Self-steering Hybrid Organization

We have seen many times in the past that even under the pressure of delayed project people refuse to take short-cuts in their work. They are obsessed with the quality of their work. Still you get 13,4 million hits for “Quality Manager” in Google. Adapted from #nofearbook from Pekka Viljakainen: Next generation professionals require leadership that match their values in work: they are native social networkers expecting availability of all information, they are passionate about their profession and they have strong sense of responsibility. In addition to leadership we have to have a structure in our organization that fully utilizes these values. With inefficient structure we unfortunately still need people who “manage the quality” and manage plenty of other things as well.

Some organizational hierarchies, steering groups and operative manager roles become obsolete when an organization is structured in cross-functional teams instead of functional silos. There are other opinions also indicating that “coordination by managers” can exist also in cross-functional world (slide 146). They may exist. But are they needed? In fact we should be more interested whether we can utilize full potential of our passionate, native social networkers with strong sense of responsibility better with cross-functional teams than seating them in functional silo.

When comparing functional teams and cross-functional teams we have to take into account the size of the organization. In most of the companies the functional silos are not just functional teams but may consist of 1000 people and many teams. Similarly cross-functional project oriented structure often means that many teams are collaborating around one project. Please remember that when we use the term team, we mean a group of people: a team or a project or a department.

Disadvantages of Functional Teams

In this setup the organization is structured in silos that are based on functions eg from the V-Model. Teams are formed around specialization, waterfall phase or similar.

We have seen that steering of this kind of organization requires layers of operative managers and steering groups that filter the collected information and pass them up. Each layer has their own responsibility and authority to make decisions and optimize their function. At some point there is a layer that covers the whole value chain and has the ability to optimize the whole. The layering creates lots of waste in terms of delayed and inaccurate information, misinterpretations and sub-optimization.

Milestones and handovers are common in organization built on functional teams. Usually budgeting is based on the organizational structure. Therefore each function ensures with milestones and strict handovers that the other functions do not ruin their business. Problems are seldom solved with cooperation. In waterfall organization it is easy to blame others from your problems.

Hierarchical structure, milestones and handovers make the functional teams resistant to change. We have seen that some functions existed in the organization only because it was included into handover criterion. The function was killed only when it became a part of bigger entity and it was understood that it is obsolete. Parkinson’s Law also works here: Functional teams expand their duties to cover the time and the budget that is reserved for it.

Functional organization has tendency to form cross-functional teams whenever there are severe problems. These tiger teams have the authority to collaborate through organizational borders. They have a goal that is related to the whole value chain not only to a function. This is clear evidence that we acknowledge cross-functional organization being more efficient. But we still fall back to the silos when the storm is over. Cross-functional teams are actually institutionalized tiger teams.

It is interesting to notice that people with experience, knowledge and interest to the whole value chain and not only to a single function are often selected as operative managers. This may indicate that also informal leadership with strong focus on value stream can only emerge in organizational structures that are cross-functional. That is, structures where the teams’ focus, goals and context cover the essential part of the value stream and the interest is aligned with true stakeholders including customers.

Why Cross-Functional Teams

Hierarchy in Functional Organization is built to coordinate between the silos, optimize the function and avoid catastrophes. Operational excellence can be achieved only with seamless collaboration at all levels through the whole value stream without handovers. This means that the structures in the organization must be cross-functional. In Cross-Functional Organization the steering and management is ‘outsourced’ to everyone: Next gen professionals that are passionate, native social networkers with strong sense of responsibility. Excellent results expected!

Transformation to Hybrid Organization

Small organizations are good examples how excellent results can be achieved with cross-functional teams. Against common Agile misconception, this does not mean that the big ones should shrink their complete value stream into team of five Developers serving all stakeholders. Sometimes specialization of teams are needed for efficiency. And bigger cross-functional structures for scale. We need a Hybrid Organization that consist of both functional and cross-functional teams where the pulse, the budget and the goals are in cross-functional direction. In hybrid organization one single functional team cannot be late, short on resources or over/under the budget. It would be sign of unwanted spin-off in value stream.

