How to Make Cross-Functional Operations a Team Effort

There are many things that go into making a successful team – shared goals, complimentary skill sets, communication, empathy, the list goes on. That list becomes even longer and forbidding when you throw a spanner into the works and turn the team into a cross-functional one.

A successful cross-functional team that brings together talent from across the organization is seen as the holy grail of effective management. Combining innovation and speed-to-market, they give a company an undeniable advantage over the competition.

Cross-functional collaboration, if done right, can make a company leaner and more innovative from the ground-up by reducing groupthink, because all decisions are taken through a cooperative and creative process with singular focus on the achievement of each organizational goal. Data supports this observation. A study of over 1100 companies shows that companies that embraced collaborative working are five times as likely to be high performing than those that don’t.

If cross-functional teams are so awesome, why don’t we see more of them?

Because they’re devilishly hard to manage and steer towards delivering real results, that’s why. Behnam Tabrizi, who teaches transformational leadership at Stanford University, reveals a shocking insight from his research – nearly 75% of cross-functional teams are dysfunctional!

So we have two facts that are equally compelling. First, well-oiled cross-functional teams are exponentially more successful than “regular” teams. Second, getting a cross-functional team to perform to their potential is hard, but definitely not impossible.

When the payoff’s this attractive, it’s imperative to understand just what it is that makes successful cross-functional teams tick. This article will talk about how to

1. Measure the true impact of collaboration and track the ROI of continuous improvement.
2. Leverage knowledge sharing by subject matter experts and encourage random interactions among high performing employees.
3. Put in place technology and software that speeds up processes, improves communication, and automates repetitive tasks.
4. Align department goals as well as individual incentives correctly (which is possible only if you get point 1 right).

So here goes.

Measure the True Impact of Collaboration

The typical cross-functional project has a clear goal towards which a team from across the organization is working. One may consider the achievement of the stated project goal as the success of the cross-functional team e.g. a new product launch or entering a new market. But that would be missing the wood for the trees.

A cross-functional team touches various aspects of your operations in such a way that the whole is often greater than the sum of its parts. To fully realize the value of this payback, you need to identify the various secondary benefits that come from your cross-functional teamwork and benchmark them against past data. This will vary from company to company and will depend on the exact nature of the project the team works on.

The idea is to look beyond the obvious and dive deeper to understand the true impact of collaborative work. The number of hours a team spends on a project or the number of times they message each other on their IM tool or the number of tickets they closed on their workspace tool is not a measure of the team’s success. Says Oji Udezue, Head of Product at Atlassian, “When measuring digital workplace tools' effectiveness, good KPIs to look for are how much time teammates are spending in deep work and how regularly are teams jumping into a video meeting to quickly resolve a roadblock.”

IT giant Cisco measures the impact of collaboration in three ways:

Operational ROI: This metric checks for all the little savings that come with cross-functional teams. From reduced travel expenses to lower energy and infrastructure costs, getting diverse teams to come together can lead to some surprising savings.

Productivity ROI: This metric looks at the improvements in work processes that come from cross-functional collaboration. This could include faster communications, reduced rework, quicker decision making and heightened overall efficiency.

Strategic ROI: This is the most valuable form of returns a cross-functional team can hope for. High performing collaborative teams drive their organizations to evolve to the next level of technology or fix a fundamental customer problem or even develop a whole new business model through cross-pollination of ideas and skills of people from different teams.

You can arrive at your own KPIs (Key Performing Indicators) that determine ROI from collaboration and figure out and track the metrics (tangible and intangible) which influence these KPIs.

Unlock Knowledge Sharing

The very reason for the existence of cross-functional teams is the need to bring together people with disparate, yet extremely complimentary skills to work on a project that demands a vast breadth of knowledge. When these subject matter experts pool their knowledge, they help their team mates look at the problem at hand in a completely different light.

But easier said than done. Data shows that 44% of managers believed people did not readily share information, ideas, or best practices with each other in typical cross-functional teams.

This unwillingness to share information and insights comes at a real cost to the company.

Experts have shown that working in silos and not sharing data with team members from other departments can cost a company close to $8000 per day in wasteful expenses.

