Reimagining Effective
Cross-Functional Teams
In today’s
globally interconnected, fast-paced business environment, nearly every
important initiative — whether it’s revenue growth, cost reduction, or new
product innovation — requires insights and actions from people working
across an organization.
The most popular “human technology” for gathering an
organization’s best thinking and expertise on a complex topic is the
cross-functional team. Here, executives assemble small groups of employees from
different functions — such as marketing, finance, and operations
— and ask them to devote a certain amount of energy to a particular
problem, usually specifying a set of goals and a time frame in which the
project will be completed and the team will disband.
But even though this is a common solution, cross-functional teams
have a checkered reputation. A recent survey by Strategy&, the strategy
consulting business of PwC, found that only 6 percent of employees working on
these teams believe that they consistently produce outstanding results. This is
in many ways not surprising, as only 8 percent of employees working on
cross-functional teams say leadership always makes their team’s work a priority
and sets clear objectives; just 10 percent say that these teams make clear
decisions and are accountable for their actions; a mere 9 percent say that team
members share information effectively; and perhaps most telling, only 9 percent
say that these teams consistently embrace diversity of opinion — which is why
different skills are brought together in the first place.
Effective teamwork of any sort requires finesse, but this is
especially true for cross-functional teams. For cross-functional teams to
perform well within more traditional organizational structures, three key
guardrails must be put in place.
• Senior executive
ownership. Assigning a senior executive to oversee the team and its
output signals that the effort is important to the organization. It also
provides the mechanisms for clear decision making and ensures that team members
are credited for this work.
• Clear goals and
performance metrics. Tying the team’s output to the organization’s strategy and
to the executive owner’s performance aligns the team to solve the right
problem.
• Knowledge transfer. Create
mechanisms to ensure that the team’s output is transferred back into key
functions and work streams so the insights become standard operating procedures
for the enterprise.
An example of an approach using these three guardrails can be
found in the cross-functional student yield team at the Kellogg School of
Management at Northwestern University. The team has produced major improvements
in the quality of students applying for, and enrolling in, the program. But
back in 2013, the school was feeling stalled in its efforts to continue to
improve its yield performance (the percentage of students who choose to enroll
after they have been offered admission). One of the primary challenges was that
leaders of key functions — admissions, financial aid, student life,
marketing, and IT — were not talking to each other enough. Further, it
became obvious that no one, save admissions, saw it as their job to increase
yield.
So the school created a team charged with outlining what
best-in-class work streams would need to look like if Kellogg were to yield
more top students. As part of that process, a handful of key performance
metrics were identified that touched each of these functions. These included
online ad click-through rates, benchmarking data for financial-aid packages,
and the functionality of online information and application systems for
prospective students. The team was then charged with meeting regularly to
jointly monitor performance on these metrics and, in the process, hold various
functional leaders accountable for their role in improving results. And the
results are clear: a significantly increased yield of top candidates over the
last three years. Just this fall, Kellogg boasted an entering class with the
second highest average GMAT in the country.
Leading organizations — such as Apple, IKEA, and Lego
— that are very clear about the few things they must do well in order to
succeed, and that realize the cross-functional nature of these things, often
make a more fundamental shift: They make some of their cross-functional teams
permanent. They understand that although functions create consistency and
efficiency at scale, they also create limitations and bottlenecks.
The area where this shift is happening most often is around
innovation: Some companies are converting the traditional R&D function into
a cross-functional innovation group bringing together research, engineering,
marketing, supply chain, and finance, with a goal of improving the company’s
growth prospects. These permanent teams are then reflected within the
organizational model, with chief innovation officers responsible for the newly
defined core expertise. Chief risk officers or chief growth officers represent
other examples that are becoming increasingly prevalent.
Bringing diverse talent together — and allowing that talent
to accomplish big things — has become the norm for how work gets done. But
the way most companies use this talent needs serious improvement.
Cross-functional teams have the opportunity to unleash great results, but only
if we ensure they are set up in the right way and given the support they need
in order to work. In the current business climate, companies need to make these
cross-functional teams successful — or risk being left behind.
Sally
Blount
Paul
Leinwand
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