Hot Spots

Why Some Teams, Workplaces, and Organizations Buzz with Energy - And Others Don't

Lynda Gratton

• Publisher: Berrett-Koehler Publishers
• Year: 2007
• ISBN:
  9781609943554
• Topic: Business
• Subtopic: Management
• Index: Business

You always know when you are in a Hot Spot. You feel energized and vibrantly alive. Your brain is buzzing with ideas, and the people around you share your joy and excitement. Things you've always known become clearer, adding value becomes more possible. Ideas and insights from others miraculously combine with your own to create new thinking and innovation. When Hot Spots arise in and between companies, they provide energy for exploiting and applying knowledge that is already known and genuinely exploring what was previously unknown. Hot Spots are marvelous creators of value for organizations and wonderful, life-enhancing phenomena for each of us.Lynda Gratton has spent more than ten years investigating Hot Spots--discovering how they emerge and how organizations can create environments where they will proliferate and thrive. She has studied dozens of companies and talked to hundreds of employees, managers, and executives in the US, Europe, and Asia. She has asked the important questions: Why and when do Hot Spots emerge? What is it about certain groups of people that support the emergence of Hot Spots? What role do leaders play? She's discovered a host of elements that together contribute to the emergence of Hot Spots--creating energy and excitement, and supporting and channeling that energy into productive outcomes.In this groundbreaking book, Gratton describes four crucial qualities that an organizational culture must have to support the emergence of Hot Spots, looks at what leaders can do to encourage them, and offers activities and tools you can use in your own company to increase the probability of them arising. In these days when traditional organizational boundaries are becoming barriers to progress, Gratton offers advice and guidance that you can use right now to increase the probability of Hot Spots emerging in your organization.

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CHAPTER 1
GENERATING EXTRAORDINARY ENERGY

COMPANIES FLOURISH WITH extraordinary energy and fade as energy wanes. The energy in Hot Spots can fuel innovation, which is fast becoming the core capability for organizational success, and ensure that best practices and ideas are incorporated into productivity improvements so that the company remains in the forefront. Hot Spot energy has the potential to trigger new ways of thinking about old problems and of revamping practices and processes to deliver superior services and products. The energy in a Hot Spot can, for example, fuel new ways of thinking about the cost base of a company that bring real insights around cost innovation. The energy of a Hot Spot can even lead us to reinvent the way we think about managing people or the practices that support performance management.

Corporate Thermal Imaging

When extraordinary energy arises, it forms Hot Spots—occasions when people from inside and outside the company are able to engage with each other in a way that they have rarely been able to do. When this energy and the resulting excitement are ignited, they have the power to propel teams to work toward goals they never believed were achievable. Let us examine Hot Spots through the metaphor of thermal imaging.

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Imagine for a moment that you are standing on the very peak of a mountain, looking through thermal-imaging goggles that show the extent of energy in the landscape. As you place the goggles over your eyes, you are able to see clearly the vast terrain of valleys and hills spread out in front of you. Imagine that the terrain stretched out before you is the organization.

These particular instruments are sensitive to energy and heat—in this case, the passion of the individual and the energy of the organization. So the terrain you are observing is the terrain of the whole company, and you are seeing people in the company living their day-to-day lives.

As you look through your heat-sensitive goggles, the terrain appears green. Daily work is happening in a predictable way—people are going about their business, and little excitement or energy beyond the norm is being generated. The green signifies “business as usual.” As you continue to watch, suddenly, in the distance, you see a flare of bright orange and red erupting. This flare could emerge in many places. It could be a workplace, a particular team or department or factory. It could be in a coffee shop, across a hallway, or in a conference. It could even happen across the whole company. This is a Hot Spot. It is a moment when people are working together in exceptionally creative and collaborative ways. As you watch, other Hot Spots emerge across the terrain. Some of these Hot Spots remain bright red; others fade to orange and then back to green. Then, from the corner of your eye, you see the green in one part of the landscape changing from green to icy blue. The energy in this place, for these people, is beginning to be depleted. As energy depletes, the heat begin to chill, and the Big Freeze has taken over.

