The Comparative Advantage of X-Teams

Abstract

Traditional teams are not faring well in today's rapidly changing business environment. Even when they establish clear roles and responsibilities, build trust among members and define goals according to the book, their projects often fail or get axed. Three MIT Sloan School researchers think they have found the reason: Traditional teams are too inwardly focused and lack flexibility. Traditional team-building activities are still important, they contend, but only when combined with a greater awareness of external stakeholders and information sources. Fortunately, a new, externally focused team has arisen: the X-team. The authors detail the high levels of performance that X-teams are seeing. And they explain how managers in a wide variety of industries and functions can establish the organizational structures that support such teams. The researchers outline the five components of X-teams they have studied: external activity, extensive ties both inside the larger organization and outside the company, expandable tiers or kinds of responsibility, flexible membership (switching roles, moving in and out of the team as needed) and execution mechanisms that facilitate getting the job done. The results are impressive. One observed X-team greatly improved the dispersal of innovation throughout its organization. X-teams in sales were seen to bring in more revenue. Drug-development teams were more adept at drawing in external technology. Product-development teams were more innovative than traditional teams ¿ and more often on time and on budget. Managers that recognize their own company in the new, flatter organizational structures, the increasing interdependence of tasks and teams, the constant updating of information and the overall complexity of work should consider creating an environment for successful X-teams.

Full text

The Comparative
Advantage of X-Teams
SPRING 2002 VOL.43 NO.3
REPRINT NUMBER 4333
Deborah Ancona,
Henrik Bresman & Katrin Kaeufer
MITSloan
Management Review
Please note that gray areas reflect artwork that has
been intentionally removed. The substantive content
of the article appears as originally published.

ften teams that seem to be doing everything right — estab-
lishing clear roles and responsibilities, building trust among mem-
bers, defining goals — nevertheless see their projects fail or get
axed. We know one such team that had a highly promising prod-
uct. But because team members failed to get buy-in from division
managers, they saw their project starve for lack of resources.Another
group worked well as a team but didn’t gather important competi-
tive information; its product was obsolete before launch.
Why do bad things happen to good teams? Our research sug-
gests that they are too inwardly focused and lacking in flexibility.
Successful teams emphasize outreach to stakeholders both inside
and outside their companies. Their entrepreneurial focus helps
them respond more nimbly than traditional teams to the rapidly changing characteristics of
work, technology and customer demands.
These new, externally oriented, adaptive teams,which we call X-teams, are seeing positive
results across a wide variety of functions and industries. One such team in the oil business
has done an exceptional job of disseminating an innovative method of oil exploration
throughout the organization. Sales teams have brought in more revenue. Drug-development
teams have been more adept at getting external technology into their companies. Product-
development teams have been more innovative — and have been more often on time and
on budget.
The current environment — with its flatter organizational structures, interdependence
of tasks and teams, constantly revised information and increasing complexity — requires a
SPRING 2002 MIT SLOAN MANAGEMENT REVIEW 33
The current environment demands a new
brand of team — one that emphasizes
outreach to stakeholders and adapts easily
to flatter organizational structures, changing
information and increasing complexity.
Deborah Ancona, Henrik Bresman
and Katrin Kaeufer
Deborah Ancona is the Seley Distinguished Professor in Management at MIT Sloan School of
Management, where Henrik Bresman is a doctoral candidate and Katrin Kaeufer is a visiting scholar.
Contact the authors at ancona@mit.edu, hbresman@mit.edu and kaeufer@mit.edu.
The Comparative Advantage
of X-Teams
O

