A growing number of organizational management experts are promoting the use of cross-functional integration within corporations. Although choosing to adopt this form of hierarchy would require reorganizing and redistributing responsibilities, implementing cross-functional integration is an appropriate response to the increasing prevalence of big data and other recent trends.
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Why Cross-Functional Integration Is Needed
According to a survey of market intelligence professionals, data collection will continue becoming more automated. However, analysis will continue being done by humans.
Approximately 78 percent of survey respondents predicted that big data will have a huge impact on their market intelligence programs by 2020. These predictions show that mining big data will become more important and that finding ways to visualize big data will become more critical as time passes.
Company spending on market intelligence efforts is also projected to increase. According to the Gartner CMO Spend Survey for 2016–2017, marketing budgets average up to 12 percent of company revenue and have increased consistently over the past three years. Approximately 69 percent of respondents expect the marketing budget of their organizations to continue growing. And nearly two-thirds of the surveyed marketing experts expect information collecting and analyzing to become more integrated across various parts of organizations.
Cross-functional integration can help organizations gather information in the following ways:
- Reorganization requires setting and articulating central marketing goals and messages while tying them into information gathering.
- Different members can apply different types of technical expertise to gather information, mine big data and present visualizations.
- An agile team is able to account for changes by switching approaches.
However, according to a McKinsey analysis of survey data from more than 2 million respondents at 1,000-plus companies, only a small percentage of companies demonstrate a strong level of agility, with 58 percent demonstrating only average agility.
The Marketing 2020 report from Millward Brown Vermeer has noted the following additional benefits of implementing cross-functional integration:
- Companies grow more quickly by conducting advanced analysis on their customer data.
- Organizations often have a marketing strategy that aligns with their business strategy more consistently by distributing marketing responsibilities across teams.
- Cross-functional integration allows a task-force-structured model that can be agile when assigned to projects.
As one researcher has explained, functionally integrated teams are at risk of becoming “cross-functional dysfunctional.” Understanding that this risk exists — and possible ways to get around it — may be key to achieving success.
Cross-functional teams do not always work as intended. One researcher has determined that almost 75 percent of cross-functional teams are actually dysfunctional, with failure being caused by not meeting at least one of five requirements.
For a cross-functional team to become dysfunctional, it must have failed to meet a budget, stick to a schedule, stay in line with specifications, align with customer expectations or stay within the bounds of corporate goals.
Cross-functional teams may fail for numerous reasons, including the following:
- Pre-existing silos don’t really go away, and it can be challenging to see the big picture.
- People with different specialties and roles are working together for the first time.
- Team members often miss meetings, as they still need to keep up with previous roles and responsibilities.
However, cross-functional teams can take steps to increase their chances of achieving success. Here is some advice for joining the minority of cross-functional teams that succeed:
- Set up a high-level project leadership team with representation from various silos. This team may include a designer, an IT expert, a marketer or other professionals with relevant roles.
- Ensure that every project has an assigned leader as well as an appointed person to fill in for them when needed.
- Each project should also have precise budgets, goals and deadlines from the beginning.
- While silos may break down eventually, every person should have a role and know what it is.
How It Can Be Done
Even through most traditional organizational hierarchies closely resemble Christmas trees, companies are beginning to cross-functionally integrate by adopting more flexible roles and requiring fewer sign-offs in order to move more quickly.
These cross-functional team structures can take on various shapes. For example, some are getting rid of the middle layers of regional heads to create “centers of excellence” with a particular specialization. Some are structured like a matrix where responsibilities overlap. Some are moving toward implementing circular organizational structures by placing a leader at the center, and some are moving toward discrete project-based team structures.
While the structures of cross-functional teams may differ, they each serve multiple functional areas, whereas functionally aligned departments only serve one functional area. Here are several other ways in which cross-functional teams and functionally aligned departments differ from one another:
- Functionally aligned departments have a pyramid structure that places the leader at the top. However, cross-functional teams tend to have a circular structure that places the leader at the center.
- While functionally aligned departments are typically permanent, cross-functional teams are often new and meant to be temporary.
- Functionally aligned departments have a direct chain of command where one “boss” owns all completed work within the department, but cross-functional teams have a chain of command with shared authority where more than one “sponsor” shares project ownership.
- And while functionally aligned departments focus on an individual’s performance, cross-functional teams focus on the team’s performance.
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