8 Crafting an Infrastructure for Innovation Embedding X-Teams
Throughout this book we have talked about today’s exponentially changing environment. Not only is it a VUCA world (volatile, uncertain, complex, and ambiguous), but it’s a VUCA world on steroids. Added to the equation is the incredible speed of change. The technical data being created in the world is increasing rapidly, and the pace of innovation is skyrocketing. In response to this environment, organizations have been changing—moving rapidly from command-and-control bureaucracies with centralized leadership and formalized roles to more nimble, agile, networked firms with leadership at all levels.
To be sure, this transition was pushed forward by the Covid-19 pandemic, which resulted in more remote and distributed work, more use of artificial intelligence, and greater reliance on teams and on teams of teams. For example, multiple teams working across boundaries in pharmaceuticals, biotech, government, and universities, and working with financial backers, led to the development and distribution of vaccines and medications that helped to stem the pandemic death rate. Competitors became collaborators, and regulators, usually seen as blocks to getting drugs to the market quickly, became facilitators of faster testing and access.
These trends continue today and support the use of x-teams to create distributed leadership and more-nimble forms of operating. Distributed leadership emphasizes giving people—up and down the hierarchy and across the ecosystem—the autonomy to innovate and collaborate. It involves flipping the organization on its head, allotting employees lower down in the organization the freedom and power to come up with new ideas, products, and processes that further the organization’s goals.
We have seen this distributed leadership in action with x-teams. In many cases, senior leadership sets the stage to empower such teams. The Cascade team at Microsoft felt empowered to step back and redefine the product development process to find the voice of the customer and innovate because Satya Nadella, the CEO, created a culture of learning and distributed leadership. In turn, the team was organized to share power with other people and parts of the organization when their input or expertise was needed. Similarly, the Spin-In team at Takeda—started after the implementation of x-teams—was tasked with creating a more agile drug development process after Andy Plump, the head of R&D, started the company’s Dare to Discover culture of innovation. We will come back to this team later in the chapter.
But creating a distributed leadership organization through x-teams does not happen with a snap of the finger. There are three key steps that need to occur at the organizational level to establish an environment where x-teams can thrive: (1) designate the right leadership roles, (2) power up your people with leadership skills so that they are capable of leading at all levels, and (3) create an incubator of x-teams to support a nimble, networked learning approach. Let’s explore each of these steps.
Designate the Right Leadership Roles: Flip the Hierarchy
A study found that in nimble, distributed leadership organizations, there were clear leadership types at the bottom, middle, and top of the company (although leaders at all levels could play any role at any given time). The study identified three types of leaders—entrepreneurial leaders, enablers, and architects—that are needed to create distributed leadership throughout the organization and across its boundaries.1
Entrepreneurial Leaders
Entrepreneurial leaders are those who come up with the products, processes, and business models needed to keep pace with a steady stream of innovation in an uncertain world. These are the leaders who create and work in x-teams, and they have three key attributes. First, they are self-confident and willing to act, because in a nimble, distributed leadership organization there is less order giving and more autonomous action. Second, they have a strategic mindset. That is, they understand the goals and strategy of their organization, unit, or team so that their innovations are aligned with key strategic initiatives. Finally, these leaders attract others so that they can create the support for the change initiative to gain momentum in the organization.2
For example, when the Museum of Modern Art (MoMA) in New York completed a major expansion in 2004, senior curators immediately began thinking about what would come next. These entrepreneurial leaders understood that the museum was competing with not only existing art museums but also an expanding cadre of commercial-sized, private contemporary art galleries.3 MoMA would need to find a new way of presenting its collection to a new generation of museumgoers whose preferred way of observing and learning is informed by their experiences with digital searching and browsing.
Curators eventually settled on the idea that, rather than the traditional chronological approach, featuring paintings of the same artist or artists of the same period, the museum’s collection should be combined around themes, like movement or shape. An extraordinarily large donation to the museum in 2016 allowed this new strategy and mission to come to life. After a massive redesign of its galleries and a three-month closure, the new MoMA reopened its doors in the fall of 2019.