34 MIT SLOAN MANAGEMENT REVIEW SPRING 2002
networked approach. X-teams have emerged to meet that need.
In some cases, they appear spontaneously. In other cases,
forward-looking companies have established specific organiza-
tional incentives to support X-teams and their high perfor-
mance levels.
Our studies all support the notion that the rules handed
down by best-selling books on high-performing teams need to
be revised. (See “About the Research.”) Teams that succeed
today don’t merely work well around a conference table or cre-
ate team spirit. In fact, too much focus inside the team can be
fatal. Instead, teams must be able to adapt to the new competi-
tive landscape, as X-teams do. X-teams manage across bound-
aries — lobbying for resources, connecting to new change
initiatives, seeking up-to-date information and linking to other
groups inside and outside the company. Research shows that
X-teams often outperform their traditional counterparts.1
Five Components That Make X-Teams Successful
X-teams are set apart from traditional teams by five hallmarks:
external activity, extensive ties, expandable structures, flexible
membership and internal mechanisms for execution. (See
“X-Teams Versus Traditional Teams: Five Components,”p. 37.)
External Activity The first hallmark of the X-team is members’
external activity.2Members manage across boundaries, reaching
into the political, informational and task-specific structures
around them. In some cases, the team leader takes on the out-
reach; in other cases, it is shared by everyone. High levels of
external activity are key, but effectiveness depends on knowing
when to use the particular kind called for: ambassadorship,
scouting or task coordination.
It doesn’t matter how technically competent a team is if the
most relevant competency is the ability to lobby for resources
About the Research
Our research occurred over many years
and with many types of teams and indus-
tries. The bottom line is that certain team
characteristics coincided with better per-
formance. We call the high-performing
teams X-teams.
When we asked some managers with
responsibility for consulting teams to rate
teams with X-team characteristics, they
ranked them high — 1 or 2 on a 5-point
scale, with 1 being the best performer.
But they ranked more-traditional teams 3,
4 or 5.*In another study, 37% of X-team
customers said that the teams were
meeting customer needs better than in
the past, compared with 23% of more-
traditional teams’ customers.†
Teams in two companies we call Zeus and Pharma
Inc. are of particular interest.
Zeus
. Swallow is a product-development team at
Zeus, a multidivisional company developing proprietary
hardware and software products. It is especially illustra-
tive of X-team activity. Zeus has since been acquired by
one of the world’s largest computer makers.
Pharma Inc
. Pharma is a large international pharma-
ceuticals enterprise. At the time of our research, it had
experienced a string of mergers and acquisitions that
resulted in drugs being developed by different organiza-
tional units, each of which had a distinctly different man-
agement approach. The unit with the best-performing
teams illustrates organizational characteristics conducive
to X-team behavior.
*D.G. Ancona, “Outward Bound: Strategies for Team Survival in an
Organization,” Academy of Management Journal 33 (June 1990):
334-365.
†For the product-development teams, using X-team characteristics
as predictors of adherence to budget and schedule — and innovation,
as rated by managers — yielded statistically significant results at
greater than .01.
Number Length of
Type of Company of Teams Time Studied Methodology
One telecommunications
company 100 4 months Interviews, survey
One educational-
consulting company 51 year Interviews, surveys,
logs, observation
Five high-tech, product-
development companies
45 2 years Interviews, surveys,
logs, observation
One multinational,
integrated oil company
2Life of
the teams
Project reports
One computer
manufacturer
52 years Interviews,
observation
One large pharmaceuticals
company, 3 units
12 2 years Interviews, survey,
observation,
project reports