Hot Spots occur when the energy within and between people flares— when the mundane of everyday activities is set aside for engaged work that is exciting and challenging. It is at these times that ideas become contagious and new possibilities appear.

As you survey the landscape through your thermal goggles, what do you think causes the changes in energy? Why is it that in some parts of the organization you see the green of the predictable, while in other parts there is the blue of the Big Freeze? And why on occasion does the red of the Hot Spot flare? Are these random occurrences, driven by factors beyond the control of the organization? Are these fluctuations in energy the result of forces that are part of the everyday work of people, forces that are so deep and so complex that they are impossible to predict, let alone control? Should we simply be passive observers of Hot Spots, looking down from the mountain, or are there actions that we can take to increase the probability of Hot Spots emerging?

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These are crucial questions for employees who are eager to work in Hot Spots and for executives intent on encouraging the emergence of Hot Spots. My research into this phenomenon shows that the probability of Hot Spots occurring can indeed be increased. There are ways of changing the blue of the Big Freeze to the green of business as usual and even to the red of an innovative Hot Spot. This is good news; however, there is a challenge. The challenge is that to do so, some companies will have to make some rather fundamental changes in the way they are structured, the values they espouse, and the behaviors of executives and leaders.

To see what these changes might entail, let us first take a closer look at what happens in a Hot Spot when it emerges. In companies across the world, I have watched Hot Spots flare. I have seen Hot Spots emerge in the teams that network between Poland and Venezuela in the oil giant BP. I have seen an incredibly innovative Hot Spot emerge in Nokia as teams grapple with ways to serve the Asian market. I have watched in awe as the volunteer programmers in Linux created clusters of Hot Spots that are a formidable competitor to Microsoft and have fundamentally reinvented the way we think about organizations. In each of these companies, I have observed over and over again that a Hot Spot flares through the spontaneous combustion of three elements.

Hot Spots = (Cooperative Mindset × Boundary Spanning × Igniting Purpose) × Productive Capacity

The First Element: A Cooperative Mindset

One of our most profound insights about Hot Spots is that their innovative capacity arises from the intelligence, insights, and wisdom of people working together. The energy contained in a Hot Spot is essentially a combination of their individual energy with the addition of the relational energy generated between them. In Hot Spots, value is created in the space between people when people come together. As a consequence, the quality and extent of these relationships is crucial to the emergence of Hot Spots, and it is a cooperative mindset that is the foundation of these high-quality relationships. Hot Spots arise because people are excited, and willing and able to cooperate with each other. It is these exciting, skillful cooperative relationships that fuel the exchange of knowledge and insights that ignite a Hot Spot and create innovation. Let’s take a moment to think about a cooperative mindset and the nature of human potential and human capital.

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A key aspect of human potential in Hot Spots is what people know and how they use this knowledge. So in a sense, we can think of a Hot Spot as the sum of all the intellectual capital of the people within it. Although intellectual capital is a crucial aspect of Hot Spots—without it, the Hot Spot becomes dull and tepid—it is not sufficient. The energy flows and ebbs within Hot Spots are just as likely to be caused by emotional capital. This is the emotional insight and ability that people have to adapt and modify their behavior. It is this emotional capital that plays a critical role in self-awareness and self-knowledge. However, the potential energy of a Hot Spot is not simply the addition of the intellectual and emotional capital of all the people who are engaged within it. The effect is a combination effect rather than a simple additive effect. The combination effect occurs as a result of the relationships between people, what we might call the social capital of the Hot Spot. This social capital signifies the depth and extent of relationships within the Hot Spots and the networks of relationships outside the Hot Spot. It is the energy released through these relationships that plays such a crucial role in Hot Spots.

The three aspects combine to form a triangle of human capital and human potential (see Figure 1.1). Hot Spots emerge when all three aspects are engaged in a reinforcing cycle. People become energized and excited about sharing knowledge and about what they might learn from others— their intellectual capital is engaged as they become increasingly emotionally involved. As people feel increasingly passionate about something, they really care, and they enjoy the emotional contagion as others becoming engaged and excited. Hot Spots become extraordinary opportunities for social capital to be created as friendships and relationships are forged and the people involved feel the pleasure of attachment and intimacy.

