In the early 1980s, Champion International Corporation decided to build a state-of-the-art paper mill in Quinnesec, Michigan. Its aim was to become the leading low-cost producer of quality paper. But most of its competitors shared the same aspiration, and, like Champion, their solution was to invest heavily in big machines. So CEO Andrew Sigler sought another means of differentiating his company from its rivals: a new set of management and operations systems that would help the mill workforce to meet the highest standards of productivity, yield, and quality.

What this meant in practice was that the mills would be run by teams—in those days, an unproven and risky approach. Champion’s quest for team performance eventually spread to dozens of mills and took a decade of effort. There were many stops, starts, and stumbles along the way, but Sigler’s determination and his executives’ conviction ensured that Champion stayed the course. The mills were transformed both technologically and culturally. In 1995, Jaakko Pöyry, a consulting firm that benchmarks worldwide paper-mill performance, rated Champion’s mills in Quinnesec and Brazil as among the best in the world.

Perhaps surprisingly, it was not until four or five years after this transformation that team performance began to penetrate the company’s senior leadership group. Why did it take so long? Largely because team performance was less obviously needed at the top, and more difficult to achieve. Champion’s continuing journey shows why team performance down the line does not readily translate into team performance at the top. It also illustrates how valuable top-level team performance can be. The story covers three separate eras, the latest of which is still unfolding.

Era 1: Pioneering teams at the mills

A paper mill is no place for the faint of heart. The first time you walk through one, you fear for your life. It is a tumult of terrifying noises and rumbling machines. Huge logs roll about in apparent chaos while tough mill guys yell orders at one another. There is no time here for consensus management.

Mistakes in this frenzied milieu of men, machines, computers, logs, pulp, and water are costly and dangerous. It’s no wonder that paper mills remained firmly under the control of strong hierarchies for more than a century. Nobody in their right mind would tamper with such an environment without good reason. Even Andrew Sigler and his COO Robert Longbine were wary at first when some of their best leaders pressed them to turn key elements of production over to self-directed work teams.

The paper industry of that time was not an obvious setting for teams. A relentless commodity business, it suffered unpredictable cycles of over- and under-capacity that continue to dismay investors to this day. Success depended as much on timber holdings, market position, and timing as anything else. This made it difficult for large paper companies to im-prove their competitive performance without restructuring their asset base and market position—steps with enormous financial implications. On a global level, meanwhile, exchange rate shifts could have as much impact on returns as most other factors did.

Given these economic constraints, operations at the mills emerged as the primary management target for improved performance. By 1985, the quest for teams at the mills had become a strategic imperative in Sigler’s mind.

Not easy to implement

Getting teams to run paper mills was not as simple as it might sound. The typical mill management structure consisted of a formal hierarchy controlled by a strong mill manager. The product of a long tradition of single-leader discipline, these mill managers could be characterized as "local CEOs." Since the mill was often the main or only employer in town, the mill managers were also a powerful force in their communities.

The shift to teams in the workplace invariably meant replacing the mill managers, who were unable to change their leadership approach enough to accommodate teams. But changing the mill managers was just the first step in a complex process of developing new skills and behavior patterns in the workforce. Shift foremen, machine operators, maintenance people, and even storeroom and clean-up workers did their jobs within the tight confines of established rules and procedures. They expected to be told what to do and when to do it. Theirs was a command and control culture that made sense to people at all levels.

Steve Goerner was the first of several pioneering mill managers to emerge in the Champion saga. A seasoned operations and engineering manager from the old school, he had also done a stint in the construction and start-up of a new plant in Brazil, and spent a year studying advanced pulp-making technology and innovative people systems. As a result, he was the natural choice to lead the experiment at the company’s new Quinnesec site.

With strong support from the top, Goerner launched what was to become one of the first team-based mill operating systems in the industry. All 620 mill workers were organized into dozens of teams, many of which took the place of the old hierarchical or single-leader structures.

Although an improvement in mill operations quickly became apparent, it took some time to find its way to the bottom line. Investor and analyst demands for better results prompted Sigler to explain that his strategy was a long-term one, and that he had no intention of tampering with it just to satisfy the barracudas on Wall Street. Eventually, however, even the analysts noticed that Champion’s focus on building an effective workforce had increased commitment, boosted productivity, and brought costs down.

While not all of the early teams worked as anticipated, the new operating system at Quinnesec provided the evidence that Sigler and Longbine needed to extend the approach across the rest of their mills. There can be little doubt that the company’s high-risk investment in teams has paid off: Champion today can boast some of the best mill operating results in the industry. As the mills began to reap the rewards of disciplined team efforts, Sigler and his senior colleagues recognized an important truth. To realize their aspirations for Champion’s overall performance, they would need team performance at the top too.