In one exhibit a Picasso is paired with a painting of a race riot by Faith Ringgold from the 1960s. Paintings, drawings, prints, and even performance art are paired with photography and architecture rather than being shown in their own exhibits. The plan is to have sixty galleries reconceptualized on a regular basis.
The other entrepreneurial leaders in the story are the curators and their teams who create these galleries on an ongoing basis. For example, the chief curator of architecture and design, Martino Stierli, who worked with a team on “Design for Modern Life,” an homage to the Bauhaus school of the 1920s that blended paintings by Paul Klee, chairs by Ludwig Mies van der Rohe, a Soviet film, reams of fabrics, and a kitchen from 1926, noted that it made historical sense “because these people were all doing architecture, painting, and everything at the same time.”4 Other curators and their teams create continuous innovation by taking regular trips across the globe to learn and listen, while also inviting colleagues from all over the world to comment on their work. These leaders are stepping up with a strategic mindset while stretching the nature of exhibits in the museum.
Enabling Leaders
Enabling leaders assist entrepreneurial leaders in their innovation efforts, since innovation often breeds resistance and entrepreneurial leaders may be too inexperienced to weather the challenges.5 These enabling leaders coach and develop their less-experienced colleagues and connect them to the broader organizational and stakeholder community. Since entrepreneurial leaders often create and work in x-teams, taking an external approach, enabling leaders can help find the appropriate experts, sponsors, and allies that x-teams need. Finally, these leaders communicate with entrepreneurial leaders, making sure that they are aware of key strategic priorities and the vision so that they can align their goals with these priorities.
Ann Temkin, MoMA’s chief curator of painting and sculpture, knew that the entrepreneurial department leaders (i.e., the curators) and their teams were not experienced at creating the new interdisciplinary exhibits that were part of her vision. Thus, she took on the role of an enabling leader by creating mandatory meetings where these leaders could work on joint proposals. Here they could argue, struggle, and experiment in a safe environment to refine their approach. Moreover, Temkin provided coaching and direction to help the change along.
Architecting Leaders
Architecting leaders are most often found at the top of the organization. They create strategy, vision, and organizational change, often taking their cues from both the external environment and the internal ideas coming from below. These leaders mold culture and redesign the organization when necessary.
Returning to the MoMA example, we see an architecting leader in Glenn Lowry, the museum’s director, who set the stage for the change by committing to move from focusing primarily on temporary exhibitions to showcasing the whole collection in rotating theme-based exhibits. As Lowry noted in a New York Times article, “We as institutions are so trained to treat our temporary exhibition program as the main tent. And we made the commitment, financially, programmatically and intellectually, that we’re going to shift that. That our main tent is our collection.”6
Senior curators followed the lead, working to create this shared vision and culture. They established an in-house think tank and rewarded new cross-disciplinary ideas. They studied other museums, like the Centre Pompidou in Paris. They initiated a “try everything once” mantra and worked with others to set the vision to become, in Temkin’s words, a museum “of our time.”7
Power Up Your People with Leadership Skills
As seen in the examples above, creating a distributed leadership organization filled with x-teams requires individuals to step up in new ways, requiring members to build up their leadership skills. A study examining two different leadership approaches to rolling out sustainability initiatives identified the individual capabilities that differentiated success in an x-team-led distributed leadership program: sensemaking, relating, visioning, inventing, and building credibility, collectively known as the 4-CAP+ leadership model.8 Let’s examine each capability.
- Sensemaking. For x-teams to succeed, individuals need the core skill of sensemaking—and notably, it’s key for individual senior leaders as well as the x-team members who innovate and execute on key strategic initiatives. Sensemaking involves making sense of the context in which the organization is operating—seeing the world with new eyes to determine the opportunities and threats of a changing environment.9 It involves learning from experts, from people who have done a task before, and from those with different perspectives, to see what might work for your project. After collecting a lot of information, individuals and teams need to consolidate what they have learned and begin to map customer demands, cultural norms, competitive challenges, technological advances, and market opportunities. Since sensemaking is always flawed given the uncertainty in the world, it also involves running experiments to test where the map may need to be edited.
