The pattern of sudden changes in the behavior of teams and companies — of the same people suddenly behaving in very different ways — is a mystery in business and social science. Entrepreneurs, for example, often say that big companies fail because big-corporate types are conservative and risk-averse. The most exciting ideas come from small companies, because — we tell ourselves — we are the truly passionate risk-takers. But put that big-corporate type in a startup, and the tie will come off and he'll be pounding the table supporting some wild idea. The same person can act like a project-killing conservative in one context and a flag-waving entrepreneur in another.
The change in behavior may be a mystery in business, but a similar pattern is the essence of a strange quirk of matter called a phase transition. Imagine a large bathtub filled with water. Hit the surface with a hammer: a splash, and the hammer slips through the liquid. Then lower the temperature until the water freezes. Strike again, and the surface shatters.
The same molecule behaves like a liquid in one context and a rigid solid in another.
Why? How do molecules "know" to suddenly change their behavior? To put it another way, which brings us even closer to the mystery of our supposedly risk-averse, big-corporate type: If we drop a molecule of water onto a block of ice, what happens? It freezes. If we drop that same molecule into a pool of water, what happens? It slushes around with all the other molecules. How can we explain this?
The physicist and Nobel laureate Phil Anderson once captured the core idea underlying the answers to these questions with the phrase more is different: "The whole becomes not only more than but very different from the sum of its parts." He was describing not only the flow of liquids and the rigidity of solids but even more exotic behaviors of electrons in metals (for which he won his Nobel Prize). There's no way to analyze just one molecule of water, or one electron in a metal, and explain any of these collective behaviors. The behaviors are something new: phases of matter.
I will show you that the same holds true for teams and companies. There's no way to analyze the behavior of any individual and explain the group. Being good at nurturing loonshots is a phase of human organization, in the same way that being liquid is a phase of matter. Being good at developing franchises (like movie sequels) is a different phase of organization, in the same way that being solid is a different phase of matter.
When we understand those phases of organization, we will begin to understand not only why teams suddenly turn, but also how to control that transition, just as temperature controls the freezing of water.
The basic idea is simple. Everything you need to know is in that bathtub.