IMPORTANCE OF CROSS-FUNCTIONAL TEAMS IN NEW PRODUCT DEVELOPMENT

The simplest definition of cross-functional teams (or CFTs) is teams that are made up of people from different functional areas within a company – marketing, engineering, sales, and human resources, for example. These teams take many forms, but they are most often set up as working groups that are designed to make decisions at a lower level than is customary in a given company. They can be either a company’s primary form of organizational structure, or they can exist in addition to the company’s main hierarchical structure.

CFTs have become more popular in recent years for three primary reasons: they improve coordination and integration, span organizational boundaries, and reduce the production cycle time in new product development. Bringing people together from different disciplines can improve problem solving and lead to more thorough decision making. The teams foster a spirit of cooperation that can make it easier to achieve customer satisfaction and corporate goals at the same time.

CFTs are similar to conventional work teams, but they differ in several important ways. First, they are usually composed of members who have competing loyalties and obligations to their primary sub-unit within the company (for example, a marketing person serving on a cross-functional team has strong ties to his or her home department that may conflict with the role he or she is being asked to play on the CFT)

Second, in companies where CFTs are being used on a part-time basis as opposed to a permanent organizational structure, they are often temporary groups organized for one important purpose, which means members are often under considerable pressure. On these temporary teams, the early development of stable and effective group interaction is imperative.

Finally, CFTS are often held to higher performance standards than conventional teams. Not only are they expected to perform a task or produce a product, they are also expected to reduce cycle time, create knowledge about the CFT process, and disseminate that knowledge throughout the organization.

For cross-functional teams to succeed, several factors have been identified that are imperative:

• Team members must be open-minded and highly motivated.
• Team members must come from the correct functional areas.
• A strong team leader with excellent communication skills and a position of authority is needed.
• The team must have both the authority and the accountability to accomplish the mission it has been given.
• Management must provide adequate resources and support for the team, both moral and financial.
• Adequate communication must exist.

Without any one of these elements, any cross-functional team will be fighting an uphill battle to succeed.

Cross-functional Teams and New Product Development

Many businesses have been able to use cross-functional teams to reduce the cycle time in new product development. As a result, CFTs have become a common tool in new product development at many companies, especially those in industries in which rapid change and innovation is the norm. CFTs have shown the flexibility to adapt to changing market needs and the ability to more quickly develop innovative products.

In the past, new product development invariably meant gathering data sequentially from a number of departments before a new product was given the green light.  First, the idea would be conceptualized. Then it would be handed off to the marketing department, which would conduct market research to see if the product was viable.

The product might then be passed on to the sales department, which would be asked to create a sales estimate. From there, the idea would move on to engineering or manufacturing, which would determine the costs to produce the product. Finally, with all those numbers gathered over the course of months, or even years, the product would move to an executive committee which would either approve or kill the project. By that time, market conditions sometimes had shifted sufficiently to render the product obsolete.

CFTS eliminate the “throw it over the wall” mentality that passes a product off from department to department. Instead, a member of each of the above functional areas would have a representative on the new product team. Team members would learn of the new product at the same time and would begin working on estimates together. If part of the product simply could not be manufactured cheaply enough, the team member from the area could immediately sit down with the engineering rep and come up with a new production method. The two of them could then meet with the marketing and sales team members and discuss new ways to position the product on the market. The result, say proponents, is a vastly improved product that is manufactured and released to the market in far less time than was achieved using traditional methods.

Cross-functional Team and Small Business

Many people believe that cross-functional teams are only successful in large companies. Conventional wisdom dictates that small business companies are probably already operating cross-functionally out of necessity – i.e., the company is so small that people have to perform multiple tasks and work together with everyone else in the company. While that may be true in the start-up operations, it is certainly not true of the majority of small businesses.

Most small operations have to weigh the pros and cons just like their larger counterparts when deciding whether or not to use CFTS. Those that have chosen to adopt CFTs have been largely pleased with the results.

For example, one owner of a small business with fewer than 30 employees originally arranged his company into functional units, but found that he had an odd assortment of employees left over who did not fit into any of the existing teams.  As a result, he created a permanent cross-functional team to handle special projects   at the company. The results were immediate and impressive, H claimed that since adopting the cross-functional team concept:

• Employees in support of roles are more concerned with profits and ways to increase sales. They now realize that the more the company succeeds, the more they benefit directly.
• People communicate more openly and are more helpful to each other. There is a far greater sense of teamwork instead of such person looking out for number one.
• Employees’ problem-solving skills have improved dramatically, and it is easier to build consensus for a given solution.
• People are more likely to speak up and point out problems. Before the CFT, people were more likely to be passive and quiet, reasoning that the problem was not their responsibility.
• People recognized that there is strength in diversity – not that everybody has to agree on an issue. They know they are being understood, but that some people may still choose to disagree with them, and that such differences are acceptable.

Staff members have also benefited from the CFT arrangement. Employees now understand the different processes that occur throughout the organization and understand the interrelationship between different functional areas. Instead of looking at their one “silo” of operations, employees now see the big picture.

Indeed, according to CFT supporters, participating employees often improve their interpersonal problem-solving skills, which make them better employees and makes them more attractive on the job market should they choose to pursue  other opportunities. 

Finally, proponents say that employees are less likely to become bored with their own job when they are given the opportunity to learn new skills on the CFT.

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