- Relating. Developing key relationships within and across organizations is the task of relating. It requires an ability to put yourself in someone else’s shoes to understand why they think, feel, and act as they do. But it also requires the ability to advocate for your point of view, not by ordering people to do things but rather by convincing them and negotiating for desired outcomes. In a world of distributed leadership, relating leaders must be able to coach and develop others who undergo setbacks or who are trying to lead in new ways. Finally, given the external nature of leadership, relating calls for the ability to connect and create trusting relationships both within and outside the organization. Relating is a key capability needed for the x-team activities of sensemaking, ambassadorship, and task coordination, as well as for establishing productive norms, psychological safety, and learning in the team.
- Visioning. While sensemaking is about “what is,” visioning is about “what is possible” in the future. Visioning goes beyond the posted vision statement; it is a process of articulating what members of an organization may be able to create going forward for the organization and the world. Visions need to be framed in a way that showcases values and aspirations that have meaning for many in the organization and that provides the rationale for why people should be working hard. At Apple, the employees working on the early Macintosh understood that they weren’t just creating a product; they were creating a revolution by changing the way that people would innovate, work, and learn. Visions give employees a sense of working on something bigger than themselves. In an exponentially changing world, visions are also about the urgency for change. They help to focus and motivate members of both the organization and x-teams, while sharpening their strategic mindsets.
- Inventing. The final leadership capability is about coming up with innovative solutions and designing new ways of collaborating to realize the vision. Inventing involves developing creative methods to get around roadblocks and keeping the organization moving as it shifts in new directions. It’s about building a work environment that encourages equity and inclusion but also timely decision-making. As such, inventing leaders need to be ambidextrous—able to execute on existing goals and priorities while also establishing a learning environment that enables new innovations for the future.10 X-team members need inventing skills to organize themselves over and over again as they move from exploring, to experimenting and executing, to exporting.
- Building credibility. While the four capabilities represent the behaviors needed for distributed leadership and x-team effectiveness, leaders also need to build credibility (the + in the model name), or their leadership may be challenged. Building credibility involves acting as a principled leader, doing what you say you are going to do, and acting in accordance with your values. It also means doing things for the good of the unit, rather than just to augment your career. Credible leaders act to meet challenges and solve problems rather than acting solely to advance their careers or stroke their egos.
It is important to note that these capabilities hold for leaders at all levels. Entrepreneurial, enabling, and architecting leaders all need these capabilities, although their scope may be different. In addition, most leaders develop a unique leadership signature, their own way of leading. Remember, leaders are not perfect—they cannot be great at all of the capabilities. That’s why most develop a particular style—or leadership signature—that builds on a few of them. The key is to have these capabilities represented in the team so that leaders with different skill sets can complement each other.
Kristina Allikmets at Takeda R&D showcases these capabilities. When she signed up to head the Spin-In team to shift the way that drug development was done, she knew she was going to be working in a new way. She created an x-team within the company’s learning culture. Allikmets and her team engaged in sensemaking to understand their context, visiting biotechs and startups to learn about their practices and to consider how to introduce them into a more mature company. Sensemaking continued with their competitive analysis of the marketplace and an analysis of their own internal political environment. Relating happened by team members reaching out to senior leaders to understand their priorities and explain their own. They continuously communicated with colleagues and partners in the organization and the broader ecosystem to report on progress and how their work could integrate with the work of others. There was also a great deal of listening and compromise within the team, another aspect of relating. Members developed a vision to “aspire to inspire bold drug development because patients are waiting,” which captured the idea of not only changing the way drug development was done but also bringing others along.11 Allikmets was continuously inventing, creating an internal board of directors to expedite decision-making and streamline governance; a small, agile team; and innovative designs for clinical trials. She built her credibility by working for her team and delivering on what she said she would do. In short, her leadership skills enabled her to successfully create an x-team in which all members contributed and improved their own leadership skills. The result: their molecule found a new home, and the organization had a new way of operating.
Craft an X-Team Incubator
Throughout this book we have seen how x-teams—through their structures, processes, and successes—can change the culture of organizations to be more entrepreneurial and innovative. They can also be the engine of distributed leadership as members take on the tasks of sensemaking, relating, visioning, and inventing, plus credibility building, and spread them throughout the organization and beyond. Senior leaders—architecting leaders—however, can help speed up the process by shaping the organizational structure and culture to create more fertile ground for distributed leadership and innovation in general, and for x-teams in particular. Lower-level leaders can also pitch in. Our work of supporting organizations in shifting from bureaucracies to more distributed leadership through x-teams has highlighted six management activities that can help x-teams thrive.
