This paper examines the role of organizational culture and team development in small businesses, drawing on Peter Drucker's three-tier team framework — Fixed Position, Parallel, and Innovation-oriented teams. It argues that small business leaders must adopt transformational leadership and mentoring practices to guide their organizations through the challenging shift from rigid, process-bound team structures to agile, innovation-centered ones. The paper reviews relevant literature on high-growth software firms, virtual teams, and empowerment strategies, using Salesforce.com as a case example. It also outlines key workplace trends, the pros and cons of team transitions, and the critical role of leaders as coaches in building accountable, empowered workforces.
The catalyst for growth in both manufacturing and services small businesses is the continual nurturing and strengthening of teams. Far from a panacea for the challenges of small businesses, teamwork is one of the most demanding aspects of keeping any organization running. The many levels of teams as defined by Peter Drucker (Alas, 2007) — encompassing Fixed Position, Parallel, and Innovation-oriented teams — have particular relevance to the stability and growth of small businesses. Each of these team types has direct implications for how effectively small business leaders empower their employees (Hayes, 2008). Drucker differentiates each type by the rigidity or agility of its processes, the skill sets of employees involved, and the degree of group versus individual accountability.
The role of teams in high-growth, high-technology firms — including those in the software industry — experiences far greater stress when shifting from Parallel to Innovation Teams (Weterings & Koster, 2007). The need for transformational leadership, including mentoring, is critical in high-growth small businesses (Ling, Simsek, Lubatkin, & Veiga, 2008). The transition from a Parallel to an Innovation Team places an inordinate amount of stress on processes, systems, and people in any organization. These conditions are only exacerbated in smaller, faster-growing businesses that have limited personnel and resources.
The role of mentoring in small businesses is crucial if teams are to successfully transition from limited, less-accountable roles in Fixed Team structures (Alas, 2007) to more accountable and agile structures in Innovation Teams. Leaders need to concentrate on transforming the underlying processes that form the basis of how a company operates so that teams can make the transition from Fixed to Innovation Teams (Drucker, 1992). In subsequent analysis of Drucker's team definitions, Alas (2007) notes that leaders must internalize and passionately embrace process, system, and personnel change if corresponding improvements in efficiency and accountability are to be achieved.
Small business leaders must define and internalize change, taking time to coach employees through the transition from Fixed to Innovation Teams via transformational leadership (Andersson & Floren, 2008). Transitioning teams from a Fixed to an Innovation-based focus — driven first by process redefinition at the company level and second by transformational leadership at the managerial level — redefines brands today (Woods, 2004). Small businesses' identities are the products and services they deliver, and team development, goal definition, and goal accomplishment either strengthen or detract from any small business's reputation, brand, and identity. Based on all these factors, it is critical for small businesses to have a concerted strategy for continuously improving and growing their teams from Fixed to Innovation as the foundation of their structure and operations.
Given how turbulent the global economy is today, the most critical role of any leader in any business is infusing their organization with the ability to change rapidly. For small business leaders, this can mean the difference between financial viability and continued growth on the one hand, and decline on the other (Brunninge, Nordqvist, & Wiklund, 2007). The growth of small businesses has increasingly defied traditional geographic limitations through the use of virtual teams, which by their very nature are Innovation-oriented (Mihhailova, 2007).
The challenge of creating Innovation Teams must begin with fundamentally re-architecting how work is done in a small business — which means redefining processes and systems so that employees have the opportunity to "own" their jobs and gain greater empowerment as a result. Studies of high-growth small businesses in the software industry (Weterings & Koster, 2007) show that the use of virtual teams and the infusion of task ownership (Zahra, Neubaum, & Naldi, 2007) are directly attributable to the creation of Innovation Teams. Clearly, the challenge for any small business leader is to cultivate a high level of task ownership strong enough to overcome resistance to change. Only by being a leader who coaches and internalizes the change that employees are also asked to make can meaningful shifts in team performance be achieved (Andersson & Floren, 2008).
The progression in organizational cultures from Parallel to Innovation Teams is evident in the software development strategies of small, rapidly growing software firms globally (Weterings & Koster, 2007). A case in point is Salesforce.com, which began as a start-up in the Customer Relationship Management (CRM) market and was one of the first companies to base enterprise software on a Web Services product strategy. The Salesforce.com culture has long focused on performance metrics at the team member level, which is consistent with Drucker's philosophy of ensuring team performance (Alas, 2007) through individual accountability. From start-up to leading software provider, Salesforce.com successfully navigated the shift from Parallel to Innovation Teams through the use of empowerment and accountability for results down to the individual contributor level (Brunninge, Nordqvist, & Wiklund, 2007).
The following are the key workplace trends and practices in the development of Innovation Teams in small businesses. The first is the redefinition of processes so that smaller, more agile teams staffed by specialists can address internal problems and coordinate more effectively on larger project outcomes and goal attainment. The second key trend is the development of more egalitarian, or flatter, organizational structures that concentrate organizational power in knowledge and expertise rather than seniority or title. In high-performing small businesses, the organizational chart has effectively been inverted to support a greater focus on leaders providing coaching and guidance, with less emphasis on authoritarian approaches to leadership (Hayes, 2008).
A third key trend is the use of virtual teams, which is especially prevalent in high-growth, services-oriented small businesses globally (Mihhailova, 2007). This trend forces leaders to be more attuned to the unmet needs of their subordinates and to manage virtual teams through knowledge and information sharing, ensuring that each team member remains focused on their individual contributory role (Weterings & Koster, 2007). Taken together, these trends and practices create one of the most challenging leadership environments that small businesses face. Leaders in small businesses no longer have the option of avoiding the critical areas of change; they must concentrate on becoming the catalyst for change through effective coaching and nurturing of teams.
The pros and cons of leading teams from Fixed or Parallel structures to Innovation-centered ones are more process-centric than they are systems-related. The many advantages of shifting a small business from fixed, often rigid processes to more flexible, process-centric ones give it the ability to respond more rapidly to unmet market needs and to avoid risks. Yet significant change is difficult for people to accomplish, and there is often a high degree of resistance to change in many organizations.
"Benefits and resistance challenges of team change"
"Process rigidity, innovation, and leadership lessons"
The critical role of leaders as mentors and coaches for team development is not an isolated function; it is rather a progression of redefining those processes most critical in any small business to allow for greater ownership and accountability at the employee level. Only by concentrating on re-architecting a small business to allow teams to be innovative will a company attract the kinds of employees who can flourish in environments that capitalize on change rather than fear it.
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