Knowledge comes in different shapes and sizes – from formal, recorded sources of knowledge that may be available from a data warehouse, library, or similar source, to informal, tacit knowledge that comes from years of experience or personal observation.

The goal of cross-functional teams is not just to improve the flow of explicit knowledge across the entire team, but also to enable team members to share inferred knowledge that only they may be privy to. This way, vital knowledge does not just stay inside someone’s head; it gets shared with the rest of the team and is put to good use. This knowledge, shared in cross-functional contexts, is invaluable in its scope and availability and justifies the effort put in to bring diverse team members together to work on a project.

One approach to encouraging collaboration and knowledge sharing is by deliberately engineering random, unplanned interactions between employees. Many companies achieve this by creating an office layout that is conducive to chance collaboration. This could be hardcoded right into your office layout in the form of little brainstorm nooks or a well-stocked cafeteria that ultimately become the hubs of employee relaxation and engagement.

This culture of connection and sharing is critical to the success of cross-functional teams, but as it turns out, not too many employees are very good at going beyond their own immediate tasks and goals very effectively.

When asked to rate their coworkers on their capability to “span boundaries” or collaborate beyond their own teams, participants in a study by the Center for Creative Leadership pointed out that middle and top management have the highest demands to collaborate across functions, but they’re also the ones who come up woefully short on their capability to collaborate effectively.

In the figure above, we see that nearly 3 out of 4 employees at the middle management level are incapable of “spanning boundaries” or collaborating cross-functionally with other teams. Bridging this “capability gap” basically means finding ways to empower team members to share knowledge freely, to trust members from cross-functional teams to perform tasks they’ve been assigned and to take ownership of projects beyond one’s immediate circle of influence.

While there’s no silver bullet to all of those problems, technology can be harnessed as an enabler in many of these cases.

Cultivate Your Safe Space

All too often, we blame the effectiveness (or lack thereof) of a team based on the individual capabilities of each of its members. The assumption is, smarter team members will form a better, more efficient team compared to their less gifted colleagues. However, this commonly held belief was debunked when Google unveiled the results of their celebrated Project Aristotle – a deep dive into understanding what made teams “click” and how they could be made to perform even better.

When Google’s researchers were grappling to find patterns or similarities between high performing teams, there was one common trait that shone out bright. This trait was “psychological safety.”

Propounded by Harvard Business School professor Amy Edmondson, psychological safety was “a sense of confidence that the team will not embarrass, reject or punish someone for speaking up.” Psychologically safe groups had all members contributing to the team conversations equally, everyone’s ideas were heard out and respected without judgement.

In other words, high performing teams created a “safe space” for team members to discuss their ideas, feelings, share even outlandish concepts without the fear of ridicule or blame, leading to stronger bonds between team members, deeper levels of trust, and substantially more innovative results.

Professor Edmondson offers some ideas on creating a psychological safe space in your team:

1. Approach the problem at hand as a learning process instead of a rigid execution process. Teams need to acknowledge that in the real world, problems don’t have straightforward solutions. Nor does any one team member have all the answers. by adopting a learning approach to problem solving, the team welcomes inputs from all members. It is not afraid to learn new ways of doing things or try out a completely new idea to arrive at the final result.
2. Understand and acknowledge that no one’s infallible. Too many teams are led by individuals who consider themselves to be the final authority on the problem faced by the team. Unsurprisingly, these are the teams that tend to fail more than others. Psychologically safe teams are those where each member and especially the leader openly acknowledges that they’re not perfect, and this humility keeps them open to learning and growing.
3. Curiosity solves problems. Psychologically safe teams brainstorm together and explore every possible angle that might help with finding an answer to their problem. No line of inquiry is too silly or unnecessary. Curiosity is encouraged and team members question each other, as well as the traditional way of doing things to arrive at alternative, equally relevant solutions.

Let Technology Come to the Rescue

“Just because people are working in the same office environment does not mean that they are regularly conversing and bouncing ideas off of one another.” says Heidi Gardner, Harvard Law School Distinguished Fellow and Lecturer.

One way to get employees into the habit of sharing information with each other is by fostering a culture of knowledge sharing company-wide.