with top management. And even resources mean little without
an ability to reach outsiders who have the knowledge and infor-
mation to help team members apply the resources effectively.
Thus at any given time, any X-team member may be conducting
one or more of the three external activities.
Ambassadorial activity. Ambassadorial activity is aimed at
managing upward — that is, marketing the project and the
team to the company power structure, maintaining the team’s
reputation, lobbying for resources, and keeping track of allies
and competitors. Ambassadorial activity helps the team link
its work to key strategic initiatives; and it alerts team mem-
bers to shifting organizational strategies and political
upheaval so that potential threats can be identified and the
damage limited.
For example, the leader of what we call the Swallow team
wanted to manufacture a new computer using a revolutionary
design. The company’s operating committee, however, wanted
only a product upgrade. The team leader worked with a key
decision maker on the operating committee to portray the ben-
efits of the product to the organization — and eventually got
permission for the design. He continued to provide updates on
the team’s progress, while keeping tabs on the committee’s key
resource-allocation decisions.
Scouting. Scouting activity helps a team gather information
located throughout the company and the industry. It involves
lateral and downward searches through the organization to
understand who has knowledge and expertise. It also means
investigating markets, new technologies and competitor activi-
ties. Team members in our studies used many different modes
of scouting, from the ambitious and expensive (hiring consul-
tants) to the quick and cheap (having a cup of coffee with an old
college professor or spending an hour surfing the Internet).
Effective teams monitor how much information they need
— for some, extensive scouting early on to get the lay of the
land is all that’s needed. For others, scouting continues
throughout the life of the team. In particular, teams working
with technologies created by outsiders can never relax their
scouting activities.
Task coordination. Task-coordinator activity is much more
focused than scouting. It’s for managing the lateral connections
across functions and the interdependencies with other units.
Team members negotiate with other groups, trade their services
and get feedback on how well their work meets expectations.
Task-coordinator activity involves cajoling and pushing other
groups to follow through on commitments so that the team can
meet its deadlines and keep work flowing. When the Swallow
team needed to check some new components quickly and
learned that the testing machine was booked, team members
explored swapping times with another team, using the machine
at night or using machines elsewhere — whatever it took to
keep the work on track.
Extensive Ties In order to engage in such external activity, team
members need to have extensive ties with outsiders. Ties that
academic researchers call weak ties are good for certain purposes
— for example, when teams need to round up handy knowledge
and expertise within the company. One team we studied gave a
senior position to a new hire straight out of graduate school
because of his ties to important experts at prestigious academic
institutions. The ties were weak but extensive and contributed
immensely to the success of the team’s project.
Strong ties, however, facilitate higher levels of cooperation
and the transfer of complex knowledge. Strong ties are most
likely to be forged when relationships are critical to both sides
and built over long periods of time.3In the case of Swallow, the
team leader’s prior relationship with the operating-committee
member helped snare funding for the revolutionary computer
design. And the three team members from manufacturing had
ties that smoothed the transition from design to production.
Expandable Tiers But how to structure a large, complex team?
How to combine the identity and separateness of a team with
the dense ties and external interactions needed to accomplish
today’s work? Our research shows that X-teams operate
through three distinct tiers that create differentiated types of
team membership — the core tier, operational tier and outer-
net tier — and that members may perform duties within more
than one tier.
SPRING 2002 MIT SLOAN MANAGEMENT REVIEW 35
It doesn’t matter how technically competent a team is if the most relevant
competency is the ability to lobby top management for resources.