Elusive at the top

During the difficult years of mill transformation, little thought had been given to pursuing team approaches within Champion’s senior leadership group. Even in organizations where front-line teams have proven their value, team efforts become more and more elusive the closer you get to the top. Like traditional mill managers, strong CEOs are not natural team leaders.

Andrew Sigler was no exception; indeed, he was a classic example of a forceful executive. Having joined the company as a salesman in 1956, he quickly stood out from the crowd. Close to six feet six, he not only towered over his colleagues, but spoke in a booming voice with an authority that commanded respect. Sigler was a natural leader, and it came as no surprise when he was named CEO in 1974 at the age of 42.

From day one, he was intent on improving the core business. His "team at the top" was always small, and its leadership was never in question. For the more than twenty years that Sigler ran the company with Bob Longbine (and later Whitey Heist) as COO and Ken Nichols as CFO, the three operated primarily as a working group rather than as a team, even though they were seeking to develop team performance at the mills. They were masters of the single-leader working group, or what might be called executive leadership discipline (see panel).

Why single-leader discipline prevails

World-class teams at the front line do not naturally lead to team performance at the top, for a number of reasons. Senior executives are invariably more comfortable operating in a clear hierarchy where single-leader discipline prevails. Though they have worked long and hard to reach their position, genuine team behavior seldom figures in their repertoire. They may well be accustomed to calling any small group effort a team, even though most such "teams" are driven by strong leaders who show little awareness of team discipline. Indeed, some would think it tantamount to heresy to suggest that individual accountability might be complemented by the mutual accountability of teams.

In addition, the discipline needed to achieve team results is much harder to apply at senior levels, since it tends to conflict with the discipline required for strong executive performance. Team discipline demands mutual accountability and collective work among team members. Top executives, on the other hand, spend their working life mastering patterns of individual accountability and responsibility that become deeply ingrained. It is hardly surprising, then, that hierarchies rather than teams are the norm at the top.

Perhaps the most difficult aspect of applying team discipline at the top is dealing with the expectations of others. Many people are profoundly nervous about environments that are not protected by a strong leader. Mark Childers, a senior executive at Champion, likens this unease to "the need for someone to make a clearing in the forest." Individuals in a company undergoing major change can easily be overwhelmed by all the complexity and confusion. Struggling with insecurity, they look to a leader to clear away enough of the underbrush to allow them to do their job. Take away the leader and you take away their source of protection. Like it or not, real team behavior at the top threatens to do just that.

Sigler and Heist recognized that they must address the problem, but it was not until they handed over the running of the company that the senior executives were able to function as a real team.

Era 2: The leadership transition

As with many teams at the top, it took a major event to bring the opportunity into focus; in this case, it was the unexpected decision by Sigler and Heist to retire at the same time. Their intention was to create a clean transition to the next generation of leaders. And Sigler in particular felt the need for a special transition process to broaden the group’s leadership skills and help it perform as a team.

It was vital that the new top leadership should appreciate the potential of the workplace teams

Some members of the board thought it would be necessary to look outside Champion for successors. Sigler and Heist, on the other hand, felt it was vital that the new top leadership should appreciate the potential and sensitivity of their workplace teams. Recruiting a CEO externally was in their view too much of a risk. They believed that several rising executives had the capacity to lead the company, especially if they could win the support of their peers and add real team capability to the leadership mix.

The transition became the most pressing item on both men’s agenda. Sigler became convinced that real team performance could not develop within the senior leadership group until he and Heist were out of the way. Most executives might have viewed this merely as a matter of picking the right successor and creating a new structure around him or her (the usual definition of "team at the top"). But Sigler and Heist were adamant that unless the top half-dozen or so leaders could function as a team, the company would miss a vital opportunity to create leadership capacity, flexibility, and responsiveness for the future.

The transition process

To that end, Sigler launched an effort that brought all 18 members of his senior leadership group together in regular working sessions. To his board and outsiders, he described the process as a means of selecting his successor. In his own mind, however, it was the best way to accelerate the development of team capability within the group. The process had two important purposes: to build the group’s strategic knowledge of the business and the industry (something Sigler, Heist, and Nichols had always provided in the past), and to strengthen members’ ability to work in different team configurations within the larger group.

