Which structure combines two or more organizational forms with multiple reporting relationships and is used to foster cross unit collaboration?

Cross functionality is an underappreciated aspect of the design thinking process. By creating cross functional teams, businesses can leverage ideas from a range of diverse sources to stimulate innovative thinking.

Businesses of all shapes and sizes are now realizing the power that comes from cross functional collaboration.

Theoretically, a cross functional team is a dream – a group of people with diverse talents from across a business working together toward a common objective.

Everybody knows what others are doing, there are no silos or repetitive efforts, and every team member deeply appreciates what their coworkers do.

So, what’s not to like? 

Unluckily, quite a lot. According to a study by The Harvard Business Review, approximately 75% of cross functional teams are dysfunctional and they’re unsuccessful on at least three of five criteria:

• Meeting a strategic budget
• Staying on schedule
• Following specifications
• Meeting consumer expectations
• Maintaining alignment with the business objectives

That’s a shockingly high failure rate. However, just because many cross functional teams fail doesn’t mean you should give up on the idea.

There’s still a lot to appreciate about this utopian way of working, and technology is making it all the way more possible.

What is a Cross Functional Team?

A cross functional team is a collection of individuals with varied skillsets from different areas of the business collaborating to achieve a common goal. It includes a combination of individuals from different business areas such as marketing, HR, operations, and finance. It also includes members of different levels like managers, mid-level workers, and subordinates.

This kind of team is usually found in small companies or startups as these businesses have a limited workforce, which often requires team members to undertake tasks beyond their regular scope of work.

When used in larger businesses, cross functionality generally encourages more innovative ways of thinking.

3 Reasons you need Cross Functional Collaboration

Why do companies need cross functional teams today more than ever before? Here are a few possible reasons:

1. Need for Employee Alignment

Today, businesses are moving faster than ever and organizations are seeing possible competitors in areas they never knew existed before.

With so many different prospects and risks, you really want your workforce to align toward the same objectives. If everybody is off working in ten different directions, the entire company will breakdown, and faster than you might think.

2. Increasing Value of Customer Experience

According to research, the value of customer experience has increased since 2010, whereas the value of conventional brand characteristics has deteriorated.

This really makes sense if we consider how brands today offer multiple communication channels for a consumer – official website, social platforms, customer service reps, automated processes, in-store sales, and more.

You absolutely need to have alignment on messaging, the broader value of the end product, and everything else that goes into an organization.

This alignment comes from cross functional collaboration, without which every silo can reach the consumers with a different message, confusing them and ultimately resulting in churn.

3. The Growth of IT

In a conventional business, IT was where individuals went to change passwords or get help with the photocopier. Today, IT impacts almost everything within an organization, nearly every hour.

It has made cross functional collaboration between the “techie” people and “the rest” indispensable in truly functional organizations, even though some have been sluggish to catch up.

 7 Benefits of Cross Functional Teams

It can be a bit overwhelming to create a team that involves individuals from multiple departments. But when you do so, it is totally worth it.

How do cross functional teams benefit the company? Let’s take a look at some of the advantages:

1. Greater Business Agility

Cross functional teams are typically small, adaptable, and flexible. As they have all the essential skills to deliver quickly, they are often seen in agile environments.

Such teams can move faster as they don’t have to wait and rely on other departments or external sources. Usually, they can tackle challenges on their own, start to solve them instantly and react to setbacks immediately.

Many businesses have been able to use cross functional teams to decrease the cycle time in new product development.

Consequently, cross functionality has become a common tool in new product development at many organizations, particularly those industries in which fast change and innovation are the standards.

Cross functional teams have displayed the flexibility to adapt to fluctuating market needs and the capability to more rapidly develop ground-breaking products.

2. Better Innovation & Creativity

Another advantage of cross functional teams is better innovation. Individuals with diverse skillsets often explore a problem in different ways.

Including different disciplines on your team can often result in improved creativity because of exposure to new ways of thinking.

