What is a cross-functional team? What are they good for, and what kind of leadership is needed to create and foster them? Jürgen Dittmar, organizational psychologist, systemic management consultant, and very experienced Management 3.0 Facilitator, is looking into which leadership skills are essential to make cross-functional teams thrive.

Quick links:

• What is a cross-functional team?
• Success factors of effective cross-functional teams
• Challenges of cross-functional teams
• The leadership role for CFTs

In the age of “VUCA” and “Agile” cross-functional teams (CFTs) seem to be one of the cornerstones and main factors for success. According to the Scrum Guide, a Scrum Team per definition needs to be “cross-functional”.

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 this article I will discuss the success factors, challenges and required leadership in the typical situation of creating and supporting CFTs in an existing organization and functional environment. That’s because creating a single CFT as an organization from scratch is just common sense and called a startup.  

Success factors of cross-functional teams

Just 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 (please refer to “Five Dysfunctions of a Team” from Patrick Lencioni and see the Management 3.0 Teams module for more on that). 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:

All the required changes from functional teams to CFTs and the listed success factors will violate existing policies, processes, structures and culture driven behavior. That’s why protection is needed.

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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.

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The leadership role for CFTs

Necessary skills for cross-functional team leaderships

So what kind of leadership activities and mindset is needed for CFTs?

Simply answer this question:

How can we foster an environment and a system that helps cross-functional teams to thrive and to deliver value?

The previously described success factors and challenges show where you have to focus on.

Here are 10 tips and skills to practice valuable leadership for CFTs

1. Manage the system, not the people
   Identify areas where you can support the CFTs to become successful by focussing on the environment and surrounding system, not on the people. Leave the people management to the team to help them to learn and self-manage. Which success factors and challenges need to be addressed first? 
   
2. Practice systems and complexity thinking
   In order to find the right interventions and experiments to help your organization and CFTs improve your understanding of your organization as a complex social system. Learn and practice systems and complexity thinking with – also with your colleagues on management level.
   
3. Be ready to challenge the system
   Working in contrast to an existing organizational culture is hard, requires courage and sometimes is disappointing. Be ready for this and find support inside and outside your organization.
   
4. Be humble and patient
   You cannot design and plan a complex social system like a CFT. There is no best practice. The only thing you can do is switch on your brain and help the team to find out the best approach. So be patient and put the team and business value creation in the center of your activities. It’s not about you, it’s about the success of the system.
   
5. Step back and empower people and teams
   To help a team to become confident in decision-making and self-management you have to step back and also empower the team. But, be aware that this is something you just can’t decide on your own. It’s a process of handing over responsibility and decision power that will need your ongoing support and commitment.
   
6. Use your power wisely
   You still are accountable for the CFT. If you are about to make decisions affecting the team, always ask yourself what effect this might have on team dynamics and team motivation. Consider that maybe the team or someone in the team might make an even better decision than you? This already applies to the decision: Who’s on the team?
   
7. As a leader of a cross-functional team, stay away from operative work and decisions
   If you try to actively manage and “help” a CFT as a line manager by being an operative part of the team there’s a high chance that it will produce the opposite. You slow down the team, by affecting their creativity, decision making and finally – value creation.
   
8. Increase the probability of the unlikely
   As you can not plan and manage a complex system and you can expect a lot of challenges for the CFT (see above) focus your actions on increasing the probability of the unlikely. By changing the organizational environment, make it easier for people and CFTs to behave differently and in contrast to the still dominant organizational culture.

Hold on, isn’t there something missing? Shouldn’t the manager also have the skills to exactly know the domain and context as well as the skills of the people in order to create the best team? Out of my own experience I doubt this. I even recognized that too much knowledge might even hinder the required mindset change for managers and the team members as well.

Photo by Ketut Subiyanto (via Pexels)