Building Cross-Functional Capability: What It Really Takes

by Michael Maccoby

Research Technology Management; Volume 42. No. 3. May-June, 1999. pp 56-58.

Building cross-functional capability is a lot harder than drawing lines on an organization chart. It requires upgrading leadership and team-member skills. It also demands that organizational culture become more interactive and less bureaucratic.

At the same time, by relying too much on cross-functional teams, organizations‹and especially R&D labs‹risk diluting deep functional knowledge and expertise, ending up with too many superficial generalists.

Given these dangers and difficulties, why should managers bother about building cross-functional capability? The answer is that many projects and problems require knowledge integration. There is strong evidence that cross-functional teams save time and money in developing new products.

Furthermore, customers are increasingly asking for solutions to their problems. This requires cross-functional teams not only to package products, but also to develop new applications. This kind of partnering has also stimulated ideas that energize the R&D process.

Together with Charles Heckscher of Rutgers University, I have been observing successes and failures in cross functional teamwork. We find there are common elements essential for building this capability. These have to do with competencies in organization, leadership and team members.

What Organizations Need

• Competent and lean functional knowledge groups. Experts need a home where they share specialized knowledge with others in their own field. Technical disciplines still have some qualities of a craft guild. The difference between traditional guilds and the present day is that with the breakneck pace of innovation, the young often know more than the master craftsmen. This is especially the case with information technology, perhaps less so in biochemistry, for example.

  By lean groups, I mean that competencies are aligned with strategic goals. Everyone in the group should either add value or demonstrate innovative potential. Breakthroughs still come from functional experts who are not trying to satisfy customer needs, but to create new needs. (When downsizing a functional knowledge group, be prepared for entrepreneurial experts to flood senior management with memos and proposals that propose breakthroughs.)

• Processes for forming, managing, assessing and dissolving teams. For cross-functional teaming to become an organizational capability rather than a serendipitous event, processes need to be established: What is the team's mandate? Which functions are required? When should they be brought in? What are the guidelines for bringing new members up to speed and sending people back to their functional organizations when they are no longer needed. Without processes and guidelines, teams develop a life of their own and costs mushroom.

• Measurements of performance. Individual contributions to teams should be evaluated, with supportive incentives. Include measurements by customers who in the case of R&D may be production or marketing organizations. Those who contribute by teaching and facilitating knowledge creation should also be rewarded. Incentives should balance team success and individual contribution.

• A pragmatic learning culture. Cross-functional teams require cultural operating principles that are understood and practiced by everyone. There should be a process for developing and communicating these principles.

  Pragmatism in this sense means defining values in terms of practice. These "soft" cultural principles are in fact harder to develop than the "hard" factors of roles and measurements. They include open dialogue where conflicting views are tested and experimentation is encouraged. In a learning culture, people not only reflect on the relation of practice to results but also question their theories when the results don't meet expectations. Failures are used as opportunities for learning better ways of doing things.

• Interactive strategic hierarchy. Although good cross-functional teams should be a heterarchies where subject matter leadership shifts according to who has the appropriate knowledge, organizations need a strategic hierarchy. This includes the strategic level, that determines market positioning, the operational and functional knowledge leadership level, and the "doing" level of technical staff. This hierarchy should be interactive and transparent, and information should flow up and down freely.

What Leaders Need

Strategists should not only communicate a vision to the whole organization, but also engage operational leaders in a dialogue about implementation. The doers in labs and on the front line should also be able to engage in the dialogue and give feedback to operational and functional knowledge leadership. They should also be heard at the strategic level. (I have described this more fully in "Knowledge Workers Need New Structures").

A learning culture must have leadership that models and maintains it. I cannot overemphasize the importance of leadership to determine strategic direction, knit together different kinds of expertise, and provide the competence required for cross functional teams.

• Strategic leadership designs and communicates a 3-5 year vision for the organization and the assumptions underlying it. At this level, business opportunities are identified in terms of value propositions. Who are our customers? What value do we offer them? How will we create this value? How should we be seen by the market? What kinds of teams are required? What skills do we need? What are the investment priorities?

• Operational leadership then takes over to find the skills needed, organize teams and facilitate their activities. Operational leaders must push the process forward, communicate and over-communicate, follow up and make sure that everyone is heard, conflict brought out and resolved. Teams do not succeed without operational leaders, but the leader must also know when to step aside and let functional experts on the doing level lead.

• Functional knowledge leadership selects and develops people, according to the kinds of skills needed for the business. These leaders make sure that experts keep up with their technical fields and with advances made in other companies.

What Team Members Need

Finally, cross-functional capability depends on team members. They should have the following:

• Understanding of the vision, what the organization is trying to accomplish over the next 3 to 5 years. This understanding directs their priorities and focusses thinking. Without it, teammembers may champion ideas and initiatives that are a waste of energy.

• A solid grounding in their own disciplines. Team members must communicate those innovations or market developments that change the assumptions underlying value propositions.

• Respect for what each function contributes. Teammembers need to stretch themselves to learn how and why other disciplines think the way they do. It also helps to invest time in getting to know each other's background and interests.

• Clear mandates to make decisions. Unless team members are empowered by their functional knowledge boss to represent the group's position on issues, time will be wasted in seeking approval, respect for each other will erode, and the team will eventually bog down.

• Team skills include brainstorming, listening, asking clarifying questions, seeking consensus. The team should be trained to practice these skills.

• The proper character. Team effectiveness depends on individual character as well as skills, leadership and organizational capability. When team members want to help each other succeed, there is less need for leaders to facilitate open dialogue or resolve conflict. When team members are thinking only about their own interests, leadership must become heavy-handed. To create good teams, people with the right character should be hired and promoted.

These requirements describe why cross-functional capability demands so much attention to the human side. But there are no shortcuts and the rewards for this investment are not only in productivity gains, but also the ability to implement a demanding vision.

Cross-Functional Capability