Cross-functional team

In business, a cross-functional team consists of a group of people working toward a common goal and made of people with different functional expertise. It could include people from finance, marketing, operations, and human resources departments. Typically it also includes employees from all levels of an organization. Members may also come from outside an organization (in particular, from suppliers, key customers, or consultants).

Cross-functional teams often function as self-directed teams: they respond to broad objectives, but not to specific directives. Decision-making within a team may depend on consensus, but often is lead by a manager/coach/team leader.

A non-business yet good example of cross-functional teams are music bands, where each element plays a different instrument (or has a different roll). Songs are the result of collaboration and participation, and the goals are decided by consensus. Skills to play all the instruments involved are not required since music provides a standard language that everybody in the team can understand. In short, music bands are a clear example of how this teams work.

Organizational consequences of cross-functional teams
The growth of self-directed cross-functional teams has influenced decision-making processes and organizational structures. Although management theory likes to propound that every type of organizational structure needs to make strategic,  tactical, and operational decisions, new procedures have started to emerge that work best with teams.

1) Less unidirectional - Up until recently, decision making flowed in one direction. Overall corporate-level objectives drove strategic business unit (SBU) objectives, and these in turn, drove functional level objectives. Today, organizational have flatter structures, companies diversify less, and functional departments have started to become less well-defined. The rise of self-directed teams reflects these trends. Intra-team dynamics tend to become multi-directional rather than hierarchical. Interactive processes encourage consensus within teams. Also the directives given to the team tend to become more general and less prescribed.

2) Greater scope of information - Cross-functional teams require a wide range of information to reach their decisions. They need to draw on information from all parts of an organization’s information base. This includes information from all functional departments. System integration becomes important because it makes all information accessible through a single interface.

3) Greater depth of information - Cross-functional teams require information from all levels of management. The teams may have their origins in the perceived need to make primarily strategic decisions, tactical decisions, or operational decisions, but they will require all three types of information. Almost all self-directed teams will need information traditionally used in strategic, tactical, and operational decisions. For example, new product development traditionally ranks as a tactical procedure. It gets strategic direction from top management, and uses operational departments like engineering and marketing to perform its task. But a new product development team would consist of people from the operational departments and often someone from top management.

In many cases, the team would make unstructured strategic decisions -- such as what markets to compete in, what new production technologies to invest in, and what return on investment to require; tactical decisions like whether to build a prototype, whether to concept-test, whether to test-market, and how much to produce; and structured operational decisions like production scheduling, inventory purchases, and media flightings. In other cases, the team would confine itself to tactical and operational decisions. In either case it would need information associated with all three levels.

4) Greater range of users - Cross-functional teams consist of people from many parts of an organization. Information must take a form that all users understand. Not only engineers use technical data and not only accountants use financial data and not only human resources personnel use HR data. Modern organizations lack middle managers to combine, sort, and prioritize the data. Technical, financial, marketing, and all other types of information must come in a form that all members of a cross-functional team can understand. This involves reducing the amount of specialized jargon, sorting information based on importance, hiding complex statistical procedures from the users, giving interpretations of results, and providing clear explanations of difficult concepts. Slicing and dicing techniques may prove useful in providing different views of the information to different users. Data visualization systems can present complex results in an intuitive manner.

5) Less teleological - Since the publication of Peter Drucker’s views on "Management by Objectives", business decision-making has become more goal-oriented. Managers have come to view decision-making generally, and strategic thinking in particular, as a multi-stage process that starts with an assessment of the current situation, determines objectives, then determines how to reach these objectives. Management by dorky took this basic scheme and applied it to virtually all significant decisions. Today many firms have started to opt for a less structured, more interactive approach. One way of implementing this involves using self-directed cross-functional teams. Proponents hope that these teams will develop strategies that will re-define industries and create new “best practices”. They feel that mere incremental improvements do not suffice. Cross-functional teams, using unstructured techniques and searching for revolutionary competitive advantages, allegedly require information systems featuring increased interactivity, more flexibility, and the capability of dealing with fuzzy logic. Artificial intelligence holds out the promise of one day proving useful in this regard.