Beyond cross- functional functional collaboration

St Stuttgart, tt t November N b 2010 

Beyond cross- 

functional 

collaboration

This study explores how companies can go beyond "classical", 

task force-based cross-functional collaboration 

OBJECTIVES 

Assess the status of 

"classical" crossfunctional 

collaboration 

Explore approaches 

how to successfully 

"go beyond" 

DDerive i recommendations d ti 

as basis for discussion 

and development needs 

METHODOLOGY AND SAMPLE 

• Exploratory approach based on semi-structured interviews 

• Approx. 20 1-2 hour interviews with senior managers 

• Broad spectrum of different industries, company sizes and 

functions: 

Industry Turnover [EUR bn pa] p.a.] Function 

Other 

IT & telecommunication 

Source: Roland Berger study "Beyond cross-functional collaboration" 

36% 

Engineered 

products 

29% 

14% 21% 

Consumer 

goods g 

0.5 

29% 

36% 

21% 14% 

>5 

>1 

Other 

Organization 

SCM 

26% 

29% 

14% 

21% 

14% 

General 

mgmt. 

Procurement 

2

Key insights of the study 

1 Functions still dominate today's corporate structures – However, increasing need to 

integrate across functions 

2 Companies rely on "classical" classical , task force-based cross-functional collaboration to overcome 

functional barriers – Its use is wide-spread 

3 However, "classical" cross-functional collaboration is often not successful – Insufficient 

incentives and fear to loose power as main reasons 

4 Companies need to adapt their management system to go beyond "classical" crossfunctional 

collaboration – 3 elements are most important 

A Implement alternative organizational models – Especially network structures 

expected to gain importance 

B Strengthen roles which facilitate collaboration – Especially staff to operatively drive 

or additionally support a project/process/task will become more important 

C Improve the skills of the employees to prepare them for less hierarchical/structured 

environments 

5 Many companies are prepared to implement major organizational changes – However, 

systematic change management is required 

6 Our view: Depending on the industry, network and process organizations will significantly 

grow in importance; companies need to look for a solution tailored to their needs 


3

1 

Functions still dominate today's corporate structures – However, 

increasing need to integrate across functions 

"Functions dominate today's 

corporate p structures" 

Fully 

agree 

Fully 

dis- 

agree 

0% 

8% 

31% 

54% 

8% 

Functional 

specialization, silos 


REQUIREMENTS 

FOR THE FUTURE 

Growing global 

integration 

Increasing customer 

requirements 

More complex p structures 

and processes 

Exhausted "functional" 

potentials 

Cross-functional 

integration 

4

1 BACKUP 

"Today, our decision structures are mostly functional. That doesn't 

fit with tomorrow's requirements." 

Further interview quotes 

DOMINANCE OF FUNCTIONS 

"We have several organizational 

dimensions dimensions. But functions own the 

resources/budgets." 

"Organizations exceeding a certain size 

require specialized staff clustered by 

functions/sub-functions. That's a given." 

REQUIREMENTS FOR THE FUTURE 

"Global competitive pressure rises day 

by day day. An integrated view is required to 

tap hidden potentials." 

"We have mostly realized the potentials 

on a functional level level. Now our focus are 

cross-functional improvement teams." 

"Functions dominate more than they 

"Global networks especially in 

should should. " 

Engineering are currently installed to 

meet tomorrow's customers demand." 

"Our people are developed within their 

respective function." "As processes become more complex it's 

iimportant t t that th t people l get t a broader b d view." 

i " 


5

2 

Companies rely on "classical", task force-based cross-functional 

collaboration to overcome functional barriers 

"Classical cross-functional 

collaboration is widespread" 

Fully 

agree 

Fully 

dis- 

agree 

0% 

0% 

8% 

33% 

58% 

DEFINITION 

"Classical" cross-functional collaboration 

• … involves staff from different functions 

• … goes bbeyond d th the ddaily il iinteraction t ti bbetween t ffunctions ti 

• … implies cooperation to reach a common goal 

• … is based on task forces, , i.e. comes on top p of daily y work 

• … AND TAKES PLACE WITHIN THE EXISTING 

ORGANIZATIONAL STRUCTURES 

6

2 BACKUP 

"A few years ago, we have introduced multi-functional teams 

comprising procurement, engineering, quality and logistics." 