A series of special meetings was scheduled at Champion’s Treetop facility near its Stamford headquarters in Connecticut. Holding the sessions off site kept operating interruptions to a minimum and fostered a more open atmosphere. The working approach was one of informal discussion, seeded by subgroup and individual work between sessions. The meetings themselves functioned mainly as single-leader working groups with assignments determined by Sigler.

Early on, members asked themselves whether they should be functioning as a team rather than as a working group. Most agreed that they should continue as a working group; with 18 members, the gathering was simply too large and disparate to shape into a single team. Moreover, it was much too late in the day for Sigler and Heist to alter their leadership styles to allow real team behavior; their own habits and the expectations of others made such a radical change impossible.

The smaller subgroups soon became a vital element in the process, and a few functioned as real teams when circumstances allowed. Though the full committee was never a real team, it became a powerful forum for communication and learning, and probably helped to build trust among future team members. Sigler’s own role changed as the group became more cohesive, open, and focused. As they interacted, members learned new forms of behavior that would enable them to perform as a team after the transition.

Era 3: Pursuing the legacy

When Richard E. Olson was asked to succeed Andrew Sigler as CEO in the spring of 1996, he was surprised, but he felt confident that with the support of the new team he could lead the company to higher levels of performance. Olson was gifted with a style that was naturally team-friendly; his attitude was that "one of us cannot be as good as all of us working together." He was willing to let his colleagues find a common language and understand each other’s views before seeking a decision: "It was important to allow time for the group to explore the different meanings that different members attach to certain key thoughts and terms."

Olson was also comfortable encouraging, coaching, and enabling others to lead the group. But he was not reluctant to make decisions himself, or to force direction on the group when a solution became obvious or when conflicting views showed no sign of turning into a meeting of minds. Like most natural team leaders, he sought the best decision, not necessarily a consensus.

Learning about each other

The group’s membership fell from 18 to eight, as the transition process had indicated it should. The "gang of eight," as they call themselves, includes the former heads of the major lines of business and key staff leaders. Mostly composed of Olson’s and Nichols’ direct reports, it is a more natural grouping than before. Yet it does not always function as a team.

During the summer of 1996, for example, the group worked to create a new organization plan that would align decisions with strategic and operational priorities and capitalize on emerging team capabilities. The initial phase of this effort, the establishment of first-level positions and roles, was basically Olson’s decision, though he worked closely with Nichols on the specifics. The two men involved the gang of eight primarily as a working group during the final shaping to secure their understanding and support. Members had the chance to air their opinions and develop common commitment, though the outcome was not a genuine team decision. All the same, it was very different from what the group had been used to under Sigler.

Nichols remembers part of the process:

"We spent half a day around that table and talked and talked and talked and talked. It nearly drove me nuts! I kept wanting to pound the table and say, ’Let’s just get on with it,’ but the prolonged discussion was very important to do because we were learning about each other. It was not just about the new structure, but about how each of us really thought and felt—things we never recognized before even though we had worked together for years. In my case, there is no question that I learned the value of listening longer, and not challenging people so quickly. I had not been giving [my colleagues] a chance to complete their ideas, many of which were really good ones. I think others learned as well."

During one of their early working sessions, Sigler opened the door and looked in. Childers was drawing something on a flipchart, and stopped dead through force of habit. Sigler gave a wry grin, exclaimed "God help us!," and left. Clearly, the game was no longer his to win or lose.

Unleashing real team capacity

The second phase of the work on the new structure—the shape and staffing of the organization below the top level—constituted the first real team project for the gang of eight. Olson and Nichols had no preconceptions about the way things should be, so the whole group shared opinions and worked together to find solutions. It also operated as a real team in developing a "roadshow" to announce the leadership and organization changes. When the day of the roadshow came, Sigler and Heist made brief speeches, but while Heist stayed for all of the first session, Sigler wandered off as the new team showed it was managing very well.

The gang of eight soon learned that they could not delegate without setting a direction as a team. Early on, they commissioned a taskforce to work with consultants to design a new compensation program that would encourage and reward collective accomplishments. However, the recommendations the taskforce eventually made did not satisfy what the gang of eight had in mind. Nichols argues that the effort was doomed before it began because the gang had not agreed on their own goals and willingness to take risks.

Olson recognized that the problem did not lie with the consultants. Instead of embarking on a long debate about the recommendations, he decided to put the matter back on the gang of eight’s agenda. They spent the better part of a dozen or so sessions over three months working on the problem as a team, and came up with a solution that was much more on target. Compensation was not the kind of project normally handled at the top, but in this case, it became a natural focus for a real team effort with a collective work product.