The core members. The core of the X-team is often,but not always,
present at the start of the team. Core members carry the team’s his-
tory and identity. While simultaneously coordinating the multiple
parts of the team, they create the team strategy and make key deci-
sions. They understand why early decisions were made and can
offer a rationale for current decisions and structures. The core is
not a management level, however. Core members frequently work
beside other members of equal or higher rank, and serve on other
X-teams as operational or outer-net members.
The first core member of the Swallow team was the leader; then
two senior engineers joined and helped to create the original prod-
uct design and to choose more members. The core members were
committed to the revolutionary computer concept and accepted its
risks. They understood how quickly they had to act in order to
make an impact on the market. The core members chose more
engineers for the team, helped coordinate the work across sub-
groups, and kept in touch with the company’s operating commit-
tee and other groups. They decided when to get feedback from
outsiders, and they set up a process to make the critical decisions
about how compatible with industry standards to make the design.
They organized team social events — and when members had to
work long hours to make a deadline, they even brought in beds.
Having multiple people in the core helps keep the team
going when one or two core members leave, and it allows a core
member who gets involved with operational work to hand off
core tasks. Teams that lose all their core members at once take
many months to get back on track.
The operational members. The team’s operational members do
the ongoing work. Whether that’s designing a computer,creating
an academic course or deciding where to drill for oil, the opera-
tional members get the job done. They often are tightly con-
nected to one another and to the core (and may include some
core members). In the Swallow group, 15 engineers were
brought into the operational layer to work on the preliminary
design. They made key technical decisions, but each focused on
one part of the design and left oversight of the whole to the core.
The outer-net members. Outer-net members often join the
team to handle some task that is separable from ongoing work.
They may be part-time or part-cycle members, tied barely at all
to one another but strongly to the operational or core members.
Outer-net members bring specialized expertise, and different
individuals may participate in the outer net as the task of the
team changes.
For example, when the Swallow team wanted to ensure its
initial design made sense to others, it brought in outer-net peo-
ple from other parts of R&D. For two weeks, the enlarged team
met to discuss the design, its potential problems, ideas for
changes and solutions for problems that operational members
had identified. Then those new members left. Meanwhile, desig-
nated members of the core group met weekly with different
outer-net members — people from purchasing, diagnostics and
marketing — for information sharing, feedback and smoothing
the flow of work across groups. Some X-teams’outer nets also
include people from other companies.
The three-tier structure is currently in use at a small, entrepre-
neurial startup we know — except that the employees there say
“pigs,”“chickens”and “cows”to refer to core, operational and
outer-net team members. Think about a bacon-and-eggs break-
fast. The pig is committed (he’s given his life), the chicken is
involved, and the cow provides milk that enhances the meal. The
startup’s terms are handy for discussing roles and responsibilities.
A person might say, “You don’t need to do that; you’re only a
chicken”or “We need this cow to graze here for at least two weeks.”
Flexible Membership X-team membership is fluid.4People may
move in and out of the team during its life or move across lay-
ers. In a product-development team similar to Swallow, there
was a manufacturing member who shifted from outer-net
member to operational member to core member. At first, he was
an adviser about components; next he worked on the actual
product; then he organized the whole team when it needed to
move the product into manufacturing. He became team leader
and managed the transition of team members back into engi-
neering as more manufacturing members were brought in.
Mechanisms for Execution An increasing focus on the external
context does not mean that the internal team processes are
unimportant. In fact, traditional coordination mechanisms
such as clear roles and goals may be even more important when
team members are communicating externally, membership is
changing, and there are different versions of membership. The
trick is to avoid getting so internally focused and tied to other
team members that external outreach is ignored. X-teams find
three different coordination mechanisms especially useful: inte-
grative meetings, transparent decision making and scheduling
tools such as shared timelines.
First, through integrative meetings, team members share the
external information each has obtained. That helps keep every-
one informed and increases the information’s value by making
it widely available. The meetings ensure that decisions are based
on real-time data from combinations of task-coordinator,
scouting and ambassadorial activity.
Second, transparent decision making, which keeps people
informed about the reasons behind choices, is good for nudging
36 MIT SLOAN MANAGEMENT REVIEW SPRING 2002

