Navigate economic downturns with high-performance team strategies for resilience.
EARLY IN 2009
Patrick Parenty was promoted to the position of President of L’Oréal’s Professional Products Division. Like most consumer products companies, L’Oréal experienced a difficult sales environment during 2008. All seven brands in the Professional Products Division suffered, but the one that held up best in a challenging market was Redken Fifth Avenue, which Parenty had led since 1999.
“If you have an organization where strategy, business priorities, and roles and responsibilities are very clear, and people are held accountable, you will have a relatively stronger business,” Parenty asserts. “In a downturn, you probably won’t be able to avoid losing some business, but you will have smaller losses than the competition.”
Parenty describes the horizontal, high-performance organization model, which Redken has been following for more than a decade. It is a radical departure from the traditional hierarchical model that dominates the corporate landscape and is the best way to drive and sustain results in both good times and bad.
In December 2008, The Wall Street Journal reported the results of two surveys conducted by The Conference Board—one in July 2008 and another in November 2008, as the credit crunch deepened and the global economy slowed substantially. After the downturn, execution of business strategy remained the top priority, but nearly twice as many respondents said they were concerned about the need for speed, flexibility, and adaptability to change. The horizontal, high-performance model is ideally suited to address these challenges.
In today’s business world, work is accomplished largely by teams. A horizontal, high-performance organization is composed of high-powered teams working at peak potential at every level. Everyone on every team understands the company’s overall strategy and the operational goals that stem from it. Each team focuses on achieving the highest results as quickly as possible.
The Benefits of the Model
Especially in times of contraction and churn, this model offers:
Greater top-to-bottom alignment
Elimination of silos
Faster, better decision-making
Increased flexibility
Greater accountability
Added focus on results
To get the maximum benefit from this model, it begins with the process of “alignment”, gaining the agreement of everyone on the team in five key areas:
Business strategy
Goals and deliverables coming from the strategy
Roles and responsibilities at individual and department levels
Protocols for interpersonal behavior and decision-making
Business relationships and interdependencies
The Alignment Process
Alignment begins with fundamental questions:
What is our competitive differentiator?
What direction should new business development take?
What products or services should we offer, and to which markets?
What are our growth and revenue expectations?
When a senior team is aligned, every member understands and agrees on the current strategy and the assumptions it is based on. If conditions warrant recalibration of the strategy, this is easier when the team shares a common frame of reference.
Parenty recalls that, when he first joined Redken, there was no follow-through in executing strategy. The general manager would set ambitious goals, but the directors had no clear roadmap to achieve them. Only after the team went through an alignment process did they begin voicing concerns and working collaboratively to set realistic and achievable goals.
Clarifying Roles and Responsibilities
Unclear roles can lead to turf battles and division. Parenty emphasizes the importance of clearly defining responsibilities and expectations. During alignment sessions, teams engage in exercises to clarify roles, which fosters collaboration and reduces conflict.
Establishing Protocols
Teams at Redken developed protocols for both interpersonal behavior and decision-making:
Conflict Resolution: Team members address conflicts directly and escalate only if necessary.
24-Hour Rule: Issues must be addressed within 24 hours or dropped.
Silence Equals Endorsement: Remaining silent in discussions implies agreement.
These ground rules help eliminate delays and ensure accountability. Parenty notes, “We make better, quicker decisions because we have these rules in place.”
Transforming Relationships
After aligning business relationships, Redken’s interdepartmental behavior changed completely. Open and honest communication became the norm, fostering a culture where both successes and failures were discussed without defensiveness.
The Competitive Advantage
The horizontal, high-performance model provides no guarantees of success but improves an organization’s chances of thriving in tough times. Teams that are aligned, focused, and free from internal conflict gain a distinct advantage, particularly in turbulent environments.
When new opportunities arise, high-performing teams are ready to act while competitors scramble to rebuild. Parenty’s experience at Redken exemplifies the power of alignment in driving sustained results and adapting to change.
“Without aligned roles and responsibilities, it is difficult to imagine an organization being able to respond to the pressures of the marketplace in time to stave off trouble.”
