Business Psychology - Latest Findings

Article No. 239
Supervision Findings, by James Larsen, Ph.D.

Maintaining Championship Performance

Researcher explores the factors that lead to sustained competitive advantage.

Picture in your mind the final moments of a championship athletic contest. Picture especially the jubilation of the winning team's players. They are happy because they won, but that's not the only reason they are happy.

Part of their happiness is sheer amazement in their accomplishment . . . amazement in the elegance and efficiency of their efforts to score points and to prevent other teams from winning. And if you watch them play, you can see it. You can see nuances of their moves and coordination of their actions that can be thrilling at times. But if you ask them to explain what they did, they'll talk in generalities about hard work and team loyalties, and in following years, when new teams test them, new championships often elude them.

Why is that, and why should business owners care?

Shawn Berman from Santa Clara University, is a researcher who sees many parallels between athletics and business, and he recently completed a study of the National Basketball Association (NBA) which he believes will give supervisors new ways to help their employees maintain high levels of performance.

Berman examined a quality of team play he called "tacit knowledge," and he investigated the belief shared by many researchers that tacit knowledge is the heart of competitive advantage for our businesses.

Members of championship athletic teams know their jobs, but beyond this, each person also knows the patterns of other players. Team members adjust in subtle, unconscious ways to each other, and together, they form elegant, complex patterns that no one person could explain. This is tacit knowledge. It involves recognizing patterns and making subtle adjustments. It must be discovered by team members. It can't be taught.

Tacit knowledge requires time to develop. People must work together in a setting that demands their best efforts, and rapid turnover spoils it. When people are replaced, the patterns change and must be relearned.

Berman studied the relationship between team composition and performance and found support for the belief that tacit knowledge forms the core of a team's advantage, but he also learned more.

Berman found that most of the learning and most of the advantage takes place early in the group's experience together. As time passes, new adjustments come more slowly and eventually stop altogether. Patterns then become rigid, and as conditions change, tacit knowledge becomes a handicap. The rigid patterns formed by unconsciously adjusting to each other in the past become blocks that stop change. People resist abandoning them. The tacit knowledge that had been a blessing and the core of their competitive advantage becomes a curse, and people must leave before new tacit knowledge can once again lead to outstanding performance.

But it doesn't have to be this way in our businesses, says Berman.

Berman believes that we should continuously strive to improve the quality of our employees. This is the most important factor, he says. Recruiting highly skilled people makes an immediate contribution, but Berman also feels we should continuously strive to improve the skills of the people we have.

When we add capabilities in a group, new adjustments by others must be made. If we have good people getting better in a group that's already performing at a high level, then we can sustain the competitive advantage that tacit knowledge gives us. We can avoid the handicap that comes from too much time together when patterns become rigid. We can maintain that feeling of amazement in our people when they come to work and accomplish good things in a tough environment. We can keep our champions champions.

Professor Berman says so.

Reference: Berman, Shawn L., Jonathan Down, and Charles W. Hill (2002) Tacit Knowledge as a Source of Competitive Advantage in the National Basketball Association. Academy of Management Journal, 45 (1), 13-31.

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