Many companies invest in a centralized data warehouse that stores important work-related information and documentation all in one location. Such a setup is only useful when it is accessible by employees anywhere, anytime. A tool like Cloud Management Suite makes it straightforward to even give employees remote access when they need to work from home, a client’s site, or even a different office location. This nifty solution goes one step further to help collaboration by allowing different team members to bring their own devices to work, which get authenticated instantly for a seamless experience. This allows for smooth IT operations in cross-functional projects.

One of the problems of cross-functional teams is that they’re often not located at the same location, geographically. Shrink the boundaries of space and time by investing in office messenger and workflow collaboration tools like Slack that help teams communicate in real-time across the world, share files and data securely as well as build dedicated channels in which to discuss the project at hand.

A great example of harnessing technology without letting it overtake the purpose of banding together hybrid teams is the “Virtual Collaboration Spaces” pioneered by GE across their offices in the US, Europe, India and China. These immersive videoconferencing experiences brings together diverse teams from across time zones into a single virtual conference room.

Instead of traveling thousands of miles to meet other teams for intensive day-long meetings, cross-country and inter-departmental teams now meet up at a moment’s notice, collaborate over multiple sessions, pull in subject matter experts on the fly, and split up into breakaway sessions at will. GE credits its Virtual Collaboration Spaces to getting things done faster than ever before, better decisions, stronger teams, and reduced cycle times.

Match Organizational Goals to Individual Incentives

At the beginning of this article, we discussed how close to 75% of cross-functional teams are actually dysfunctional in nature. This should come as no surprise to anyone who’s ever been a part of such a team.

While there are clear cause-effect consequences vis-à-vis departmental goals for each team member, when teams straddle different departments and tackle projects that are not owned by any single team, more often than not, chaos reigns. Individual members of a cross-functional team see no direct incentive for contributing to a project that has nebulous ownership provenance. When the guiding thought of every team member becomes “What’s in it for me?” commitment to the overall organizational goals flags and the project suffers too.

An important step to remember when setting up cross-functional teams is to link the individual incentives of the team members to the goals of the cross-functional team as well.

In fact, research by i4CP and Professor Rob Cross of Babson College shows that successful organizations are 2x more likely to base their cross-functional project goals on specific business needs or goals. They are also over five times more likely to reward teams that encourage collaboration. When teammates see clear incentives in return for their efforts, they have a reason to put in their best.

Hyundai Capital Services comes to mind when speaking of dysfunctional cross-functional teams that managed to overcome their barriers. HCS is the financial arm of the Hyundai Motor Group that offers customers loans for their vehicle purchases, with branches around the world. As a subsidiary of the Hyundai Motor Group, Hyundai Capital and all its offices worldwide reported into the South Korean headquarters of the automobile maker.

As one might imagine, the complicated reporting structure proved to be a thorn in the side of both companies. Problems ranged from differences in communication styles to different management styles; mismatched cultural expectations, disagreements over decision-making, and lack of authority, all combined to make the teams extremely volatile and non-productive.

After some deep soul searching, the two companies figured out a way to work together more effectively. They started the process of mending departmental relations by first aligning their goals with each other. Both parties knew what was expected of them and what they would get for achieving the agreed-upon goals.

Next, they reorganized their teams to improve communication and transparency. Roles and authority were clearly spelt out between team members and a dedicated training program was set up to help them rise above the cultural differences and deliver results.

The entire exercise, though long and no doubt difficult to pull off, was eventually worth it. Hyundai showed a marked improvement in its overall efficiency and intra-organizational cooperation.

Only as Good as its Parts?

A machine is typically only as good as each of its parts put together. Thankfully, we humans are not machines that do not understand the concept of going above and beyond. Cross-functional collaboration offers individuals the opportunity to showcase their best skills with the additional challenge of getting along with people that they may not know (or like).

However, that’s where the blessing of being human comes in – our undying ability to adapt belies not just our evolutionary instincts but also our willingness to come together for a cause that might turn out to be greater than all of us!

About the Author

Dipti Parmar is an experienced business and marketing consultant. She helps startups, brands and individuals build a stellar online reputation and establish thought leadership in their industry, with innovative content and digital marketing campaigns.