Roles and Responsibilities at Individual and Department Levels
Whose job is it, anyhow? These five words are some of the most loaded in the management lexicon. Unless the answer is crystal clear, you can count on turf battles and a divided, paralyzed organization. Without aligned roles and responsibilities, it’s difficult to imagine an organization responding to marketplace pressures in time to stave off trouble.
At your next meeting, try this role-responsibility exercise, which we typically use in alignment sessions:
Ask team members to write their answers to the following questions on an easel sheet:
What are your key responsibilities?
What are the activities for which you are responsible?
With whom, on this team and outside it, do you need to collaborate to get your job done?
What do you think other players perceive your job on the team to be?
What questions do you have about your role?
Next, post the sheets on the conference-room wall. Have each team member and the team leader review the sheets, putting their initials next to any statements they disagree with or have questions about. As initials are added, disconnects become increasingly apparent. Encourage discussion about these disconnects. The objective is to assign each contested role or responsibility to one person. If, after a reasonable time, those directly involved cannot reach agreement, the leader should step in and make the final call.
While this exercise takes time, teams invariably find that clearing up confusion over roles and responsibilities is crucial to improving performance.
Decision-Making Protocols
Parenty’s comment brings us to another critical area: decision-making. On great teams, the leader is no longer the sole decision-maker. Much of the action shifts to subteams, where decisions are often reached by consensus or collaboration. While leader-centered decision-making has the advantage of clarity, migrating away from this model can create confusion, which is why teams must develop and agree upon decision-making protocols.
Questions to address include:
How will important decisions be made: unilaterally, collaboratively, or by consensus?
Who will be consulted for information and opinions?
Who will make the final decision?
Who will execute it?
These protocols should not be imposed by the leader but rather hammered out collectively. Commitment to the agreed-upon rules is essential.
Business Relationships and Interdependencies
Effective teamwork depends on healthy interpersonal relationships. We ask teams to assess their interpersonal behavior using a simple exercise:
Each player identifies where their behavior falls on a continuum—nonassertive, assertive, or aggressive.
The rest of the team weighs in.
This often reveals significant disconnects between how individuals perceive themselves and how they are viewed by their colleagues. For example, someone perceived as aggressive by others may see themselves as merely assertive. While uncomfortable, this process is often a real eye-opener.
This exercise is followed by another in which team members share, in a depersonalized, business-like manner, how their colleagues’ interpersonal behavior impedes results. Learning to deliver and receive "straight talk" is challenging but essential. Once mastered, teams can move on to resolving conflicts and collaborating more effectively.
Results of the Horizontal Model
After transitioning to a horizontal, high-performance model, Redken saw double-digit sales and profit growth in an industry growing at an average of 2%. Parenty attributes this success to alignment and clearly defined protocols. “We do not miss opportunities due to inaction or internal conflicts. We make better, faster decisions because of the rules we have in place,” he explains.
Addressing Interoffice Conflict
When Parenty initiated the alignment process in 1996, the division was siloed. Teams rarely communicated, and functional leaders prioritized their own goals over shared objectives. This “who’s who in the zoo” mentality led to declining sales and morale—even in good times.
Harvard Business School’s Prof. Rosabeth Moss Kanter identifies behaviors common in companies facing tough times: lack of collaboration, scapegoating, finger-pointing, and in-fighting. High-performance organizations avoid these behaviors by addressing conflict openly and swiftly, regardless of the economic climate.
A Competitive Advantage
In horizontal, high-performance teams, how results are achieved matters as much as what is achieved. Teams aligned in the five key areas—business strategy, goals, roles, behavior protocols, and relationships—gain a distinct advantage in turbulent times.
As new opportunities emerge, high-performing teams are prepared to act quickly, leaving competitors scrambling to rebuild.
Howard M. Guttman is the principal of Guttman Development Strategies, Inc., a Mt. Arlington, N.J.-based management consulting firm.
His latest book is Great Business Teams: Cracking the Code for Standout Performance.
USA TODAY ★ JANUARY 2010