Saturday, June 23, 2012

Pressure and Clever Ideas: How Teams Mess Up

This week we have been treated to news of firms under pressure trying clever new ways of competing. Microsoft wants to improve its revenue from Skype, and is going to place advertisements during calls. The ads will be linked with what Microsoft knows about the users in the call, but they have decided against making the ads responsive to the conversation topic because of concerns it might be "creepy." Best Buy are launching a sales associate training program in order to reduce "showrooming," or people looking at a product in a store before buying it from a competitor online.

Both of these initiatives might irritate customers. Skype users have been mostly left alone after Microsoft acquired the company, and are now going to have to get used to two changes: ads, and possibly ads that are so well targeted that they cause discomfort. Of course, we still don’t know how well Microsoft can target the ads, but they will clearly profit more from the ads the more accurately they can target them. Training sales associates to reduce showrooming sounds fishy because the main reason for showrooming is the price difference between items bought in the store and items bought on the web. If Best Buy wants to reduce showrooming by training instead of by reducing that gap, it is reasonable to assume that the training will include high-pressure sales tactics.

So who came up with those ideas? Probably there was a team in action in both cases. Teams are great ways to come up with solutions to problems, especially creative solutions, and they can be made to work hard under pressure. Pressure that naturally comes from a firm needing to improve its performance and pressure artificially piled on by supervisors of a team influences how teams work. But there is a problem. As Heidi Gardner has shown in recent research, pressure not only makes teams likely to come up with solutions, it can also reduce the quality of those solutions. This is because teams under less pressure are better able to pool the expertise of their members to produce solutions that integrate knowledge, while teams under high pressure are too quick to settle on solutions and too deferential to their leading members.

So is there a cure to this problem? For major decisions or development efforts it seems strange that teams should be put under pressure at least initially, because the first steps are too important to rush through. Also, because any team, not just one under pressure, might go off on a wrong path, others should also check the solutions. Of course, all these steps may have been taken by Microsoft and Best Buy, and the initiatives may turn out to be successful in the end. We can still be skeptical because of the poor track record of organizations under pressure, and because of what we know about teams under pressure.

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