The Miami Heat shocked the basketball world in the summer of 2010 when they landed the two most coveted free agents on the market—LeBron James and Chris Bosh—to join their superstar Dwayne Wade. They now had a team stacked with an overwhelming amount of talent. The Heat threw a lavish celebration for their new superstars. When predicting how many championships they were going to win, LeBron boasted during this party that they would win not just one, “not two, not three, not four, not five, not six, not seven.”

But hints of the Heat’s impending troubles were evident even at the celebration. When the announcer brought the three star players out on stage together, he mused, “So it’s Wade’s house, LeBron’s kingdom, and Bosh’s pit.” It became evident that it couldn’t be all three, and that no one knew who the leader would be—would it be Wade, the proud resident who had already won a championship with Miami, or James, the reigning MVP who was the most unstoppable force in the game?

Immediately, basketball insiders started wondering if the Heat had too much talent, and whether they would suffer from the absence of a clear leader. In the fall of 2010, the sportswriter Bill Simmons articulated this sentiment: “They believe two alpha-dog superstars … can reinvent themselves as co-CEOs of a basketball team. My gut feeling when LeBron took his talents to South Beach? ‘That can't work.’” Many wondered what would happen when the team needed a single player to take a game-winning shot in the absence of a clear hierarchy.

The concerns that Miami lacked a clear hierarchy turned out to be well-founded. In late-game situations, the Heat’s execution and coordination was disastrous. In the 2010-2011 season, their record in close games (those decided by 5 points or fewer) was an atrocious 32 percent, ranking them 29th out of 30 teams. In comparison, the year before, when the Heat had an objectively worse team, but had a clear leader in Wade, their winning percentage in close games was 58 percent. When the new talent came onboard, they fell out of sync because they didn’t have a clear hierarchy.

A year later, the Heat won an NBA championship. Ironically, critical injuries to Wade and Chris Bosh may have contributed to their success. With his fellow starters injured, James emerged as the clear leader of the team. “Dwyane Wade injured his knee … inadvertently solving the ‘dueling banjos’ dilemma,” Simmons said. “Less talent became more.”

Intrigued by this idea, we set out to analyze 10 years of NBA performance with Roderick Swaab of the business school INSEAD. Our analysis revealed exactly what we saw with the Miami Heat: At a certain point, adding more top talent caused teams’ winning percentages to go down rather than up. These teams simply had too much talent.

It turns out that for basketball teams, steeper hierarchies lead to better performance. Why? Teams with a clear pecking order passed the ball more effectively. They had more assists, and as a result, players made more of their shots. As any good coach knows, getting a group of talented individuals—egos and all—to coordinate their behaviors effectively is easier said than done. A group of all-stars can easily tip the balance away from coordination and cooperation to competition and petty rivalry. When individual interests take precedence over what is best for the collective, group performance declines. It no longer functions as a cohesive whole.

The United States Olympic basketball committee recently came to appreciate the problem of too much talent. Though the U.S. team had dominated international competition in basketball in prior years, they stumbled in 2002 and 2004. In the 2002 FIBA World Championship, the U.S. finished a shocking sixth, and in the 2004 Summer Olympic Games, they settled for a bronze medal.

Then, in 2005, Jerry Colangelo took over management of the U.S. men's international basketball teams. He immediately intended to recruit less talent and focus on coordination and suppression of individual interests. As he explained to The Wall Street Journal a few years later,

The first thing I wanted to establish was a real national team, not just an all-star team … That means a commitment from coaches and players for three years. I wanted to build an esprit de corps, camaraderie, and team unity…It's no longer about you, but about Team USA. You walk in the door here and you check your ego at the door … Basketball is the consummate team game...we wanted players who could complement [the stars].

Adhering to this philosophy, Colangelo asked Andre Iguodala to join the team in 2010. As Bleacher Report put it, “Iguodala isn't one of the best players on the team. But Iguodala is a perfect fit for team USA … While most of the guys on the team play good defense, they need a player focused almost fully in their half of the court. That player is Iguodala.”

The new approach worked: The United States won the gold in the 2012 Olympics and again won the World Championship in 2014.

The too-much-talent effect persists well beyond the basketball court. In business, companies and firms compete fiercely to attract the most talented individuals, presuming that ever higher levels of talent produce better performance. But Boris Groysberg, a professor at Harvard Business School, has also found the too-much-talent effect on Wall Street. In the world of sell-side equity research, top talent was beneficial for performance, but only up to a point: The effect of more talent turned negative and started to harm performance.

When there is too much talent, the stars and high-status individuals compete amongst themselves to establish who the alpha dog is. As Corinne Bendersky, a professor of UCLA’s Anderson School of Management, these status conflicts hurt group performance. With too many people at the top, individual competition dominates and cooperation and coordination breaks down.