Activity 1: Set the Course
A company’s strategy, vision, and priorities make up the engine that drives the actions of distributed leadership and x-teams. Without a clear direction, leadership at the front lines is lost and unaligned, and it is difficult for x-team leaders to achieve a strategic mindset and help move the organization forward. Distributed leadership organizations need to find ways to make the strategy, vision, and priorities visible and shared, turning them into a playbook for action. One company, HubSpot, does this by posting its culture deck online as a statement for customers, observers, and employees alike. Its mission, as the deck states: “To help millions of organizations do better.” The tenets to get there include prioritizing the customer, being transparent, working with autonomy and accountability, and striving for long-term impact. The 128-page slide deck then provides more detail. One goal: not only satisfying customers but helping them succeed.
Activity 2: Manage Overload and Empower
Being on an x-team can be an exhilarating and empowering experience. But it can also add to the already heavy workloads that people have. The key is not to assign people to an x-team on top of their regular day jobs, but to either give them some time off from their regular jobs to do x-team work or have them work full-time on new dedicated x-teams. The transition to x-ification may require some extra effort and strain; overwork can be further exacerbated by a misguided attitude that “good” managers do more than everyone else. But overloaded team members are not likely to think creatively and come up with fresh ideas and breakthrough innovations. Thus, a focus on doing more is counterproductive. HubSpot captures this idea in its culture deck: “Results matter more than the hours we work. We think that even hamsters get tired of being on a hamster wheel.” In short, measure output, not time spent working.
To manage overload, people need to get the time for innovative projects, the resources to do more with less, and the freedom to prioritize family time when necessary. They also need to be freed from dealing with lots of bureaucracy. Instead, “simple rules” should guide work.12 As the HubSpot deck says, “We don’t have pages (and pages and pages) of policies and procedures.” Instead, the deck says, employees should “use good judgment—basically, do what’s best for the company and the customer.” It further offers a simple rule for good judgment: “Here’s the cheat sheet on good judgment: customer > company > individual.”
Related to the theme of overload is the theme of empowerment. X-team leaders have to believe that they can step up with new ideas. This means that they need to feel confident that their ideas will be heard and have a fair shot. HubSpot creates an equal playing field by giving every employee access to all the data, making it easier to share. For example, decisions are made with data and the philosophy that “debates should be won with better insights, not bigger job titles.”
While distributed leadership is the goal, often managers can undercut change efforts. Top management may verbally encourage empowerment but then reject all new initiatives. Furthermore, senior leaders may be simultaneously encouraging innovation while pushing lower levels to achieve tougher and tougher performance targets, thus prioritizing output over new ideas. Teams should monitor their culture of support and send up a flare when demands are too high or the culture of empowerment is threatened. Other avenues for employees to communicate problems without fear of retribution include having an ombudsman, anonymous electronic bulletin boards, and open-door policies. Periodic flash surveys at HubSpot allow trouble to be noticed and acted upon quickly.
Activity 3: Set Up for Networking, Leading at All Levels, and Learning
If innovation through x-teams and distributed leadership is the goal, then the organization needs to work on enabling out-before-in behavior. Going out before in means engaging in high levels of external activity to build networks across the organization and the larger ecosystem. Doing this, however, requires a time commitment. And that means teams have to constantly rid themselves of extraneous work that gets in the way. At HubSpot, this is called the SCRAP approach: stop generating unused reports, cancel unproductive meetings, remove unnecessary rules, automate manual processes, and prune extraneous processes.
Beyond the time commitment, people may also be reluctant to go out before in because of concerns about how to approach others or the fear of giving away intellectual property. Senior leaders can help, first by modeling external outreach and learning as critical tasks. Next, they should coach people who are nervous about interviewing a senior leader or someone in a different industry. Third, they can provide resources such as open networks and opportunities to go to conferences, trade shows, and cross-industry events. They could also let people go to executive training sessions with a whole team or unit, or even with customers. Networks are created and nurtured by mixing employees from different levels, functions, and organizations together for tasks or training. Finally, tracking and rewarding external activity can bolster it.