A cross functional team is a planned investment for companies to improve efficiency and pool resources.

That’s because a collaborative team brings new ideas that pave way for innovation. It is a great way to come up with concepts together that distinguish companies from their competitors.

When different people working in different capacities come together, they think outside of the box to significantly yield better outcomes.

When individuals think in new ways, it helps them make intelligent mistakes, take better risks, and encourage innovation and ingenuity.

3. Better Employee Engagement

Do you know, almost 63% of employees aren’t fully engaged in their work and are struggling to cope with work situations that don't provide sufficient support?

This makes a huge difference to the overall productivity of the company. Therefore, transitioning to team-focused structures can improve team relationships and enhance workplace dynamics.

A cross functional team can help in tackling the silo mentality and bridge the gap between team members.

Cross functionality nurtures employee engagement since individuals from every company level are working together. This diminishes the gap between higher management and mid to junior-level workers.

4. Improved Insights

Research suggests 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. This is where cross functional collaboration can help by breaking down silos.

Cross functional collaboration is a great way to introduce great ideas. Creativity is a group process.

When the project managers group together employees who have expertise in different subjects, each with unique skill sets, it develops diverse and deeper insights. 

This way, cross functional collaboration brings new perspectives to the team to think of creative solutions and improve development.

As every team member brings their abilities and knowledge to the table, the business progresses and thrives, bringing solutions faster.

5. Superior Communication Skills & Team Development

Effective communication is the foundation of any team for successful projects. It’s an art that can make or break your team. Clear and crisp communication inspires sharing of ideas between cross functional teams.

Having a cross functional team means bringing in a diverse group of people who can develop their communication by discussing constructive feedback and understanding each other’s opinions.

Cross functionality allows you to build a team of high performers so they can bring out something big, become more self-reliant, and undertake bigger challenges. Together they can create a sense of harmony and learn more about tolerance.

6. Enhanced Management Skills

Cross functionality also helps enhance management skills. Although managing cross functional teams doesn’t come naturally to everyone, it should be refined by learning through experiences.

By putting teams together, your management skills are put to the test. You have to develop special skill sets to work with diverse backgrounds and working styles, and effectively lead a cross functional team through unique challenges.

When collaborating with teams from different areas, you get the opportunity of being the boss or maybe leading the way for your team.

The manager can give chance to other people in the team to lead the project so they learn to be in the leadership role and can pump new life into the project.

7. Removing Stereotypes & Diversity Issues

By involving people from different departments, a team understands the strengths of other teams. For instance, when a tech team meets a non-tech team, they recognize each other’s struggles and capitalize on their knowledge.

You begin sharing mutual goals and nurture understanding. This kind of understanding that breaks the stereotype is a blessing for the company and leads to conflict resolution.

Moreover, a diverse group of people of different ages, backgrounds, and opinions can bring novel ideas to the table.

4 Cross Functional Collaboration Examples

Successful companies don’t just build cross functional teams overnight. They embed cross functionality in their employee culture, building a truly inclusive workplace.

Let’s take a look at some of the companies that are using cross functional teams to drive innovation.

1. Northwestern Mutual Life

Northwestern Mutual Life is an American financial services mutual organization based in Milwaukee. It is one of the leaders in building cross functional teams.

When creating a cross functional team for the first time, the company followed the conventional model and engaged only those individuals whose roles were critical to the task at hand. However, that’s no longer the case.

Today, Northwestern is experimenting with appointing one person to each cross functional team who is not a stakeholder at all.

According to Colleen Stenholt, Director of HR at Northwestern, “One of our goals is to break out of the box, and the stakeholders are the people who built the box."

She believes outsiders are necessary as they are not locked into a customary way of thinking. Therefore, they are often able to bring a fresh perspective to an issue.

The design team at Northwestern Mutual believes strongly in the power of interdisciplinary collaboration. Cross functional workshops include both product and design and cover topics ranging from information architecture to sketching, to user flows.

