How to make a cross-functional team thrive and what value it brings

Tap into the magic of cross-functional teams to make sure the best output possible.

In product development, setting strict boundaries between departments can hinder growth and stifle innovation. Instead, embracing the concept of a cross-functional team can elevate efficiency and foster innovation, helping to infuse creativity and new ideas into each phase of the project implementation process.

Cross-functional teams have become a cornerstone in enabling innovation and agility within organizations. As highlighted by a recent Harvard Business Review article, 78% of organizational leaders report experiencing ”collaboration drag” due to traditional siloed structures. This drag can be mitigated by the fluidity and collaborative nature of cross-functional teams, which are increasingly common in today’s project-based work arrangements, including remote and hybrid models.

So, what exactly is a cross-functional team, and how do you set it up properly? What are the strengths and weaknesses? Why should you consider a cross-functional approach to project management? And why is it that 93% of companies are planning to reshape their organizational structure to leverage cross-functional collaboration? Let’s get to the bottom of this.Figure 1. Functional vs cross-functional team.

What to expect when building a cross-functional team?

A cross-functional team means that it gathers people from different departments, divisions, and offices. What brings them together is a common task. The benefit of having a cross-functional cooperation team is that you can bring people from various fields and their experience, knowledge, and expertise to your project. This approach encourages collaborative culture and knowledge sharing and can spur creativity within the team.

Possible challenges of cross-functional teams

Сross-functional teams offer a promising approach to business operations, bringing together diverse skill sets and perspectives. However, they are not without challenges and have to be appropriately managed.

Professor Behnam Tabrizi of Stanford University and expert in business process transformation wrote a research stating that 75% of cross-functional teams are not functioning at their full potential and need assistance. This finding is based on an analysis of 95 groups across 25 leading companies in industries such as communications, software, pharmaceuticals, agriculture, retail, government, and banking. As we delve into this issue, we encounter the following hurdles that today’s cross-functional teams have to navigate:

• Lack of clear goals. Many teams lack specific objectives, leading to misalignment and inefficiency.
• Failure to meet specifications. Even teams with established goals often fail to meet key performance indicators, such as schedule adherence, budget constraints, or expected results from sales, marketing, or management.
• Economic pressures. Inflation and budget constraints can strain resources, requiring teams to be more strategic and adaptable in their financial planning.
• DEI initiatives. As organizations strive for greater diversity, equity, and inclusion, cross-functional teams must ensure these values are embedded in their culture and workflows, which can be a complex process to manage effectively.

To tackle these obstacles, it’s critical to create a structure that encourages cooperation and clarity. The Harvard Business Review emphasizes how important it is to establish defined roles and goals so that everyone in the team knows their responsibilities and how they fit into the group’s overall aims. Setting up communication guidelines is also necessary to keep everyone on the same page and avoid misunderstandings, and creating a positive work environment motivates everyone to strive toward the same objective. Developing an environment of safety and openness inside the team is equally crucial because it fosters the free flow of ideas and open communication, both of which are essential for creativity and problem-solving.

What is an effective cross-functional team?

While cross-functional teams face their share of challenges, when structured with transparency and a strategic approach, they can unlock significant advantages for organizations. To achieve this, it is crucial for a cross-functional team to be self-managed. This means team members take ownership of their tasks and decisions without needing constant oversight. Better results are produced by self-managed teams since they are more flexible and quick to adjust to changes.

Another significant benefit of cross-functional teams is their ability to be flexible. Team members can step into different roles as needed, ensuring that the team remains productive even if someone is unavailable. This flexibility helps maintain continuity and efficiency, which is essential for sustained performance.

In addition to this, cross-functional teams excel in optimizing resource utilization. In the case of  ordinary teams with sequential work processes, they often struggle to distribute workloads evenly across all aspects of production. Hence, some areas will have less than 100% utilization. From the business perspective, cross-functional teams can fully resolve such issues by ensuring that resources are optimally allocated, leading to higher efficiency and better overall performance.Figure 2. How to make your cross-functional team effective.

Adopting a cross-functional approach

Cross-functional teams work better under certain conditions where governance is transparent and robust, allowing them to remain focused on their specific projects. Such teams typically include:

• A product manager who acts as the team’s visionary leader, helping the team collaborate effectively;
• A lead developer or an engineer who brings technical expertise to the table;
• A UX (user experience) designer who ensures the product is user-friendly and meets customer needs.

These teams excel when they are given direction with clear objectives, goals, and KPIs.

One example of the successful adoption of a cross-functional approach in their company is Spotify. The company has successfully implemented cross-functional teams known as ”Squads” that operate independently like startups but are aligned to the company’s overall objectives. This structure has allowed Spotify to innovate rapidly and respond to market changes effectively, leading to a significant increase in feedback, development pace, and creative problem-solving.

As Spotify demonstrated, the essence of cross-functional teams is not just the clear definition of responsibilities but also the liberty to pursue bold ideas. When issues arise, these teams are equipped to address them internally, preserving the flow of progress and only turning to higher governance as a contingency. Such a dynamic structure is pivotal for organizations aiming to thrive in a fast-paced business landscape.

Explore Avenga’s role in transforming a global manufacturer’s communication by migrating 1.500 users to Microsoft 365, enhancing collaboration across 36 countries. Success story

An investment that goes a long way

Setting up a solid, effective cross-functional team might be a challenge requiring a lot of commitment, work, and dedication, but the results are more than rewarding. To name a few:

1. It spurs innovation

When you assemble, or hire a team composed of people with diverse expertise, you gain access to their competence, experience, and ideas. This diversity fosters an environment where creativity and innovation can thrive, leading to unique and effective solutions.

2. It helps to come up with an idea quicker

Cross-functional teams tend to iterate on ideas quickly. Each team leader and team member brings to the project their skills, knowledge of their department’s limitations and weak points, and strong suits. This helps the team thrive and find solutions fast.

3. It enhances problem-solving

Cross-functional teams tend to be better at problem-solving as they approach issues from different angles. This utilization of various methodologies can enhance critical thinking and lead to more robust solutions.

4. It builds a stronger team culture

Cross-functional teams foster a sense of unity and shared purpose which can strengthen team culture and improve overall morale. When team members from different departments work closely together, they build trust and create a more cohesive and supportive work environment.

Despite its initial challenges, the formation of a cross-functional team yields significant benefits. By fostering innovation, motivating through change, and accelerating idea generation, these teams not only enhance productivity but also build a stronger, more adaptable workforce. Long-term success and growth can be facilitated by strategically embracing the diverse strength of cross-functional teams.Figure 3. Benefits of cross-functional teams.

Conclusion

What is the secret of a successful cross-functional team? The following works for us:

• Bringing together experts with different backgrounds
• Building teams with highly motivated people who care what they do and share the same mindset

The most important thing to remember is never to strive to make cross-functionality your ultimate goal. As good as cross-functional teams are, one ingredient should always come first—efficiency. A diverse team is a valuable tool that helps increase utilization, but the objective should always be first-rate expertise and operational effectiveness..

Ready to start a project with a cross-functional team or want to know more? Contact us and explore the many in-depth insights our experts can offer.