Transcript
Speaker: 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. 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 midsize companies and help you take advantage of new opportunities.
Speaker: 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 Farron, Managing Director of the National Center for the Middle Market at The Ohio State University Fisher College of Business.
Speaker: We're the nation's leading research center studying mid -sized companies, which account for a third of private sector employment and GDP, and a 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.
Speaker: 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. It's really nice to be here. Thank you. Great. So John, the center released a study of the drivers of growth in mid -sized companies.
Speaker: literally five years of research data, 20 ,000 different midsize company data points, and analyze that to understand kind of 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, firing the right people.
Speaker: 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?
Speaker: 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 mean, 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.
Speaker: who we have a social identity connection to. We're able to create, you know, 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
Speaker: 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.
Speaker: who is quite a famous trumpet player, as well as band leader, 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, right? Is that what we're sort of like playing around with a little bit, right? Sure, yeah.
Speaker: And teams seem interchangeable in a lot of ways. How do you get the right team? How do you put those teams together? And I'm being very tangential here. I'm aware of that. But your question just sort of illuminated this idea of going all the way back to that beginning of my career, which is like, how do we create? How do you create a band? How do you put together a musical band? And is that a paradigm that actually works necessarily for an organization, large or small, or middle market necessarily?
Speaker: Does that make any sense to you? 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? I mean, sometimes you think of teams being more important, maybe in, oh, I don't know, places where they're
Speaker: 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? No. And I think what you bring up there is, if we want to get granular on in terms of what do we hire for and how do we interview people sometimes, which is very much within the sort of sweet spot of what talent management ultimately is, is how do you source talent? How do you develop talent?
Speaker: how do you offload talent, right? Either to a retirement or to another organization, right? Those are kind of parts of that process. And within that process, you want to think about
Speaker: 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. I know you're 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?
Speaker: How do we define this idea of growth, Doug? It can mean a lot of different things, right? Traditionally, I would say we look at it as growing profit. Right. There's a financial component to it, right? Increasing your top line, increasing your bottom line. But is that good for everybody?
Speaker: Not necessarily. I push against that sometimes, but I come from a very hippie side of the world. I also worked for the small, I guess we were mid -sized at the time, called Manta Media here in Columbus after I left it.
Speaker: I created Home Depot and Abercrombie and Fitch were these massive companies. I was really interested in going to a smaller company to kind of 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
Speaker: to the capital markets in our quarterly fashion, in our quarterly calls. If numbers were up or numbers were down, the least was yanked in certain ways in terms of where your budget was, and you always want 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's this sort of cause and effect component around growth, and growth was one of those things that
Speaker: you 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 at working at Manta, was we were a small firm, about 75 people, helped us bridge to 125. We had some corporate backing. We had actually some Silicon Valley investing that gave us a valuation of about $250 million at the time.
Speaker: And everyone was like, okay, 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?
Speaker: 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, right? And I think that's totally understandable, but that's not the whole story. I mean, you want to think about talent, and you're gonna start having to have a conversation about generations. When you start talking about generations, you're gonna have to start
Speaker: saying the M word or the C word, which is millennial and centennial, right? 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 audience 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
Speaker: is not necessarily anathema to their worldview. It's in some ways, I would say in Congress. Interesting. So just as you're kind of challenging the definition of growth,
Speaker: I think you've also kind of challenged the definition of a high performing team or at least that term, right? Could you describe that a little bit? What do you mean? Well, a high performing team is not what my New York Yankees did last night. Okay, so that would be the opposite, losing 16 to 1.
Speaker: But quite frankly, I'll use a sports analogy, because sports analogies are kind of easy for us to understand. It's a pretty simple heuristic for us to be able to kind of 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've just harkened 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,
Speaker: be part of that. But this idea of high performing teams. So does high performing means, is that a financial measure? So what does that mean? So 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.
Speaker: The Red Sox did that last night and 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, is one that has the capacity to have a multiplicity of talents as opposed to a plosity of them. So to speak, my Yankees, they can hit for power. They're handsome.
Speaker: I don't know if that translates into anything like outside of, you know, 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 one less, have only one weakness that's their
Speaker: 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. So it's about the complimentary sum of the parts.
Speaker: overcome maybe any single weakness in your example? I think you hedge your bets that way, for sure. But you come up with a complexity around hiring is challenging. I think I'm chasing my tear here a little bit, too. 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,
Speaker: 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 think 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. What makes the question you're asking me? What is the source code, let's say, of high performing teams?
Speaker: And they started with a hypothesis, which was one that I think we all kind of ascribed 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. Like if we like to go and cheer on the Buckeyes or go do 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.
Speaker: 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.
Speaker: 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, it's 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.
Speaker: 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 two -thirds of the class is just listening, we're missing the mark a little bit. Google kind of proved that a little bit, which was...
Speaker: There's also a lot of implications 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.
Speaker: And it also allows for what's called team voice to be illuminated, 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
Speaker: orientation towards everyone sharing or turn -taking within expressing themselves led to what they called psychological safety.
Speaker: 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
Speaker: 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 if you apparently the high performing teams collectively scored something like 26 or 27 out of 36 which is a high sort of emotional intelligence score. We gauge people's intelligence by looking at each other in the eye.
Speaker: And so that was an indicator of emotional intelligence. That was a long answer, but one that I hope was somewhat relevant. So what can companies or maybe more specifically leadership at companies do to enable some of those things or support some of those things? I mean, what is the role of the owner of a midsize company or the CEO? What can he or she do to foster that environment? That's a good question.