The idea that a pecking order is critical for success comes from, well, chickens. In order to maximize egg production, sellers selectively breed the chickens who lay the most eggs. But something goes terribly wrong when you place a high number of the best egg-producing chickens in one colony: Total cage-wide production plummets. And, even worse, chicken deaths skyrocket. Why? Because, the best egg producers also happen to be the most competitive birds, and when they are brought together, they begin fighting over food, space, and territory. They peck each other to death. For chickens, businessmen, and basketball players alike, high-levels of performance comes with high-levels of competitive spirit. These status conflicts drive performance down.

Our research with Deb Gruenfeld of Stanford University and Joe Magee of New York University suggests that simply having people think about a time in which they had power increases their confidence and assertiveness. But since conflicts can arise when there are too many assertive people in a room, what happens when everyone in a group is primed to feel powerful? Would they end up squabbling like the chickens that peck at each other?

To find out, we ran the following experiment. We had groups engage in a task that required coordination: Create sentences where at least one word had to come from each group member. To succeed, group members had to successfully integrate their individual efforts.

Before the sentence task, we manipulated how many members of each group felt powerful: In the all-high-power condition, each member of a three-person group reflected on and wrote about a time in which they had power. In the all-low-power condition, each of the three members thought about a time in which they lacked power. In the hierarchy condition, we had only one of the group members think about a time in which they had power.

Our findings confirmed our suspicions: Groups in which all three members felt powerful descended into fierce battles for control—like the most industrious chickens and the basketball teams with too much talent—and thus performed worse. The groups in which no one felt powerful didn’t fare any better; here, the group members all lacked agency, with too many followers milling around in search of a leader. Instead, it was the hierarchical group—the group where only one member was primed with power—that performed the best out of the three.

We then conducted a follow-up experiment with a biological marker of power and dominance—testosterone. If you want to know how much testosterone you were exposed to when you were in your mother’s womb, take a look at your hand and focus on your ring and index fingers. It has been shown that the ratio between the length of the ring finger and the index finger is a marker of in-utero testosterone exposure. If your ring finger is considerably longer than your index finger, you were exposed to greater levels of testosterone back in your mom’s womb. If your two fingers are similar in length, it indicates that you were exposed to less testosterone in utero.

On the left, the hand of someone with higher levels of testosterone, and on the right, the hand of someone with lower levels of testosterone (Richard Ronay)

It may seem ridiculous to use finger length to determine anything about a person’s behavior, but our work with Richard Ronay of VU University shows that high levels of prenatal testosterone exposure makes people sensitive to threats to their place on the hierarchical ladder. High-testosterone people, in other words, are more likely to feel disrespected.

We used this measure to create groups of all high-testosterone, all low-testosterone, or a mix of high-, low-, and average-testosterone individuals and had them perform the same sentence task we just described. The results mirrored our first study—the all-high-testosterone groups did worse than the groups that had a range of testosterone because they spent more time embroiled in conflict.

This same effect has even been documented in baboons. When two baboons with high levels of testosterone interact, they move towards each other in a competitive and assertive way that can promote conflict. When two baboons have different levels of testosterone, the one with lower testosterone yields and moves away.

So, too much talent can derail groups by eliminating the necessary pecking order that helps produce effective coordination. Whether it’s winning the NBA title, securing a victory on the battlefield, or building and sustaining a beehive, a group of individuals are most effective when they are integrated into a seamless whole. Hierarchy helps achieve this collaborative coordination by suppressing individual desires and synchronizing behavior.

But sometimes more talent is better. Consider baseball. When we studied the relationship between talent and performance on baseball teams—for the same 10-year period we studied talent and performance on basketball teams—the benefits from attracting top talent were linear: the more talent, the better. The “too much talent” effect didn’t exist. In baseball, you can never have too much talent.

How do we explain this finding? As we have seen, hierarchy is most useful in situations where coordination is the key to success; thus, the key to whether or not you can have “too much talent” hinges on how much the group performance requires coordination between the team’s members.

Baseball and basketball differ markedly in terms of their need for coordination. A baseball team’s offense plays sequentially rather than simultaneously. Each player bats individually. As a result, each batter gets approximately equal opportunities to hit. Of course, there are opportunities to cooperate on offense in baseball, but the extent of coordination between offensive players in baseball pales in comparison with basketball. In basketball, the number of shots a team can take is necessarily limited, and teams need a mechanism to efficiently allocate and reduce conflict over this scarce resource. Team members also depend on each other to create opportunities for high-percentage shots. Defending is also more interdependent in basketball than it is in baseball. In basketball, playing defense requires all five players to constantly coordinate their actions and to support each other.

These differences were best expressed by two quotes uttered within three days of each other in the spring of 2010. In one, Bill Simmons referred to baseball as “an individual sport masquerading as a team sport.” In the other, President Barack Obama referred to basketball as “the quintessential team sport” on CBS’s March Madness broadcast. In other words, whenever individuals perform largely independent tasks, as baseball players do, more talent never hurts. But in interdependent settings such as beehives, Wall Street, and basketball courts, more talent can lead to diminished performance.

This article has been adapted from Adam Galinsky and Maurice Schweitzer’s book Friend & Foe.