Once networking starts, x-team members should be encouraged to sense the environment and seize the opportunities that are uncovered. That is, the goal is not simply to learn and map the world but also to use sensemaking as a springboard to action. Providing forums, hackathons, and even contests to showcase new ideas and choose the best ones to move forward keeps innovation on the front burner. Setting clear criteria for which ideas will get the green light communicates that the choice process is fair and transparent. The message is “please come up with ideas, but only the best ones will move forward.” Then give internal entrepreneurs the freedom to take the project forward.
External forays into the exponentially changing world will showcase new opportunities and may render old ideas obsolete. When that happens, it is critical to have the flexibility to form and reform teams as opportunities emerge and to cut projects that are no longer relevant. It’s also an opportunity to collaborate across organizational boundaries, creating teams of teams to meet new challenges that no group can solve alone. The Covid-19 pandemic was a great example of a time of almost instant change, when resources needed to be redeployed toward new modes of delivering food, developing vaccines fast, using more technological tools for remote work, and establishing new partnerships. If all of that could be done during the crisis, it can continue to be done now.
Perhaps the most important part of enabling x-ification is prioritizing learning. Learning is optimized when there is free-flowing information, learning from mistakes, a lack of blaming people, respect between colleagues, and diverse voices and perspectives. It often requires a focus on the customer and the use of new technologies. Creating a learning culture means identifying what it is—where is your culture deck?—and building it into day-to-day practices. For example, every meeting could end with a short discussion about whether learning or blaming is more prevalent and whether external activity is being fostered. Mistakes must be owned. The HubSpot deck includes one slide that reads: “Founder Confession: (diversity) is an aspiration we wish we had prioritized a long time ago. (Like when we first started the company.)” By modeling how errors can lead to improvement, leaders signal one way that learning takes place. Culture is difficult to change, and doing so takes a long time, but it will lead to big rewards.
Activity 4: Become a Conductor
What, you might ask, does being a conductor have to do with distributed leadership and x-teams? The idea here is to create a rhythm of activities to bring the whole organization into synchrony. Imagine the difficulties inherent in managing x-teams. Members have to align with top management, which operates on a fiscal calendar; middle management, which operates on budgeting and planning cycles; other functional groups, each with its own time frame for operating; and customer deadlines. Add to this the fact that x-teams may need to shift resources, people, and ideas from one team to another, a process made more difficult when teams have their own schedules. If this were an orchestra, with each group representing a different instrument, it would produce a cacophony of sounds as each instrument followed its own score.
Now consider a temporal redesign. Suppose sets of x-teams were on the same schedule, launched simultaneously, and were working toward common deadlines. Each interim deadline then becomes a common place to pause, and a “temporal crossing point” during which cross-team activity can take place.13 During such pauses, decisions about shifting people and resources, starting new teams and ending existing ones, and comparing progress and performance can be done more effectively, since all teams have paused and can move on in sync. This intervention is even more useful if the stopping point corresponds to key shifts in the task, such as the move to experiment and execute or to export, or a shift at the beginning or the end of key cycles such as budgeting.
Let’s take the temporal design one step further. Create an organizational rhythm whereby all groups within a unit or across several units synchronize the transfer of products and services. Now there is one common score. This might mean getting a new product out at the same time every year or breaking the day in half, with morning time reserved for interruptions and joint work while afternoons are reserved for individual concentration.14 Or this might mean that all groups must get their code in by 3 p.m. for the joint testing of the prototype, or that a hospital schedule centers on patient needs, not clinical services schedules.
By setting up such rhythms and cycles, the cacophony of sounds turns into a real musical composition. In this scenario it is easier for x-teams to mesh their activities with other x-teams and units, as well as with deadlines set by key external stakeholders. Now everyone shares the same rhythms around pausing, reflecting, and shifting to a new form of work.
Activity 5: Model the Way and Send the Right Signals
There are several mechanisms by which leaders send signals to model and embed new modes of action.15 The first is through their calendars—how they spend their time. If members of an x-team program are told to be ambassadors, but those above them never have time to meet, team members will realize that there is no real commitment. Similarly, if innovation is touted as a top priority but all ideas are shut down, innovation will dry up. On the other hand, when senior managers save a day to listen to x-team ideas, team members work to deliver.