Spending time together

A year into the new approach, the gang of eight continues to function sometimes as a real team, sometimes not. What is remarkable is the amount of time they spend working together. They meet every Monday morning for two or three hours on long-term issues, and again in the afternoon for normal operating matters. They also meet every Friday for most of the day to continue shaping their aspirations, set an overall corporate direction, and resolve critical issues. Some sessions are devoted to learning, with presentations by consultants, investment bankers, industry analysts, and other experts. The group has an open outlook that reflects the degree of trust that has developed among its members.

Real team capability has made a tremendous difference to the gang of eight’s motivation, enthusiasm, and commitment

All eight feel extremely positive about the new approach. Real team capability has made a tremendous difference to their motivation, enthusiasm, and commitment. As Nichols puts it, "I can’t wait to get to work every morning; I never worked this hard or enjoyed my work this much." Coming from a man considered to be the ultimate workaholic, this is quite an endorsement.

The emerging team at the top has crucial differences from the old Sigler/Heist single-leader working group:

• It is a much smaller group that can switch more easily between different modes of behavior, sometimes working as a team, sometimes not.
• Members play different leadership roles in different subgroups. Within any subgroup, the most senior person is often not the leader.
• The role of the CEO is markedly different. Olson is far more comfortable in a team leader role, yet he can play the conventional CEO when necessary.
• The number of subgroup efforts has multiplied, since the reorganization makes heavy use of crossfunctional business teams.

So quickly and effectively did the gang of eight come together that it became more and more awkward for Sigler and Heist to be involved. Both left the company and the board in the fall of 1996, three months ahead of schedule. Sigler had accomplished his mission: to transfer the leadership of the company to a group that would achieve team performance at the top, as well as at the mills.

The view from below

Team efforts lower down in an organization can provide useful insights into the impact of the top team. David Stubbs is vice-president of marketing for uncoated paper at Champion, and part of a team of four that manages a business worth about $1.2 billion in sales. Having left a headquarters job in 1989, Stubbs had not been around during Sigler’s last years as CEO, but sensed that people liked his clear direction about where the business was going. By the time Stubbs moved back to HQ, that source of security had disappeared, and he found the first few months pretty chaotic.

By the beginning of 1997, however, things had settled down. Stubbs noticed a "real and permanent evolution of the top team from ’telling and controlling’ to ’listening and advising.’" Having known two of the gang of eight personally before the reorganization, he is impressed by the way they have changed their style: "Scott [Barnard] and Joe [Donald] like to have their hands in the middle of things and make the decisions themselves; they’ve let that go."

The biggest challenge the business unit teams face is that of accepting the new freedom they have been given

For Stubbs, the biggest challenge the business unit teams face is that of accepting the new freedom they have been given:

"In the past, people waited to be told what to do. Now it’s different, not unlike a dog that is constrained by an invisible fence. You live for a long time with that fence around there. You know that if you go to this point you’re going to get zapped, and so you go back. Eventually, you don’t go near there any more. I think we need to get used to the fact that we can now go out there beyond the old fence lines. And once you go out there, you need to be more comfortable knowing what you’re doing."

Olson makes a similar point; he believes that "you really have to pull people over the line" that they have been used to staying behind. He recalls what happened when he invited one of his mill teams to determine how their organization should be changed. For several days, they sat around thinking, "Dick knows what he wants; why doesn’t he just tell us?" When it dawned on them that he didn’t know what he wanted, and genuinely expected them to decide for themselves, Olson recounts, "They found it pretty scary; I told them I found it scary too!"

Difficult lessons

The Champion story is unusual in several respects. First, seldom has there been such a complete change in the culture and performance of a large company. Second, the ground-breaking work at the mills created a remarkable fund of team experience and knowledge that influenced team efforts at the top, as well as transforming everyday operations. Third, the company’s performance will depend as much on strategic adjustments as on mill performance in the future. As the top leadership group gets to grips with both, working as a team will become still more important.

Ask the gang of eight today whether it would have made a difference if the senior leadership group had functioned as a team much earlier, and most will acknowledge that it would. But Olson probably speaks for everyone when he says, "There is little doubt in my mind that we could have come a lot closer to being a premier company (and still can) by working more often as a real team at the top; it is also clear that there is no way we could have done it before now."

The jury is still out on Champion’s new approach. Only time will tell how well the new leadership group rises to the challenges it faces. One thing is certain, however. They are now equipped with an arsenal that includes both executive leadership and team performance discipline at the top.