Building Better Teams

A conventional wisdom about teams is that they tend to perform better when members exchange knowledge freely among themselves and outsiders. Another widely accepted notion is that diversity among team members leads to better performance because of the range of viewpoints and experience of the different individuals. But are those assumptions accurate, and how do those two factors — knowledge sharing and diversity — relate? Recent research by Jonathon N. Cummings, an assistant professor at the MIT Sloan School of Management, sheds some light.

Cummings conducted a field study of 182 work groups at a Fortune 500 telecommunications company that manufactures a variety of products. The teams had worked on diverse projects, including product development, service improvement, process management and manufacturing. The projects were mainly conducted between January 1998 and January 2000, with an average duration of 15 months.

The average team in the study consisted of eight people. Members differed in their geographic locations (including North America, Asia and the Middle East), functional assignments, reporting managers (including directors and general managers) and business units. Those four attributes were the key factors in determining the “structural diversity” of the teams. Group leaders and members were surveyed to estimate the amount of knowledge they shared with others during their project, including general overviews of their work, specific requirements, analytical techniques, progress reports and results. Senior management assessed the performance of groups on the basis of several criteria, including methods used to solve problems as well as the innovativeness of solutions.

There were two major findings. First, teams that shared knowledge, both intragroup and externally, tended to perform better. This result confirmed much earlier research. Second, as the diversity of teams increased so did the correlation between external knowledge sharing and performance. That is, structurally diverse teams did not necessarily perform better (or worse) than their homogeneous counterparts. But structurally diverse groups did appear to be better equipped to take advantage of knowledge shared with outsiders.

Previous studies have investigated the demographic diversity of groups, such as differences in the sex, age or tenure of members. But comparatively little attention has been paid to structural diversity, which Cummings found to be a more important factor, at least in terms of team performance and innovativeness. One benefit of structural diversity is that it can help companies avoid reinventing the wheel. Consider a team in the study that was responsible for designing a new electronics device. The group consisted of nine people, located in the United States, Singapore and Israel. To develop a specialized chip for that product, the team was able to modify the existing design of a similar chip developed by another group in Israel. That type of technology transfer would have been far more difficult had none of the team members been based there.

Of course, structural diversity has its drawbacks. For instance, geographic dispersion can greatly complicate team communication and work coordination. But Cumming's study suggests that the benefits of structural diversity outweigh the costs, although he points out that further research is needed in that area. Also, additional work is required to answer “the chicken or the egg” question: Specifically, did knowledge sharing result in higher performance or did better performance lead to more knowledge sharing?

Such issues aside, Cummings advises managers to be more explicit about the importance of knowledge sharing. To encourage greater sharing, he recommends, among other things, cross-functional workshops and “knowledge fairs” to bring people together and specific incentives to motivate employees. For instance, performance evaluations could be based in part on how well workers exchange knowledge with one another.

Cummings' article, “Work Groups, Structural Diversity and Knowledge Sharing in a Global Organization,” will appear in Management Science. Contact him at cummings@mit.edu.