Second, signals are sent through promotions, measurement systems, and resource allocation. Who gets the next plum job? If senior leaders talk about innovation but reward only short-term financial results, then the message is to play it safe and make your numbers. On the other hand, if integrity is a core value and a toxic manager who takes all the credit is passed over for promotion, word will spread that the top group is serious. At the same time, you can’t encourage innovation and integrity without measuring them. If they are not measured, they are often ignored, and it is harder to make promotions or allocate resources in the absence of data.
Finally, signals are sent through stories. Leaders at all levels can signal changes in a culture by telling stories that highlight new role models or behaviors. At one airline, a story about the heroic deeds of an employee who saved an elderly woman’s suitcase from the garbage is told over and over again to highlight that every customer is important and every person can help. Stories of great distributed leadership will spread new practices in a way that PowerPoints just can’t.
Activity 6: Be Ambidextrous
Research has shown that firms that practice ambidexterity—that can both innovate and execute, explore and exploit, experiment and fine-tune—are more successful in managing sustained innovation.16 There are a number of ways that companies can act with more ambidexterity using x-teams.
One way to shift organizations is to create separate x-teams that take on the role of innovation. These teams can be tasked with finding new solutions to strategic issues, which can then be melded into the rest of the organization. At Takeda R&D, there was a leadership academy where teams engaged in leadership training by coming up with innovative ways to connect to patients, provide drugs to emerging markets, and shrink the product development cycle. The difficulty here is in moving innovations into the regular businesses. On the positive side, doing so provides a stream of innovative solutions to core challenges.
Ambidexterity can also be created by designing separate organizational units, one of which focuses on making existing businesses more efficient while another focuses on coming up with next-generation ideas. At a newspaper, for example, of the organization worked on improving the print version of the paper and another part designed the digital version. The problem with this kind of arrangement is in how to join these units together, or at least how to coordinate across them.
A third possibility exists at Microsoft, where there are x-teams that focus on innovation. These teams send their ideas to implementors who bring the innovations into existing product lines and platforms. There is a clear overlap and hand-off process to make sure the transfer does not result in a not-invented-here dynamic.
Finally, existing x-teams can be used to shift gears as needed. They can be used to orient work around innovation and experimentation or around fine-tuning and execution. Because x-teams are agile, they provide a flexible mechanism for enabling organizations to focus on the tasks that are most important at any given moment.
In sum, if leaders set the course through strategy and vision, manage overload and empower members, set up for networking and learning, create temporal rhythms, and structure for ambidexterity, they are more likely to architect organizations with distributed leadership powered by x-teams.
X-Teams: A Challenging Choice with Great Rewards
We are living in scary times, as climate change, war, floundering economies, high energy costs, and high levels of competition have become the order of the day. Moreover, social inequality, poverty, and political upheaval are constants. It is in such a world that we believe x-teams can be a powerful tool to not just survive but thrive. In this book we have mostly provided examples of teams in competition-driven businesses, but the forces of change that we have described touch all corners of society. And people from all walks of life will need to work together to solve these problems. In fact, the concept of distributed leadership started in the educational sector, where there was a need to bring teachers, students, families, and communities together to find the best solutions for students. We have also seen the x-team principles followed successfully in the social sector, in government, and in groups that mesh government, the private sector, and nongovernmental members. We expect to see these principles benefit teams of every stripe that are charged with adapting to the challenging and complex world we now face.
X-teams are increasingly becoming the modus operandi wherever innovation, adaptation, and flexibility are prerequisites. They are the perfect vehicle for reaching out to far-flung islands of expertise and information and for creating new synergies across units and organizations. They are a highly effective vehicle for connecting and aligning people inside and outside the organization. They are the mechanism to move from fear and inertia in the face of uncertainty to confidence and action.
Yes, choosing to create x-teams will challenge everyone—from individual team members to the organization as a whole. Yet we have seen the joy and accomplishment that comes from successful x-teams around the world. As the famous American anthropologist Margaret Mead is said to have declared, “Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has.” That is the essential message and truth behind x-teams.