How to Build a Successful Cross-Functional Team

Teamwork and collaboration are essential to success in business. Learn about the benefits of cross-functional teams as well as five strategies for their successful implementation.

Updated March 3, 2020

Perhaps you work in a large company, and every day when you ride the elevator up to your floor, you wonder what all those people do who exit on the floors before and after yours. Or, maybe you’re at a smaller business, but it’s not until a company get-together where you talk to someone with a different job that you realize how little you know about their work-related specialties, goals, and concerns.

If so, you’re not alone. Traditionally, most companies have been built around functional departments: people with the same skill set — sales, marketing, design, production, and so on — being grouped together in so-called “silos” of expertise.

While silos are great for storing grain, they can limit an organization’s operational effectiveness due to a lack of communication, shared goals, and collaboration. To address those issues, cross-functional teams (CFT) can be deployed in businesses large and small to increase innovation, improve communication, and accelerate project results.

Overview: What is a cross-functional team?

Simply put, a CFT consists of people with different skills and from different departments working together via team collaboration on a shared project.

The first use of CFTs in the U.S. occurred in the 1950s. The CEO of The Northwestern Mutual Life insurance company brought together people from multiple departments, including actuarial, financial, and investment, to study the impact computers would have on the business world.

As a result, Northwestern was one of the first corporations in the country to create an information systems department. Doing that gave it a significant competitive advantage as the use of computers steadily increased, and since then, the company has continued to rely on cross-functional teamwork.

You do not have to be a giant corporation, however, to benefit from CFTs. In fact, smaller companies and startups likely use an informal version of CFTs as everyone probably wears multiple hats each day. That means it’s even more important to understand the benefits of CFTs and the strategies for their successful implementation.

Benefits of developing cross-functional teams

Every business needs to maximize its resources, people, materials, time, for the greatest return on investment (ROI). While there are multiple, specific advantages cross-functional collaboration can provide, the benefits can be grouped into three overall categories:

  • Increasing innovation
  • Improving communication
  • Accelerating results

Increasing innovation

Products and processes are the two areas where companies typically seek to innovate. Whether your product is material- or service-based, you always want to be working on the next best iteration of it. In addition, you must constantly be improving your internal processes that either directly produce or support the production of your deliverables.

CFTs can do this in ways that functional teams simply cannot. First, by bringing together team members with different areas of expertise, you gain high level insight from multiple perspectives at the same time instead of going through each organizational silo, one by one.

In addition, team members have the opportunity to experiment with multiple combinations of their own skills with those of their teammates to achieve optimized workflow. This can produce results far beyond those of functional departments working on their own.

Improving communication

Every department organically develops its own jargon and shorthand for efficient communication. This can also lead, however, to organizational isolation and less effective cross-company dialogue: “We know what we’re talking about here, but what are they saying over there?”

CFTs quickly break down these communication barriers. By definition, teammates will become familiar with each other’s terminology, and each team will inevitably develop its own set of terms. Instead of existing in isolation, however, this shared vocabulary from cross-functional communication will eventually be transmitted throughout the company as your cross departmental team members return to their own work groups or go on to new CFTs.

Accelerating results

Producing improved deliverables and enhancing company-wide communication are critical goals to achieve. Then again, the success of a business comes down to one fundamental key performance indicator (KPI): unit sales.

That means you always need better results faster.

This is where CFTs are potentially most powerful, speed. By breaking down organizational silos, products and processes can be developed more quickly as team members with different skill sets collaborate simultaneously.

Plus, improving communication within CFTs as well as your company overall will allow for quicker application of your teams' results.

Strategies for establishing cross-functional teams in your business

While the results produced by CFTs can be transformative, their success is not guaranteed. In fact, a 2015 Harvard Business Review article estimated that 75% of these teams are dysfunctional for reasons as simple as not being able to stay within budget or meet a schedule.

That’s why the five strategies below are essential to successfully implement your CFTs and have control over the project management process.

Strategy 1: Set project goals

Before a CFT is put together, the first thing to do is to clearly establish what you specifically want to accomplish.

Do you want a new product design that improves performance? Do you want to reduce the number of steps in a manufacturing process? If you’re not explicit up front about the end goal, your CFT will lack direction and focus from the outset.

Tips for setting project goals:

Every project has three elements that must be clearly identified up front: scope, what needs to be done; time, how long will it take; and resources, people and materials.