SPRING 2002 MIT SLOAN MANAGEMENT REVIEW 37
everyone in the same direction and for
maintaining motivation. Even when
team members are frustrated that a com-
ponent they have worked on has been
dropped, they appreciate knowing about
the change and why it has been made.
Finally,measures such as clearly com-
municated but flexible deadlines allow
members to pace themselves and to
coordinate work with others. The just-
in-time flexibility allows for deadline
shifts and adjustment. If external cir-
cumstances change, then work changes
and new deadlines are established.
Putting the Pieces Together X-team com-
ponents form a self-reinforcing system.
To engage in high levels of external activ-
ity, team members bring to the table out-
side ties forged in past professional
experience. To be responsive to new
information and new coordination
needs, X-teams have flexible membership
and a structure featuring multiple tiers
and roles. To handle information and
multiple activities, they have coordina-
tion mechanisms and a strong core. The
five components cannot work in isola-
tion. They complement one another.
Although small or new teams may not
have all five components, fully developed X-teams usually do.
Supporting X-Teams
The more dependent a team is on knowledge and resources in its
external environment, the more critical is the organizational
context. Companies that want high-performing X-teams can
create a supportive organizational context — with three-tier
structures mandated for teams, explicit decision rules, accessible
information and a learning culture. Within a company, it’s gen-
erally the organizational unit that sets those parameters, pro-
vides resources and lays down rules. (See “Creating an X-Team.”)
A large pharmaceuticals company that we call Pharma Inc.
illustrates the importance of such support. One of the authors
was asked to investigate a dramatic performance variation
among drug-development teams that were working on mole-
cules from external sources. (Such projects are known as
in-licensing projects.) A performance assessment showed that
the teams of one unit were doing well, the teams of a second
unit showed varying results, and the teams of a third unit were
doing poorly. To probe the differences, we picked a chronologi-
cal sequence of three teams at the best-performing site (the
Alpha site) and three teams at the worst-performing site (the
Omega site) for a careful study.
The story that emerged seemed almost implausibly black-
and-white: All the central steps the three Alpha teams took
seemed to contribute to positive performance, whereas the
opposite was true for the Omega teams. It appeared that
despite fluctuating external circumstances, the Omega teams
were sticking to a traditional approach that had served them
well enough when they worked on internally developed mole-
cules. The Alpha teams, however, were adapting to the chang-
ing environment by using an X-team approach, although they
didn’t call it that. In the wake of the molecular biology revolu-
tion, which has led to increased use of in-licensed molecules,
they saw the importance of external activity and extensive ties,
and they adapted.
Traditional Teams X-teams
Internal Focus
Focus on trust, cohesion
and effective work
processes
Ties to Other
Members
Efforts to build close
ties and strong identity
One Tier
One structural tier:
team versus
environment
Stable Membership
Leaders and members
Mechanism for
Execution
Coordination among
individuals
Mechanism for
Execution
Coordination among
tiers
External Activity
Combination of internal
and external activity
Extensive Ties
Internal ties
supplemented with
both strong and weak
ties outside the team
(and inside and outside
the company)
Expandable Tiers
Core, operational and
outer-net tiers
Flexible
Membership
Movement across
tiers—and in and out of
the team
X-Teams Versus Traditional Teams: Five Components

38 MIT SLOAN MANAGEMENT REVIEW SPRING 2002
Three-Tier Structure Organizational structure has a profound
effect on team behavior. All Alpha-unit teams used a mandated
three-tier structure that gave core members oversight of the
activities of operational and outer-net team members.
Importantly, the roles were not a reflection of organizational
hierarchy. Often a core-team member was junior in the organi-
zational structure to an outer-net member.
Having the core team tied to the outer net was particularly
helpful when much external technical knowledge was needed
quickly.With links already established, a core member could get
information from an outer-net member at short notice. The
brief time commitment for serving on the outer net gave
X-teams access to some of the company’s most sought-after and
overbooked functional experts.
The Omega-unit teams, however, used a traditional one-
tier structure. In X-team terminology, the Omega teams had
only core members. Although that worked well for coordina-
tion, it hampered team members’ability to adapt to changing
external demands.
Explicit Decision Rules X-teams favor decision rules that adapt to
new circumstances. The Alpha unit’s X-teams,like most product-
development teams, used traditional flow charts, but they con-
stantly updated them. Also, they complemented flow charts with
decision rules that allowed the charts to become evolving tools
rather than constraints. One such rule was that, all things being
equal, the search for solid information was more important than
speed. It wasn’t that the teams tolerated slackers. In fact, at times
speed had to take precedence over information, but it was the
team leader’s responsibility to identify when that should occur.
Another rule mandated that whenever important expertise
was not available in the time allotted, a team member would
be free to bring in additional outer-net members. Such rules
allowed for flexibility but spared team members any ambiguity
about what to do at important crossroads. Furthermore, the
rules gave them the confidence to act on their own and to raise
issues needing discussion. For example, it was never wrong for
a team member to suggest that a process be stopped because of
a lack of important information in that member’s area. Even if
the team overruled the request, speaking up on the basis of an
explicit decision rule was definitely appropriate.
The Omega unit’s teams,by contrast, used process flow charts
quite rigidly and without complementary decision rules. Team
members had to stick to the planned process and were allowed
little latitude for tweaking the process even when they saw the
need. There was no mechanism for making adjustments.
Accessible Information Access to valid, up-to-date information is
always critical, but when knowledge is widely dispersed, the infor-
mation infrastructure becomes even more important. The Alpha
unit had processes that supported teams’need for accessible data.
After every project, a report was written detailing important issues
and the lessons learned. The store of reports increased over time.
In addition, the Alpha unit maintained a “know-who”database,
which provided names of experts in various fields and explained
the unit’s historical relationship with those experts.
Unfortunately, at Omega, project reports were written only
occasionally and contained mainly the results of internal lab
tests. And Omega did not have a know-who database at all.
A Learning Culture A useful information infrastructure cannot be
established instantly. It has to be nurtured. That’s why Alpha
insisted on project reports whether or not the project was con-
sidered a success and regardless of time pressures on team
members. Alpha also saw to it that past team members con-
ferred with ongoing teams.
Strong recognition from top management at the Alpha unit
reinforced the information infrastructure. The relentlessly
•Design and support a three-tier team
structure
•Formulate decision rules for an
unambiguous yet flexible process
•Maintain a rich information infrastructure
•Establish a learning culture
X-team
•Before staffing the team, understand
the external context
•Change team members as needed
•Treat a team member’s connections as
a key competency
•Map the external domain, including key
stakeholders
•Create mechanisms for internal and external
communication
•Set team goals, knowing what external
constituencies want
Create a Supportive
Organizational Environment
Building the Team
Staffing the Team
Creating an X-Team

