Over the last 25 years I have led business teams in a diverse range of contexts. In that time, the emergence of cross-functional collaboration and partnership as a critical success factor has become increasingly clear to me. This has been especially true in my experience of the last 3 years in deploying a global Sales & Operations Planning (S&OP) process in a major pharmaceuticals business. My previous articles in this series have provided some further background on the drivers for this change and also the characteristics of strong cross-functional S&OP teams.
"Only 21% of executives have confidence in the ability of their organisations to build cross-functional teams"
Whilst there may be widespread agreement that cross-functional collaboration is a good thing there is clear evidence that organisations still struggle to find ways to build and support this collaboration – Deloitte published a study finding earlier this year (Global Human Capital Trends, 2016) that only 21% of executives have confidence in the ability of their organisations to build cross-functional teams. The good news though is that organisations that develop clearly structured change initiatives are 3.5 times more likely to achieve an effective and sustained cross-functional approach according to work by McKinsey (Finding Opportunity Through Uncertainty - A New Paradigm for Pharmaceutical Supply Chains, 2014).
An effective change initiative must focus on the key requirements for effective and sustained cross-functional working. This article presents my high-level summary of these requirements based on published insights from both academics and leading practitioners on the key success factors for building cross-functional collaboration.
These requirements can be summarised in 3 categories as illustrated in the figure below;
1. Organisational Context
This describes the environment required to enable and sustain cross-functional partnership as a core way of working. This includes 3 key themes;
a. Senior Leadership
The need for senior leadership support is broadly accepted but the clarification I propose here is that this is required in various forms;
Providing tangible investment to support collaborative practices – both in terms of the people resource required to make it happen but also the key tools (eg information systems) which form the practical infrastructure to support this way of working
Demonstrating real engagement in the process themselves – in the case of S&OP this could mean participating fully in the relevant level of S&OP meeting but crucially also role-modelling the key behaviours of cross-functional partnership in the ongoing interaction they have with their peers across the company’s functions
b. HR Strategy
This requires interventions to drive both short and long-term change in the organisation;
Short-term – supporting the creation of measures and incentives which are specifically designed to support and reward cross-functional behaviours and ways of working. These tend to be relatively uncommon but the absence of such incentives can create enough tension or conflict to derail cross-functional working initiatives.
Long-term – building the organisational capability for cross-functional or matrixed ways of working. This could include specific training programmes for leaders and team members or the introduction of rotation programmes which allow supply chain and commercial staff for example to build awareness and understanding of working in partner functions – this provides the foundation upon which the increased trust and empathy needed for collaboration can be built.
c. Culture
There is a requirement to develop a culture which clearly supports and values collaboration and cross-functional working.
This is built firstly through establishing the common, shared purpose to which the organisation or team works and then clearly valuing those people, processes and structures which look beyond siloed roles to drive towards this.
In the S&OP example, practically this might mean an individual working effectively within the defined meeting structures to achieve the best possible overall outcome for the business rather than their own silo function and indeed even seeing this as their ‘home team’. It might also include working across a collaborative S&OP team to draw out the contributions and collaborations across the team. This culture is of course underpinned in a practical way by the role modelling of senior leaders and the introduction of appropriate incentives systems as described above but does require concerted attention by senior managers to define it in its broadest sense.
2. Team Leadership & Set-Up
The published work in this area repeatedly highlights two key requirements;
a. Team Leader Attributes
The probability of creating a successful collaborative team is, not surprisingly, heavily dependent on the leader of the team. Research highlights several key factors;
The need for a leader with the ability to flex comfortably between task- and relationship-orientated styles of leadership and with sufficient emotional intelligence (or EQ) to sense the most appropriate leadership style as the cross-functional team develops.
It is also reported that strong communication skills are critical, not only to support strong cohesion and delivery within the team but also to influence and seek support from senior leaders.
b. Team Formation & Structure
A range of proposals are published by researchers and practitioners in this field – many of them related specifically to creating collaborative S&OP teams;
Agreeing clear and common goals with the team which then form the ‘true north’ which the team subsequently uses to stay on track for its shared purpose.
Adoption of a clear and well-defined process which specifically has a clear route to decision-making. A helpful tool in this area, widely used in S&OP is the ‘RAPID’ accountability allocation approach initially developed by Bain & Co.
Clear measures and KPIs through which the team can assess its cross-functional performance and outcomes. This is a critical enabler which allows the team to focus on shared objectives rather than silo goals. As outlined above this should also, ideally, be a part of a wider incentives approach that rewards collaborative ways of working.
Actively building trust and collaboration in the team is also a key requirement and requires the investment of time with the whole team to co-create and agree strategies for this and also to follow-up and check progress.
3. Information Flow
Research also shows that information flow is a critical requirement. For a cross-functional team to operate and make decisions genuinely as one team, all members need to be ‘looking at the same reality’ as one practitioner describes it. It is essential that the team can analyse one version of the truth and make decisions for their common purpose based on this shared understanding. Without this, cross-functional discussions can quickly de-generate into advocacy for particular silo perspectives or information sources rather than decision-making.
Often investment in information systems or business intelligence tools may be needed to create the ability to have this one version of the truth. However, a view expressed by several practitioners (and borne out by own experience) is that waiting for these systems to be created and deployed is not necessary in order to start-up strong cross-functional working in S&OP. The power of interaction and conversation across functions (especially those that have not traditionally had an open dialogue) quickly outweighs any drawbacks associated with gaps in shared information. The lack of a fully-functioning information tool in this context can be compensated for in several ways – for example, segmenting the tasks and information being worked on the team and concentrating manual efforts on creating shared information for the key segments only.
Conclusions
Whilst achieving and sustaining strong cross-functional collaboration is challenging, it is clear that well-conceived and executed transformation programmes can deliver effective results in this field. Critical to designing such a programme is understanding the key enablers for collaboration and the work published by academics and practitioners suggest that these are;
Organisational context
Team leadership and set-up
Information flow
Understanding the detail of these enablers is critical not only to achieving improved cross-functional working but, importantly, also sustaining it. It is interesting to note that of the success factors I have described above more than half of them relate to creating the conditions for longer-term support of collaboration. Failing to address these adequately could mean that the outcomes of a more tactical change approach to driving collaboration may ultimately be dissipated by tensions in the prevailing organisation environment.
Upcoming posts in this series will continue to explore what it takes to deploy an enterprise-wide cross-functional S&OP which drives tangible business benefits, with the next article focusing on how to practically approach the question of sustainable transformation.