah, no, it does. This has been great. I want to thank you for your time. Thanks for joining us today,
JOHN SCHAFFNER: My pleasure.
DOUG FARREN: Thank you again for listening to "The Market That Moves America." Never miss a new episode. You can subscribe to the podcast on iTunes, Stitcher, Google Play, or wherever podcasts can be found. Or you can subscribe and learn more about us at our website, which is middlemarketcenter.org.
Again, thanks to John Schaffner for joining us today, and I look forward to future episodes. Thanks.
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