  • Work with stakeholders: No successful project is defined in isolation, so work with your stakeholders, both inside and outside the company as appropriate, to define exactly what needs to be accomplished.
  • Write a project charter: Once the high level goals have been identified, write a formal project charter which explicitly describes the final deliverables, the time and resources required, risks to watch out for, and the role of each CFT member.

Strategy 2: Choose the right team leader

To increase the odds for success, each team needs effective cross-functional team leadership for the duration of the project. To do that, select an end-to-end team leader. Otherwise, valuable time can be lost as team members jockey for control or engage in finger pointing when upper-level management has questions about what is or isn’t going on.

Tips for choosing the right team leader:

An effective team leader will be able to delegate tasks, mediate discussions and problems within the team, adhere to the project schedule, and be an advocate for the CFT within the rest of the company.

  • Prioritize emotional intelligence: Leading a team effectively is as much psychological as technical. That is, it may be tempting to put the best engineer or the highest-performing salesperson in charge of a CFT, but that doesn’t mean they can manage others well. Instead, look for someone who has the soft skills to help others work together.
  • Use a project manager: One option for your CFT leader is a dedicated project manager. A project manager may not have the technical skill set or subject matter expertise to contribute directly to the final deliverables but can still keep everyone else on track to get there successfully. Plus, a standalone project manager can help prevent other team members from feeling like one area of expertise is being emphasized over another.

Strategy 3: Select the best team members

Just as choosing the right leader is critical, so is selecting the rest of the team members. You need people who are as skilled at working cross functionally as they are with their technical skill sets.

Tips for selecting the best team members:

The strength of CFTs is the collaboration achieved by people with different skill sets. At the same time, you also want to optimize your team’s size for maximum efficiency.

  • Incorporate diversity: Just as combining different skill sets can spark new connections and ways of seeing things, the same is true about team members’ backgrounds. Try to incorporate varied ages, skill levels, and education to generate even more perspectives for the group to use.
  • Use the “two pizza” rule: Amazon founder and CEO Jeff Bezos is famous for creating small teams via the two pizza rule. It’s simple: Do you need more than two pizzas to feed everyone? If so, you probably have too many team members to work efficiently.

Strategy 4: Establish effective communications

Every team must employ effective communication strategies. After all, you want everyone to have enough time and space to get their jobs done without trapping them in seemingly never-ending meetings.

Tips for establishing effective communications:

If you must have formal meetings, limit their number as much as possible. Instead, explore other options to keep everyone informed about what is going on.

  • Use stand-up meetings: For face-to-face team meetings, try using the stand-up method. By having everyone stand up, the temptation for the meeting to last any longer than necessary is greatly diminished.
  • Take advantage of technology: In addition to email, there are a variety of software options for everyone to stay in touch. Slack, for example, is one popular choice. You can easily message people individually, set up group “channels” for ongoing discussions, and share files.

Strategy 5: Assess progress regularly

To make sure your CFT is staying on track and making progress requires ongoing assessment. This isn’t just to identify problems but to also discover what’s working well, so you can replicate those efficiencies.

Tips for assessing progress regularly:

You don’t want your CFT leader consumed with writing endless evaluations or team members submitting constant progress reports at the expense of making actual progress. Like most things related to project management, it’s the Goldilocks principle: neither too much nor too little but just the right amount.

  • Use project management software: From informal project management systems like Trello or more robust options like Basecamp, you have a wide range of software to choose from to track your milestones and monitor your schedules. Want to learn more? Check out this overview of the best project management software.
  • Celebrate successes: Assessment isn’t just about recognizing problems and trying to fix them. It also includes acknowledging what’s working well and those successes your CFT has had along the way. Not only will team members appreciate the positive feedback, it will give them the incentive to push on to the project’s completion.

Implement cross-functional teams today

Functional teams, grouping people with the same skills together, have been the default choice for building teams in the past, but many times they don’t produce the best results. You may meet some internal resistance when putting together your first multifunctional team.

After all, change is hardly ever welcome, but CFTs will be worth the effort, even if you need a formal change management plan.

What seems to be your most intractable problem? What project doesn’t seem feasible using the team structure you’ve relied on in the past? Put together a CFT using the strategies above and you could find yourself with a real advantage over your competitors who are still stuck in organizational silos.

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