“Workshops are good for getting people’s buy-in. And if they’re part of the process you’re also making use of that great knowledge that’s stuck in their heads, which designers may not know,” says Abigail Gray, Northwestern Mutual VP Head of Design.

In a recent workshop, designers, tech leads, and even certified financial planners explored how to make financial data visualizations less intimidating for customers.

In another cross functional exercise, many workers, including designers and writers, took a basic class in financial planning that helped them think about the influence of the advice they’re giving in the products they’re building.

How Cross Functional Teams Help Northwestern Mutual Life

As one of the earliest pioneers of cross functional collaboration, Northwestern Mutual Life began building cross functional teams made of members from its financial, investment, and actuarial departments. The objective of this team was to study how computers would influence the business world.

As a result, the company was able to create one of the first information systems departments that helped give the company a substantial edge when computers began to permeate every industry.

Currently, the company boasts cross functional teams in almost every aspect of its organization. This goes to show the incredible value cross functional teams can provide. Despite the global crisis in 2020, Northwestern Mutual Life ended the year with financial results that surpassed the record levels they achieved in 2019:

• Revenue of $31.1 billion
• Total surplus of $32.3 billion
• Total assets of $308.8 billion

Lessons We Can Learn From Northwestern Mutual Life

Stakeholders are the people who can benefit or lose from the work of the team. Every stakeholder must be represented on the team, and it is these stakeholders who can make or break the team.

For instance, if a department head doesn’t believe that the team is required, they can deny their best workers from participating on the team, depriving the team of resources. Or, they can choose to ignore the work of the team, conducting business normally because the team threatens their traditional role in the company.

It is up to the business ownership, management, and key cross functional team members to make all stakeholders understand the significance of the team and its motive and priorities.

2. Apple

Apple steps away from the traditional autocratic leadership model and gives every team member the freedom to support ideas, contest opinions, and eventually build on each other’s thinking to come up with the best solution.

“To see all the cross functional work and the relationships we’ve forged come together in one product makes me incredibly proud,” says Jason, Wireless Software Engineering Manager at Apple.

Apple is all about the user experience, even in ways consumers may not observe. This team is responsible to keep things going as finished products move through their supply chain and sales channels.

They work cross functionally with other Apple teams to discover ways to enhance processes, such as making it simple for consumers to order a product online and pick it up in a store.

How Cross Functional Teams Help Apple

Apple employed a cross functional team to create the revolutionary iPhone. They brought together experts from different departments across the business to start what was to become a smartphone revolution. They are considered as one of the greatest teams of all time bringing about innovation.

Today, it is renowned globally for its innovations in hardware, software, and services. Apple has grown from roughly 8,000 workers and $7 billion in revenue in 1997, the year Steve Jobs returned, to nearly 240,000 employees and almost $275 billion in revenue in 2020.

The main reasons behind Apple’s massive success are its organizational culture that supports cross functional collaboration and the associated leadership model.

Apple's Global Revenue (In $US Billions)

Lessons We Can Learn From Apple

Collaboration is more than simply working together. It means passionate and collaborative discussion. Employees in retail, hardware or marketing teams may focus on different matters, however, the principles of respectful and honest discussion stay the same.

Cross functional collaboration is critical as no one team is responsible for a product or a service on its own. You may need dozens of specialist teams for even a single module of a new product. Yet every team works with a common motive – to create an amazing customer experience.

3. Nokia

When there’s effective cross functional teamwork, everybody learns more and everybody is a winner.

Cross functionality brings people from different segments or departments of an organization together, boosting the cross pollination of ideas and knowledge. Every individual would then realize what the other individual does. They can understand their role and how it fits into the bigger picture.

This is exactly what Nokia has been practicing since its inception. When it comes to recruitment, it employs candidates who have experience in leading/working with cross functional teams in a multi-site environment.

The company understands the principles of agile development and applies these principles in the day to day work of its cross functional team.