Speaker: 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 that have
Speaker: a sense of ... 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 people that follow them.
Speaker: 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 resident leader. How would you rate yourself on your level of compassion? Compassion can be more detailed in terms of a very simple equation.
Speaker: 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,
Speaker: Empathy is like, oh, he's probably having a bad day. Maybe you two are a Yankee fan and you're a little down. And I can just 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.
Speaker: 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 be like, hey, is everything all right? You just don't seem like yourself today. That's compassion. And the groups at Google that were able to
Speaker: that were seen as high -performing teams were ones where people had the comfort level, 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'm a coach. My area of expertise is in coaching. I'm an executive coach. I do a lot of that work. And one of the core components of coaching is listening.
Speaker: And one of the things we talk about in my class all the time is if you can listen to somebody's emotional state, which doesn't have a sound necessarily, but 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,
Speaker: It sounds like you're really upset today or your voice cracked there when you were talking about that. Is everything okay? That's listening to an emotion, right? 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
Speaker: 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,
Speaker: watch what the data, 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.
Speaker: 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. If leaders can create a sense of compassion around the people that they work with, they live with the orientation around mindfulness, and they create hope.
Speaker: Hope is not nonsensical. Hope is something that's actually possible, but something I would like to endeavor to, too, something that's...
Speaker: that's impressive and reachable. So building on this a little bit, I want to talk about family businesses because... 60 % of the world. And about 40 % of the middle market. Yeah. So a lot of these things that you just described so well, they can be overlooked or maybe even taken for granted with the family dynamic. Right. So what do you think needs to happen
Speaker: in a family -owned business, do you overemphasize hope and empathy and compassion or what do you think that might be different from say, I don't know, public visit or even just a normal company?
Speaker: That's a really good question that I haven't really contemplated long enough. But this idea of 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,
Speaker: Like you've, you've created, right. And then you, and then one of those things, it's always challenging in the workplace is, is this idea of fairness, right? And so nepotism, does that fall into the conversation? And, and, and, 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? Sure. So, you know, how, how does that dynamic play there? I think it probably,
Speaker: I don't know if you overemphasize it.
Speaker: but it's still a thing, right? Despite the fact that their 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 ahead, a mother who's in charge of a big conglomerate or a middle -sized market company who leads with a sense of resonance is gonna get more out of their people. And the data shows that she'll get more out of her people if,
Speaker: 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
Speaker: 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. Let's go back to the millennials and centennials.
Speaker: What are gonna be some of the challenges, right? So you think about, we're gonna have this period of time where there could be four generations in the workforce together, right? Boomers, X.
Speaker: Millennial centennial. Mm -hmm. What do you think some of the chair now actually there are now? All right As these younger folks come up through the ranks become leaders in companies I mean, what do you think you mentioned the idea of a flourishing environment being more attractive? What do you think are gonna be some of the other necessary components? To create a successful environment buckle up I'm
Speaker: 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 100 million strong millennials.
Speaker: I'm using the definition of born after 1980, and centenials 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. The millennials are 100 million strong. The Gen Z or centenials are much smaller.
Speaker: And so we're looking at these bookends in the 20th and 21st centuries around these two kind of huge cohorts, the Baby Boomers and the Centennial, and Mount Millennials, excuse me. One is probably gonna retire a little slower than I think we expected them to. And as they retire, we have this other cohorts that's going to fill those spots.
Speaker: 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. Generation X, proudly so. I still don't believe in authority and et cetera, et cetera.
Speaker: 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 leadership role until I was probably in my 30s. I guarantee you that while I worked at Abercrombie & Fitch, where my job was a 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.
Speaker: that with seven other direct reports who are 22. All of a sudden, the responsibilities thrust upon this generation is very real and it's very present. 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.
Speaker: 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 or being a resident leader. How do I start bringing that to bear into my undergraduate classes?
Speaker: 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, right? 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.
Speaker: So I think that's one aspect of it, which is I think 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.
Speaker: 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 is really sort of was born from our success, the allies success in World War II, it was a military model that worked for a while, but it doesn't work anymore because of these inherent
Speaker: aspects that are false. Not false, but are not as supportive. So the next thing is...
Speaker: 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 think about that too. So let's just wrap up with one final question, which is,
Speaker: If you or I were a leader of a middle market company, what would be the two or three biggest mistakes that could be made to kind of crush team performance? 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? So what do we do? The things that you want to avoid,
Speaker: 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 missed cast, I assure you. I've worked with plenty of them during my Abercrombie experience. I work with them daily.
Speaker: hundreds of students a semester here. I'm deeply impressed with them. I am. I'm enthusiastic about them. So much so that I'm back getting a PhD at the age of 47 and studying them and in a developmental way. So I'm totally jazzed about this generation because I think the world needs changing and I think
Speaker: 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 is too late for us. So I think one of the things I would encourage is embrace it. Embrace this change and understand that that change is happening.
Speaker: The other piece is to harken in these ideas of the whole person. This idea of flourishing is a conversation that emerges outside of the quantitative and 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.
Speaker: which is 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,
Speaker: They would never have solved before. You know what? Apple's probably going to have to build some bridges for us. 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. You're already seeing this. They're going to have to solve some of our societal problems.
Speaker: are 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, right? There is this blending of generations. There's this blending of work and life. I think people want to show up with that sense of blending also being respected by the leaders for whatever size company that they're going to.
Speaker: Awesome. I hope that makes some sense. Yeah, no, it does. This has been great. I want to thank you for your time. Thanks for joining us today. My pleasure. 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.