"We have many cross-functional circles. We use them e.g. to identify cost 

reduction potentials, optimize our products, prepare and implement large 

outsourcing contracts and so on." 

"We use cross-functional teams on two occasions: 

1. To deliver large client projects 

22. As value analysis teams to identify product product-related related cost reduction potentials. potentials " 

"We use cross-functional collaboration mainly to deal with 

special projects, e.g. the setup of a new production site." 

"Cross Cross-functional functional collaboration is claimed by many many. Reality Reality, 

however, often looks different." 


7

3 

"Classical", task force-based cross-functional collaboration is 

often not successful – Several reasons are important 

"Classical cross-functional 

collaboration does not work 

in many cases" 

Fully 

agree g 

Fully 

dis- 

agree 

0% 

9% 

9% 

36% 

45% 

MAIN REASONS 

3.0 

Insufficient 

incentives 


2.9 

Fear to 

loose 

power 

2.8 

Insufficient 

resources 

2.6 2.6 

"Silo 

thinking" g 

Insufficient 

trainingg 

2.1 

Insufficient 

methods 

4.0 

High 

importance 

1.0 

Low 

importance 

8

3 BACKUP 

"The concept of cross-functional collaboration remains undisputed. 

Implementation, however, often falls short of expectations." 


FAILURE OF "CLASSICAL" CLASSICAL CROSS CROSS- 

FUNCTIONAL COLLABORATION REASONS 

"A few years ago, we have introduced 

multi multi-functional functional teams comprising 

procurement, engineering, quality and 

logistics. Success is so so." 

"We We use cross cross-functional functional teams on 

several occasions. Results are OK, but 

can definitely be improved." 

"In In many cases there is limited 

commitment to support cross-functional 

projects unless the 'What's in it for me?' 

is evident to everybody." 


"Main reasons for insufficient cross-func- 

tional collaboration are a lack of capacity 

and other priorities in daily business." 

"Defining cross-functional processes 

alone is not enough enough. Our employees 

often do not have sufficient understanding 

of interlinkages to make crossfunctional 

collaboration a success." 

"Silo thinking is also a problem of the 

generation." 

"One main hurdle is to 'force' people out 

of f their th i ddaily il work k and d get t th them iinvolved l d 

in the cross-functional team." 

9

4 

Companies need to adapt their mgmt. system to go beyond "classical" 

cross-functional collaboration – 3 elements are most important 

Key elements of the "management system" 

Performance 

Objectives 

Incentives 

STRATEGY 

…gives clear guidance and defines measureable 

performance improvement targets 

…ensures ensures a closed loop of objectives objectives, incentives 

and measureable performance (controlling/KPIs) 

A 

STRUCTURE & PROCESSES 

Primary Secondary Processes …focus the available resources on the defined 

organiorgani- objectives 

zationzation …define and organize collaboration based on 

hierarchical structures and the sequence of work 

B Roles & responsibilities 

ENABLERS 

Company standards 

…steer corporate behavior in addition to the 

C HR Management 

formal organization (structure & processes) 

Values/culture …emphasize emphasize "soft facts" 

Most important to successfully go beyond "classical cross-functional collaboration 