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Where Hot Spots fail, these three aspects of human potential rapidly atrophy. People lose interest, they no longer believe they can learn and develop, and the intellectual challenge is gone. They increasingly withdraw emotionally as the passion of the project wanes and they become increasingly individualistic and uncooperative as relationships cool. Instead of engaging in exciting and skillful cooperation, people become passive or uninterested in each other or even turn competitive and aggressive. Instead of contributing to the learning and innovation of a Hot Spot, they hoard their knowledge and insights, and the level of energy drops to neutral or even disappears entirely. The Big Freeze has taken over.

Figure 1.1 The three aspects of human capital and potential

The emergence of the three elements of human potential begins the process of Hot Spot development. This emergence is in turn dependent on the extent to which individuals value the power of working with others— what I term a cooperative mindset. Without this valuing of cooperation, intellectual and emotional potential are turned inward, to development of the individual, rather than outward, to the development of others and the creation of Hot Spots. Without a deep cooperative mindset, human potential is geared toward producing “superstars” and all the competitive values associated with them. For companies such as Goldman Sachs that actively recruit highly talented people, this emphasis on the cooperative mindset is crucial to ensuring that the firm does not break up into clusters of superstars with their own fiefdoms. Chapter 3 takes a closer look at how companies like Goldman Sachs have created a context in which there is enough of a cooperative mindset that the talents of the firm remain integrated rather than fragmented.

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Hot Spots = (Cooperative Mindset × Boundary Spanning × Igniting Purpose) × Productive Capacity

The Second Element: Boundary Spanning

Within Hot Spots exciting and skillful cooperative relationships thrive, built on the three combined aspects of human capital. These relationships differ in their typology, that is in their depth and extent. This typology is important. The extent and depth of relationships within Hot Spots can have different effects on the business value created within Hot Spots. With regard to the depth of relationships, some relationships are strong and have been in place for many years. Other relationships are more of an association or an acquaintance—with people who are known but not known well.

We also found that the extent of boundary spanning in the relationships differs within Hot Spots. Some relationships are within the group. Other relationships are with people outside the group, in other functions, or even in other companies. In this case, boundary spanning is high as these networks of relationships cross team, function, and company boundaries.

The effects of these relationships on the capacity of the Hot Spot to create business value is symbolized in Figure 1.2.

The real insight in the first element of a Hot Spot is that a cooperative mindset is crucial to the emergence of a Hot Spot. The insight for the second element is that the nature of the business value created within a Hot Spot differs according to the extent to which boundaries are crossed. Figure 1.2 shows the different ways in which value is created in a Hot Spot. Innovative value is created through novel combinations of the ideas, knowledge, and insights of people. Value can also be created as people exploit their shared expertise within their group or explore ideas, knowledge, and insights with people outside their group. We return to this topic in Chapter 4.

Value creation through exploiting shared expertise

There are times in Hot Spots when the value of the community is created primarily because groups of people have been working together for some time in an activity that has been ignited by a particularly complex or challenging goal. In these circumstances, value within the Hot Spot is created as a result of the members’ exploiting and sharing knowledge they already have. This outcome is unlikely to be unusual or innovative because the members of the Hot Spot know each other well and are probably rather similar in their competencies and attitudes. Hence they are unlikely to learn things from one another that they did not already know. As Figure 1.2 illustrates, although Hot Spots can emerge in this lower left quadrant, in reality they need the stimulation of people from outside the group to flourish in the long term.

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Figure 1.2 Effects of relationship quality on value creation in Hot Spots

Value creation through exploration

Some of the relationships within a Hot Spot are strong ones between people who know each other very well but are located in different groups or functions. These strong boundary-spanning relationships are marvelous opportunities for value to be created as each person explores in depth what the other knows.

Value creation through novel comb...