communicated learning culture not only generated positive
performance for any given team, but helped make every team
perform better than the previous one.
The Omega unit had no such practices. As a consequence,
new teams in that unit generally had to reinvent the wheel.
Is the X-Team for Your Company?
X-teams are particularly valuable in today’s world (many com-
panies already deploy X-teams without calling them that), but
they are not for every situation. Their very nature as tools for
responding to change makes them hard to manage. The mem-
bership of the X-team, the size of the team, the goals and so on
keep fluctuating.
In a traditional team, coordination is mostly internal to the
team. It involves a clear task and the interaction of a limited
number of members. In an X-team, coordination requirements
are multiplied severalfold. The X-team’s internal coordination
involves more members, more information and more diversity.
On top of that are the external-coordination concerns.
Executives considering X-teams must be sure the potential ben-
efits are great enough for them to justify the extra challenges.
The IDEO product-development consulting firm thinks
they are. IDEO, based in Palo Alto, California, is an example of
a company that depends on the innovativeness and agility of
its teams. During brainstorming, experts from multiple indus-
tries serve as outer-net members soliciting unique informa-
tion. Team members go forth as “anthropologists”to observe
how customers use their products and how the products
might be improved. Employees at IDEO also have been busy
creating a knowledge-distribution system they call Tool Box,
which uses lively demonstrations to communicate learned
knowledge and expertise.5
We recommend using an X-team when one or more of three
conditions hold true. X-teams are appropriate, first, when
organizational structures are flat, spread-out systems with
numerous alliances rather than multilevel, centralized hierar-
chies. Flat organizations force teams to become more entrepre-
neurial in getting resources and in seeking and maintaining
buy-in from stakeholders.6
Second, X-teams are advised when teams are dependent on
information that is complex, externally dispersed and rapidly
changing. In such cases, it is critical to base decisions on real-
time data.7
Third, use X-teams when a team’s task is interwoven with
tasks undertaken outside the team. For example, if every new
product that a team works on is part of a family of products that
others are working on too, teams need to coordinate their activ-
ities with what is going on around them.8
Increasingly, modern society is moving in a direction in
which all three conditions are routinely true. That’s why we
believe that, ready or not,more organizations will have to adopt
the X-team as their modus operandi.
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