10

4 A 

Companies need to implement alternative organizational models – 

Especially network structures expected to gain importance 

Primary organization: Importance of alternative models 

3.4 3.5 

3.3 

40 4.0 

High 

impor- 

2.8 

tance 

Project 

organization 

2.1 

Network 

organization 

2.2 

Importance today Importance tomorrow 

Process 

organization 


1.0 

Low 

importance 

COMMENTS 

Project organization 

• Organizational setup to cope with complex, sing- 

ular challenges, e.g. matrix project organization 

• Goes beyond "classical", task force-based 

collaboration by integrating various areas within 

projects on a regular institutionalized basis 

Network organization 

• Consisting of independent organizational 

elements driven by common goals 

• Goes beyond "classical", task force-based crossfunctional 

collaboration by strong common goals/ 

incentives and coordination principles 

Process organization 

• Organization along (end-to-end) business 

processes, e.g. order-to-delivery 

• Goes beyond "classical" classical , task force force-based based crossfunctional 

collaboration by eliminating functional 

borders along the process 

11

4 A EXAMPLE PROJECT ORGANIZATION 

Project organizations typically combine the traditional line 

organization with an institutionalized project management 

Matrix project organization of an aerospace & defense company 

Project 

management 

g 

team 

Module lead 

Module 

1 

Function 

1 

LINE ORGANIZATION 

Function 

2 

Function 

3 

Function 

n 

End 

respponsibility 

Module 

2 d-to-end 

Module 

3 

Module 

1 

Source: Anonymized client example 

Functional team members 

Key account 

ORGANIZATION OF PROJECT 1 

COMMENTS 

• Matrix project organization 

with the dimensions 

– Project (responsible for 

content/scope, t t/ timeline ti li 

and cost) 

– Line (responsible for 

resources, , know-how 

and quality delivered) 

• End-to-end responsibility 

of project (development, 

production production, maintenance) 

• Involvement of line functions 

varies by project stage 

►Currently, y, project p j organi- g 

zations are mainly used as 

secondary organization 

12

4 A EXAMPLE NETWORK ORGANIZATION 

Network organizations are typically used to coordinate mostly 

autonomous entities, e.g. competence centers or offices/sites 

Global Roland Berger network organization 

COMPETENCCE 

CENTERSS 

INDUSTRY 

Automotive 

Consumer 

Goods & 

Retail 

Corporate 

Development 

FUNCTIONAL COMPETENCE CENTERS 

Marketing & 

Sales 

Operations 

Strategy 

… 

COMMENTS 

Engineered 

Products & 

High Tech expertise 

… 

Roland Berger office 

Source: Roland Berger Strategy Consultants 

• Global network 

organization comprising 

– 5 functional and 9 

iindustry d t competence t 

centers 

– 36 offices worldwide 

• Flexible staffing of pro- projects 

based on required 

functional/industry competence 

and local market 

expertise 

►Currently, companies use 

such network structures 

only selectively, e.g. to 

coordinate di t th their i global l b l 

R&D activities 

13

4 A EXAMPLE PROCESS ORGANIZATION 

Process organizations are focused on key business processes 

with additional processes to support the main activities 

Process organization of a metal products company 

Mgmt. 

processes 

Business 

process Product 

management 

Service 

processes 

Support 

processes 

Strategy Planning Leadership Controlling 

Warehousing 

Development 

Marke- Quality 

ting mgmt mgmt. 

Source: Anonymized example 

Sales 

Strategic 

purchasing 

Sheet metal 

forming 

Production 

techno- technology 

Engineering 

Project management 

Purchasing 

Techni- HR/ 

calorgaservice nization 

Production 

Assembly 

Service 

Paint shop Transportation 

Continuous 

impro- improvement 

Financial 

accoun- accounting 

IT 

COMMENTS 

• Process organization 

comprising 

– 9 product groups 

structured t t d along l th the 

standard business 

process 

– 4 internal suppliers pp 

(paint shop etc.) 

organized as service 

processes 

– Centralized mgmt mgmt. and 

support processes for 

all product groups 

►Currently, process organi- 

zations ti are primarily i il used d 

by service companies 

14

4 B 

Companies need to strengthen roles which facilitate collaboration 

– "Driver" and "body lease" expected to grow in importance 

Roles & responsibilities: Roles facilitating collaboration 

3.7 3.7 

2.9 

3.6 

2.7 

3.2 

40 4.0 

High 

importance 

"Manager" "Driver" "Body lease" 



1.0 

Low 

importance 

COMMENTS 

"Manager" 

