Leadership skills for fostering cross-functional teams

The meaning and purpose of cross-functional teams

According to Wikipedia, “a cross-functional team, also known as a multidisciplinary team or interdisciplinary team, is a group of people with different functional expertise working toward a common goal”.

In contrast to functional teams, which are traditionally organized in kind of “departments” and focus on specialization and efficiency, cross-functional teams try to optimize on value creation and creativity by removing organizational communication barriers and conflicts of interest.

Organized in value stream units (like Scrum Teams), they gather all relevant people contributing to the development or delivery of a specific product, project or service in order to create tangible business value and solve problems of customers.

ust bringing people with different skills together does not guarantee any benefits or success.

Establishing and developing a productive and effective CFT is not an easy task, actually it is a complex problem. Typically you have to establish a new complex social system with a different way of working and acting in contrast to an existing organizational structure and culture. 

Here are 10 important factors you need to consider when leading effective cross-functional teams:

1. Optimize communication and work along value streams
   Focus on understanding the real market needs and identify the value streams is one of the success factors of cross-functional teams. Get all relevant people on board, who need to contribute and optimize their communication and collaboration.
2. Define a clear purpose, common goals and constraints
   In order to understand and support the setup as a CFT, the purpose, collective goals and constraints of the team have to be clear and aligned – also with other teams. Improving value creation has to be the purpose, not the existence of a CFT.
3. Empower the team
   The cross-functional team has to be supplied with the relevant decision power in order to be successful. No empowerment, no decisions, no commitment, no success, no motivation!
4. Self-managing team
   Empowerment of a team is one thing. The team also has to have the skills to internally manage themselves, e.g. to decide who does what, when, and how. Often, this requires support.
5. Building a real team based on trust
   Self-management also means to understand and to address the own team dynamics and understand the lack of “vulnerability based trust” as the main dysfunction of a team. A crucial success factor of cross-functional teams.
6. Understand the market/customer
   A CFT must have an active opportunity to learn from the market and their customers in order to directly improve their business value creation process and way of working.
7. Skill management
   In order to optimize the value creation of the team, available and needed skills have to be transparent and to be actively managed by the team themselves.
8. External support on team issues
   Teams and subject matter experts often need some support about soft skills, team building and conflict resolution. Good support from outside of the team – e.g. like an Agile Coach – is often advised and one of the success factors of cross-functional teams.
9. Continuous learning and improvement
   All of the above as well as existing impediments have to be continuously monitored and managed by the team in order to improve their way of working and value creation.
10. Somebody with formal authority and power to make it happen
    All the listed factors contribute to the success of an CFT, they often have some kind of interdependencies to each other. But from my experience, the most important thing you need is somebody with the formal authority and power to create the environment and the shelter, where a CFT can grow and thrive:

Challenges of cross-functional teams

CFTs – like Scrum Teams – don’t just appear like a miracle. Depending on the context and organization, creating and maintaining CFTs within an existing, often more functional oriented environment face different challenges. And most of them are linked to the powerful existing organizational culture.

1. Culture eats CFTs for breakfast
   As already mentioned above, the introduction of CFTs in an existing functional organization will at least challenge existing policies, processes, structures and culture which leads to resistance and conflicts.
   Here are just a few of the “typical reactions” and impediments you might recognize:
   • traditional reporting, resource planning and budgeting still required
   • various line managers are still responsible for individuals in the CFT, requiring additional activities, e.g. fire fighting, reporting, performance appraisals
   • sharing of knowledge and helping others is not rewarded, because you would lose power and status
2. People have existing commitments
   People typically are not waiting to be called into a new team or CFT. Normally they are busy and committed to existing projects and working assignments as well as to their former functional teams and line managers. The result often is that CFTs start with some kind of “part-time” commitments and sometimes never see a fully dedicated team.
3. CFTs are built based on availability not on fit
   A second effect of the existing commitments and the typical overload is that line managers who have to nominate people for a CFTs appoint not the best fitting to the job but the easiest dispensable. And the best people typically are committed to a high degree.
4. Unrealistic expectations and management pressure
   Although it could be seen as common sense, that the change from functional teams to CFTs will cost some kind of productivity reduction before the benefits might be recognized, the unrealistic expectation often is that performance explodes as soon as the members of the CFT are nominated.