Posted by Juliet Bourke on February 15, 2017.
As public scrutiny of top teams (boards of directors and C-suite leaders) increases, the question arises: How well are top teams set up for success? Shareholders, employees, and the broader community need to be confident that top teams are making the best possible decisions.
Ensuring that top teams are high performing usually drives attention to the qualifications, skills, and experience of individual members. While the capabilities of each team member are critical, there is an emerging emphasis on the collective intelligence of top teams. This overall team IQ isn’t a reflection of the average or even the maximum intelligence of team members; research demonstrates that groups are more than the sum of their parts and collective intelligence is the property of the group itself.1 Moreover, collective intelligence has measurable value. Just as individual intelligence enhances individual performance on complex problem-solving tasks, collective intelligence improves the group’s performance.
Having confirmed an intuitive belief that two heads are better than one, closer attention is now being paid to the factors that drive collective intelligence and ways to avoid “group think.” Deloitte’s research points to three critical elements:
- Top team composition. Do top teams have diversity of thinking? When problems are solved from a single perspective, be it that of an individual or a homogenous group, there is an inherent error rate of approximately 30 percent.2
- Structure of conversations. Are discussions between top team members designed to ensure that each person has an equal voice? Without structure, conversations are likely to be dominated by a vocal few and are subject to unconscious biases.
- Leadership. Does the chairperson create an inclusive environment where all members are treated fairly, feel valued, and are encouraged to speak up? The objective is to stimulate robust and thoughtful debates.
Conversational structure and inclusive leadership are well-covered ground. It is the first of these elements—top team composition and diversity of thinking—that is the most difficult. The challenge lies in defining the kinds of diversity that lead to collective intelligence, as well as their proportions and how they are interconnected. Without these details, diversity of thinking is no more than an enticing concept, and certainly not a practical tool.
Unsurprisingly, this challenge has generated a wide range of studies. Some have pointed to the value of gender balance, others to the importance of a group whose members have held diverse functional roles (e.g., CFO, CMO, and CHRO). Still others stress the importance of racial diversity. If each claim is valid, how do the findings hang together? Research helps makes sense of these disparate factors and adds another critical consideration: how individuals tend to approach problem solving.
Diversity of gender, experience, race, age, and problem-solving approach has clear benefits, but some factors influence diversity of thinking much more directly than others. A combination of direct and indirect factors is ideal for optimal performance and collective intelligence.
Individual approaches to problem solving
Individuals tend to solve problems using one or two of six approaches, particularly when they are under pressure or in like-minded groups. These six approaches are:
- Evidence. Relying on robust and multiple sources of data
- People. Identifying diverse audiences and their interests
- Process. Giving absolute clarity to an implementation plan
- Outcomes. Closely defining desired objectives
- Risks. Predicting and addressing multiple scenarios
- Options. Creating an exhaustive list of possibilities
All six approaches are critical to a well-rounded solution and all top team members are capable of addressing them to some degree, but as individuals, we tend to believe that one or two are the most important.
This results in a tendency to favor those options and produces conversations and solutions that overemphasize some dimensions and undervalue others. Indeed, executive groups are often dominated (75 percent) by people who tend to focus on defining the outcomes they want to achieve and identifying the options for getting there.3 Individuals who think of problems in terms of the other four dimensions—people, process, risks, and evidence—report that much less time and attention is given to their views. This presents obvious risks, both in the selection of team members and in the solutions that are likely to be developed by executive teams and presented to boards.
Greater transparency into individual approaches and the weight of the group’s preference enables top teams to select members for diversity of thinking in terms of problem-solving approaches, or at least to self-correct if there is a natural conversational bias. More balanced conversations help reduce blind spots (minus 30 percent) and promote innovation (plus 20 percent).4 Moreover, the team’s capacity for collective intelligence is likely to be recognized by those outside the team, stimulating greater levels of confidence in the analysts, investors, and regulators who follow their decisions.
Variety of disciplines or functional roles
A second direct influence on diversity of thinking comes from the mix of functional roles (such as general counsel, CRO, CIO, CMO, or CHRO) held by team members. These executive roles expose members to different domains of knowledge and social networks. The productive value of this kind of knowledge diversity has been well documented, and it is one reason why leaders often take a tour of duty in roles outside their initial field of expertise. The additional value of diverse social networks for sourcing and disseminating ideas is, by comparison, often overlooked and underestimated.
Collective intelligence is also influenced by gender balance and racial and cultural diversity. Top teams should reflect the diversity of the organization’s underlying employee and customer populations to promote market confidence and sensitivity, but there are additional indirect benefits.
Gender balance promotes psychological safety and more conversational turn-taking, thereby encouraging people to speak up, offer their views, and elaborate on the ideas of others.5 Racial diversity triggers curiosity, causing people to ask more questions, make fewer assumptions, listen more closely, and process information more deeply.6 The indirect value lies in the positive influence of gender balance and racial diversity on conversational dynamics, subtly helping to elicit latent diversity of thinking.
The bottom line is that by attending to the factors that drive collective intelligence, top teams can help themselves make smarter, more innovative decisions and boost their own confidence, as well as that of their stakeholders. Viewing top teams as needing a balance of individual problem-solving approaches and a diverse set of experience will help members focus on the direct drivers of diversity of thinking. A focus on gender balance and racial diversity, worthy in its own right, will also help create a team environment that is more conducive to diverse views.
Questions for top teams (and their HR advisers)
- Who are we? Does our team display diverse thinking? Have we held diverse roles? Do we approach problems in different ways? Do we develop organizational strategies that are balanced?
- How do we converse? Do we operate in a collaborative and respectful way? Would each team member say he or she feels confident to speak up, even to express a point of view that is different from the majority?
- How are we led? Do we have a chairperson and/or CEO who is highly inclusive?
- How do we influence our organization? Do we ask powerful questions to ensure that diversity of thinking is a priority?
This post was originally published in Courage under fire: Embracing disruption, the 2017 Directors’ Alert published by the Deloitte Global Center for Corporate Governance. Please visit the link for more Director insights.
1 A. Williams Woolley, C. F. Chabris, A. Pentland, N. Hashmi, and T.W. Malone, “Evidence for a Collective Intelligence Factor in the Performance of Human Groups,” Science, Vol. 330, pp. 686–688, 2010
2 L. Hong, S. E. Page, and M. Riolo, Incentives, “Information and Emergent Collective Accuracy,” Managerial and Decision Economics, Vol. 33, pp. 323–332, 2012
3 J. Bourke, Which Two Heads Are Better Than One? How Diverse Teams Create Breakthrough Ideas and Make Smarter Decisions, Australian Institute of Company Directors, 2016
5 L. Gratton, E. Kelan, A. Voigt, and H. J. Wolfram, Innovative Potential: Men and Women in Teams, The Lehman Brothers Centre for Women in Business, London Business School, 2007
6 S. S. Levine, E. P. Apfelbaum, M. Bernard, V. L. Bartelt, E. J. Zajac, and D. Stark, “Ethnic Diversity Deflates Price Bubbles,” PNAS Early Edition, www.pnas.org/cgi/doi/10.1073/ pnas.10407301111, 2014