• Overall responsible for project/process/task 

• Level of escalation 

• Decision-maker 

"Driver" 

• Drives the project/process/task on the operative 

level ("Kümmerer") 

( Kümmerer ) 

• Moderates between different stakeholders 

• Partially supports (operative mgmt. support) 

"Body lease" 

• Flexibly supports the project/process/task. 

wherever needed 

• Trouble-shooting/fire-fighting 

• "On top" resource to standard plan 

15

4 C 

Companies need to improve the skills of their staff especially to 

prepare them for less hierarchical/structured environments 

HR management: Required abilities 

3.2 

3.5 

Ability to 

"see the big 

picture" 

3.0 

3.5 

Ability to 

"convince 

without being 

able to give 

orders" orders 

2.5 


3.2 

Ability to 

"perform in a 

less structured 

environment" 


40 4.0 

High 

importance 

1.0 

Low 

importance 

COMMENTS 

"See the big picture" 

• Ability to understand and evaluate global cause- 

and-effect chains and trade-offs 

• Required to achieve a global optimum despite 

more complex structures, processes etc. 

"Convince without being able to give orders" 

• Ability to steer peers towards a common goal on 

a voluntary basis 

• Required whenever there is no formal disciplinary 

power (or this power is not to be used) 

"Perform in a less structured environment" 

• Ability to cope with higher degree of freedom and 

insecurity 

• Required to unlash creative potential and 

manage fast fast-changing changing environments 

16

5 

Many companies are prepared to implement major organizational 

changes – However, systematic change management is required 

"Companies are reluctant 

to implement p major j 

organizational changes" 

Fully 

agree g 

Fully 

dis- 

agree 

0% 

20% 

30% 

50% 

ROLAND BERGER 

CHANGE MANAGEMENT APPROACH (overview) 

C Implementation: Employees 

B Design: Middle management 

A Concept: Senior management 

IV Shape culture ("allowed to do") I Define content of change ("should do") 

• Anchor a culture in line with the 

vision, create room to maneuver 

• Embed a process of permanent 

change 

• Ensure sustainability 

• Develop competencies/abilities 

– Project-related training 

– Workplace p training g 

• Promote networks and collaboration 

(knowledge management, bestpractice 

management) 

Culture Cu tu e Content Co te t 

Capabiliti 

ities 

Communication 

& 

leadership 

Commit- 

mentt 

• Design a vision of change and set goals 

• Develop strategic content for 

communications 

• Define metrics and measure target 

achievement 

• Create energy for change and 

sustain it 

• Set incentives, reward success 

• Ensure broad-based involvement of 

the organization 

0% III Develop capabilities ("can do") II Create commitment ("want to do") 


17

6 

Our view: Depending on the industry, network and process 

organizations will significantly grow in importance 

Organizational models per industry (schematic) 

Lot size 

Mass 

Process 

produc- 

organization 

tion 

Single 

orders 

Network 

organization 

COMMENTS 

"Classical" organi 

nizational ational models models: • 

• 

1-dimensional 1 dimensional (func- (func 

tional, divisional, …) 

2-dimensional (matrix 

In addition to the 

nature of the industry/ 

company, other factors 

determine the struc- 

tural organization 

• Company strategy 

• 

of products and regions) 

Hybrid (combination of 1- 

• Market positioning 

Project 

and 2- dimensional models 

• Market environment 

organization • Communication 

technology 

• Legal requirements 

Innovation Cost 

BioTech 

SemiCon 

Aerospace & 

Defense 

IT 

Automotive 

Machinery 

Consumer 

electronics 

Utilities 

Industry 

driver 

• Management 

philosophy 

DDynamic i iinternal t l and d external t l changes h require i review i and d optimization ti i ti off organizational i ti l structures 

t t 

Today Tomorrow 


Alternative organizational models Expected movement 

18

6 

Organizations dominated by functions do not fit today's needs – 

Companies should look for a more tailored solution 

Source: Arend van Dam; Roland Berger study "Beyond cross-functional collaboration" 

19

Beyond cross- functional functional collaboration

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