How Cross Functional Teams Help Nokia

The executives of Nokia Bell Labs used the idea of cross functionality when they brought scientists and engineers together, each with exceptional skill sets.

The managers were able to develop a risk-free company culture that considered failure as an essential part of growth. This experiment led to the invention of the vacuum tube that has transformed thousands of industries.

Today, Nokia is constantly at the vanguard of telecommunications technology innovation. Managing over one billion subscribers internationally, their extensive expertise, culture strategy, and functional organization design set them apart from their competitors.

The global revenue of their Network Infrastructure for the quarter ending March 31, 2021, was €1.7B, a 22% increase year-over-year.

Lessons We Can Learn From Nokia

The more individuals across your various departments understand the basics of each other’s specialties, the more prolific your entire business would be. It is an additional advantage for any business if, for example, the Marketing manager understands how the Finance department processes payment to suppliers.

4. Cisco

“Cisco has created a bridge between siloed architecture experts and customer-facing staff in diverse groups across the company,” says Sean Worthington, Vice President of IT, Operational Excellence and Service Enablement, Cisco.

Cisco is one of the best organizational culture examples that established cross functional teams to change the organizational structure from a command and control system into a more collaborative and organic way of work.

The company has developed a collaborative approach in its HR strategy that focuses on the ideas of lower-level managers and involves them in top-level decision-making.

In other words, the goal of Cisco’s new collaborative approach is to move toward a more organic structure that would allow Cisco’s different teams and divisions to plan long-term strategies and work together to achieve them so that new product developments and technology are shared across the organization.

How Cross Functional Teams Help Cisco

“Our teams working at different levels are cross functional in nature. This has lent Cisco speed, scale, flexibility, and rapid replication. We had made the shift to this type of organizational structure in 2001 and had refined it in subsequent years. We had reorganized to break free of the silo culture in the company prior to 2001 so that it could remain agile and innovative in a rapidly changing industry,” says John T Chambers, the Chairman, and CEO of Cisco.

This cross functional collaboration has definitely worked as Cisco is currently the number one router security vendor. The company’s approach has allowed it to develop new products that make Cisco the global leader in both communications technology and Internet-linked IT hardware, as it finds ways to bring innovative products to the market more quickly than its competitors.

It has witnessed great progress on business transformation to more software and subscription, with 76% of software revenue sold as a subscription.

Lessons We Can Learn From Cisco

When it comes to cross functional collaboration, you can’t define it as a top-down approach or a bottom-up approach. In fact, it’s a more multi-directional approach that helps you achieve a more productive outcome.

Cross functional collaboration ensures that not all ideas originate from the executives or the top management only. It ensures that people from any level can contribute and participate in the creation of new ideas, which improves engagement on all fronts.

How to Use Cross Functional Collaboration to Drive Innovation

Cross functional teams sound like the perfect work environment, right? Improved creativity, problem-solving, and innovation potential.

A team that’s created to operate in a cross functional setting can do wonders for your company’s innovation and decrease project time if planned well. However, if not planned correctly, cross functional teams can be dysfunctional and chaotic, resulting in stagnating projects.

Individuals from different departments will contribute toward the mutual goal, however eventually, they’re likely going to be partial toward the requirements of their own department. People with no decision-making authority can also increase project time, waiting for a ton of approvals.

So how do you build a cross functional team keeping all that in mind?

Here are a few tips to help you:

• Identify team members who work well in teams, particularly those who can work autonomously and collaboratively.
• Identify a leader for the team and choose somebody who can delegate tasks, keep the team on the right track, and also moderate the discussion.
• Develop clear, transparent, and consistent roles and anticipations. Make sure everybody is on the same page by fostering communication across the organization.
• When setting goals, clearly define the problem that needs to be solved, not the solution that needs to be achieved. Setting the desired solution as your target will narrow down your group's focus even before they begin working.
• Do not allow for conflicts between departments or individuals to slow innovation.