Extreme teams
How pixar, netflix, airbnb, and leading innovators achieve success where others stumble
Description
Creating exceptional teams in the corporate sector is a nuanced process, despite the universal recognition of the benefits of teamwork and collaboration. These teams need careful cultivation and support to achieve and sustain outstanding outcomes and a cohesive environment.
Success stories from leading companies like Pixar, Netflix, Airbnb, Whole Foods, Zappos, Alibaba, and Patagonia credit their achievements to the formation of "extreme teams" that surpass their competition. These elite groups are bound by five key practices that are crucial to the development of successful teams.
Robert Shaw has observed that significant accomplishments in business and society stem from the collective effort of small groups with ambitious objectives. It's the synergy of teams, rather than individual efforts, that creates impact. Extreme teams fulfill a fundamental human desire to connect with others in the pursuit of meaningful and sometimes daring goals.
Table of contents
01Cultivate A Collective Passion Among Team Members
Extreme teams, unlike conventional ones, view their work as a calling, bordering on an obsession. They are driven by a passionate belief that they are destined to make a significant impact on the world. This belief, often cult-like, fuels their conviction in their ability to overcome adversity and prevail.
Interestingly, many extreme teams generate more profits because they are not primarily focused on financial gain. Instead, they are engrossed in the work they love, viewing profits as necessary but not the primary driving force. A prime example of this is Patagonia, an American clothing company that designs and sells environmentally friendly outdoor clothing and equipment. Its founder, Yvon Chouinard, is an environmentalist who has built a $750 million company, not by focusing on making clothes or money, but by striving to influence other companies and customers to do the right thing for the environment.
02Prioritize Cultural Compatibility Over Experience In Recruitment
Traditional teams typically select members based on their past experiences or qualifications, whereas extreme teams prioritize passion and personality traits that align with the team's goals and culture. The more distinctive the team's culture, the more crucial it becomes to hire individuals who are a good fit.
These teams are passionate about their beliefs and methods, often preferring to hire someone who is an "A" in cultural fit even if they are a "B" or "C" in terms of pure talent. This approach is exemplified by Brian Chesky, founder of Airbnb, who spent five months hiring his company's first employee, likening it to introducing a DNA chip to the company. Culture, in this context, is defined as "the way things are done around here". Leaders are tasked with hiring and incentivizing the right people for specific tasks, a process that is more art than science, but where great leaders excel.
03Concentrate On Key Priorities While Remaining Receptive To Innovation
Conventional teams often value generalists who can perform a variety of tasks, while extreme teams focus intensely on a few key priorities that underpin success. This focus is crucial as every team has finite resources and cannot accomplish everything they envision. Therefore, it's essential to concentrate on areas that yield the highest return on investment.
A prime example of this approach is Airbnb. Initially, the company aimed to help users invite strangers to stay in their spare rooms. As the company grew and gained traction, rental firms began using Airbnb. However, the founders recognized that individual travelers were their core customers and refocused their resources to improve the service for these individuals.
As the company expanded, the founders developed an annual operating plan with a dozen key objectives. However, this proved too complex, leading Airbnb to limit its objectives to four each year, summarized on a single sheet of paper. This streamlining has contributed to Airbnb's phenomenal growth rate.
04Establish A Team Environment That Balances Rigor And Compassion
Conventional teams tend to be less assertive, while extreme teams are both harder and softer, driving for measurable results on visible targets while fostering collaboration and loyalty. This dynamic is interesting as most firms operate with either a hard edge, like General Electric, setting performance targets, using disciplined practices, and holding employees accountable, or a soft edge, like Google, emphasizing strong bonds between creative individuals in an informal, talent-driven environment.
Extreme teams, however, create a work environment that is both hard and soft, achieved by establishing and maintaining a specific culture within the team. This culture, defined as "the way we do things around here", incorporates core beliefs and assumptions and operates at two levels: cognitive, shaping how people think and act, and emotional, dictating the feelings within the team.
05Embrace The Discomfort Associated With Risk And Disagreement
Conventional teams often strive to avoid conflict, while extreme teams thrive on it, believing that robust ideas emerge from critical disputes. These teams relish significant challenges and high-risk situations, as exemplified by Jack Ma's creation of Alibaba. Two decades ago, Ma, with the help of 17 friends, founded Alibaba to assist small and medium-sized Chinese companies in accessing global markets. Anticipating eBay's potential threat, Ma established a small team to create an internet auction site tailored to Chinese consumers' needs.
Today, Alibaba, China's largest retailer, boasts 25 business units, 38,000 employees, and over 370 million active customers, accounting for more than 60% of packages shipped through the Chinese postal system. The company has gone public to fund its expansion into emerging markets like China and Brazil. Ma attributes Alibaba's success to hiring the right people, with the company's management meetings notorious for their heated debates.
06Synthesis Initiating And Developing A New Extreme Team
Aspiring to start a successful startup and build a future extreme team requires a compelling purpose to attract passionate people, a willingness to hire competent individuals who fit the culture, the right priorities and success metrics, and a set of essential beliefs and behaviors for the group.
Netflix serves as a prime example of this approach. Born from the simple idea of providing movies on DVD via the U.S. postal service, Netflix was significantly smaller than Blockbuster in 2000. However, its agility and innovative culture allowed it to transition successfully to online streaming and content production, while Blockbuster went bankrupt.
Netflix's success is attributed to its high-performance culture and high "talent density". This was realized when cash flow shortages forced Netflix to lay off a third of its workforce, and the remaining employees were able to perform tasks faster and better. This led to the understanding that fewer people with more talent will always outperform larger teams of average employees, prompting Netflix to hire only top performers.
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