Some people believe that the functional competence will disappear in cross-functional structures. I believe in passion to your profession. I believe that people who are good at something will find similar people and start the collaboration. We don’t need the DP1 to that.

At this point it is already quite clear that for the seamless collaboration around the value stream we need the complete value stream in all locations where work is done. Multi-site development requires complete value stream in all sites. Until hologram videoconferencing is invented.

So what is left then for the managers to manage? In cross-functional organization their job is to grow structures that adapt to the changing environment. Structures that support the self-steering hybrid organization to respond to changing needs of their all stakeholders. Easy? I didn’t say that.

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6 Responses to Self-steering Hybrid Organization

  1. This is a timely article for my organization right now, but not sure it gives me the magic bullet we need. We are currently functionally structured under a VP of IT with your basic functions … Project Management, Business Analysis, Developers, QA, etc. We are an MIS organization of about 50 people. There is basically one and a half layers of management under the VP as some Directors/Managers have Leads/Supervisors. We have dabbled with Scrum recently based on matrixed cross-functional teams, but are going full bore in the next several months with several focused Scrums and then some (possibly, Kanban) maintenance teams. Our challenge is in determining the right organization structure for us going forward. Based on what I’ve been reading, there are mixed feelings about whether a team should direct report to their ScrumMaster and I think that’s what is suggested by a cross-functional project-based structure. In our case, the PMs are currently acting as ScrumMasters so far. I’d love to hear from others that have faced this same challenge and what organization structure they have found to work best for them with Scrum and possibly Kanban in mind. While we aim to have self-organizing teams, we can’t escape from the fact that functional standards have their place.

    • Janne Irmola says:

      Thanks Stephanie for your viewpoint.

      A team reporting to their coach is not a good idea. And cross-functional project-structure does not mean that.

  2. Vin D'Amico says:

    It is sometimes said that agile development works best when the team consists of people who can assume multiple roles. They don’t just write software or test it or release it. They do all of the above as needed.

    It sounds good in principle but there is also much to be appreciated in specialization. Someone who specializes in an art knows more about the subject matter area than someone who occasionally performs the tasks. Software teams need access to specialists.

    The hybrid organization makes sense and I think we may have to carry it one step further. The agile concept of “team” is a group of people that stay together for the life of the project. Is that really needed? Why can’t specialists help a small core group as needed?

    As agilists, we want the business to be flexible. Are we?

    • Janne Irmola says:

      Thanks Vin for your comments. I fully agree.

      The timing aspect can be added to the list of ‘why supportive functions’. If some task is done only once or few times in a project centralization might be wise.

      Quite often the word ‘specialization’ is used only in the ‘high and rare competence’ meaning. Please note that we might want to form supportive functions that are specialized in basic but laborious tasks that are needed only couple of times in a project.

  3. Anonymous says:

    I don’t think that real coordination complexity is reduced after cross funtional teams are formed. The functional teams connect to each other through well defined interfaces which helps to see the boundaries. In the other hand cross functional team members form a full mesh having lot of informal relationship without knowing the boundaries or defining clear responsibilities. This structure generates extra communication and coordination needs. Of course this effort is spread around the whole graph which makes the system more robust, but the complexity is still there.

    Both full specialization and full generalization are extremities and extremities are never the best solution for a problem. This is why T shaped knowledge scheme is a good idea.

    • Janne Irmola says:

      Thanks for your comment.

      This is not only about the coordination complexity. The context of work for the teams influence to the team goals, their responsibilities, the context of improvement work and innovations, etc, etc. Examples: It is more probable to get innovations that span over the value stream when the context of team member’s daily work is cross-functional. It is more probable that we avoid functional sub-optimization when the daily work and goals span over the value stream.

      Coordination complexity can be constant. But there is huge difference if the coordination is done inside a team than between functional silos.

      Please note that the T-shaped knowledge scheme usually means the competence profile for individual. Here we talk about a team specializing to tasks of certain type.

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